WASHINGTON (1/20/15, UPDATED 10:10 a.m ET)--The Supreme Court has rejected a request to hear a case brought by a group of retailers regarding debit card interchange fees, a decision welcomed by the Credit Union National Association. A cap on such fees was established by the Dodd-Frank Act, but retailers argued the cap is too high, and sued the Federal Reserve board of governors in an attempt to have the rule revisited. No further appeals on the case are possible.
"The Supreme Court made the correct decision for credit unions and consumers today when it refused to hear this case," said Jim Nussle, President and CEO of CUNA. "The Fed's rules aren't perfect for credit unions -- but after years of fighting, we appreciate the ability to move forward."
CUNA, as part of a coalition of financial services organizations, has said the cap was too low. While merchants have argued that a lower cap would benefit consumers, there has been no evidence that it would cause prices to come down.
The coalition filed an amicus brief in 2012 saying the cap does not allow debit card issuers to cover their costs with a reasonable rate of return.
An interchange fee occurs when a debit card transaction takes place. The fee goes to the financial institution that issued the card, and it is used to pay for the cost of providing the card and the transaction services, including fraud protection.
The Dodd-Frank Wall Street Reform and Consumer Protection Act called for the cap on the fees and required the Fed to implement it. In 2011, the Fed announced a cap at 21 cents per transaction for issuers with more than $10 billion in assets.
After the initial lawsuit brought by NACS, a U.S. District Court struck down the cap in July 2013. That decision was overturned in March by a three-judge panel of the U.S. District Court of Appeals.