The Retail Industry Leaders Association (RILA) issued the following statement in response to a U.S. District Court ruling today that the implementation rules for debit swipe fee reform established by the Federal Reserve were inconsistent with the intent of the law.
The ruling from the United States District Court for the District of Columbia states:
“Upon consideration of the pleadings, oral argument, and the entire record therein, the Court concludes that the Board has clearly disregarded Congress's statutory intent by inappropriately inflating all debit card transaction fees by billions of dollars and failing to provide merchants with multiple unaffiliated networks for each debit card transaction. Accordingly, the plaintiffs' motion is GRANTED and defendant's motion is DENIED.”
“Retailers welcome today’s ruling and the opportunity to ensure the law is finally implemented as intended. The flawed Federal Reserve rules have muted the law’s intended benefits to merchants and consumers and resulted in further distortions in the already broken electronic payments market,” said Bill Hughes, senior vice president for government affairs.
Debit swipe fee reform, passed by Congress in 2010, required the Federal Reserve to ensure that the fees charged to merchants that accept debit cards be “reasonable and proportionate” to the cost of the transaction. The law exempted 99 percent of all banks and applied only to those banks with more than $10 billion in assets. In 2010, after aggressive lobbying by Visa, MasterCard and the biggest banks, the Federal Reserve capped debit swipe fees for non-exempt institutions at roughly 24 cents, more than three times higher than the cap it had proposed just months before and more than five times higher than the Federal Reserve found such transactions to cost.
RILA was not a party to the case.
RILA is the trade association of the world’s largest and most innovative retail companies. RILA members include more than 200 retailers, product manufacturers, and service suppliers, which together account for more than $1.5 trillion in annual sales, millions of American jobs and more than 100,000 stores, manufacturing facilities and distribution centers domestically and abroad.