Federal Judge to Hear Arguments About Debit Interchange
U.S. District Court Judge Richard Leon will hear retailers, the U.S. government and debit card issuers argue Tuesday over whether the Federal Reserve's regulations capping debit card interchange did not go far enough (the retailer position) or that it went too far (the issuer position).
Leon sits on the U.S. District Court for the District of Columbia.
Retail associations have taken the Federal Reserve to court to force the regulator to lower the rate of debit interchange even further, which is what the associations argued the Durbin amendment requires.
The issuers have countered with the argument that the debit cap regulations have already gone too far since they prevent debit issuers from covering the costs of running debit card programs and earning a reasonable return on their investments.
The issuer coalition, including CUNA and NAFCU, filed an amicus brief in the case earlier this year.
“The merchants have claimed all along that imposing government price controls on interchange fees would directly benefit consumers, yet there is absolutely no evidence that consumers are benefiting,” said coalition spokeswoman Trish Wexler.
“So while consumers have gotten nothing from the retailers, the merchants are back asking the courts to add even more to the $6 billion windfall they are now enjoying,” Wexler said.
“Credit unions are already feeling the pinch of the Durbin amendment’s rate cap, despite the exemption for institutions with less than $10 billion in assets,” said NAFCU President/CEO Fred Becker. “The government should not set market prices.”
In addition to CUNA and NAFCU, the coalition includes the Independent Community Bankers of America, Midsize Bank Coalition of America, Consumer Bankers Association, The Clearing House Association, the ABA, the Clearing House Payments Company and the Financial Services Roundtable.