WASHINGTON (6/9/15)--The U.S. District Court for the District of Columbia Monday said it will issue an order providing the Federal Reserve Board 60 days to resolve the final issue remaining from merchants’ lawsuit challenging its debit card interchange transaction fees regulation: how it treats transactions-monitoring costs.
CUNA attended the interchange status conference hearing Monday afternoon and will continue monitoring developments. The hearing was another phase in the National Association of Convenience Stores (NACS) et al v. Board of Governors of the Federal Reserve lawsuit.
At the hearing, the Fed said it would need at least 60 days to resolve the issue of how its Regulation II treats transactions monitoring and whether those costs should be recovered through the base interchange fee or as part of the fraud-prevention adjustment, said Luke Martone, CUNA senior director of advocacy and counsel.
Although NACS said at the hearing that 30 days should be enough time for the Fed to act, U.S. District Court Judge Richard Leon indicated he would issue an order providing the Fed with 60 days. The Fed’s counsel said the issue will not require notice or comment. Instead, the Fed likely will amend its current Regulation II to provide transparency in its approach to the issue.
In the lawsuit, the merchants challenged the Fed’s regulation allowing a maximum debit card interchange fee, the fee paid to card-issuing financial institutions when their cardholders make a debit card transaction. The Fed had set a cap, as required by the Dodd-Frank Act, and in 2011, it set the cap at 21 cents per transaction for issuers having more than $10 billion in assets (News Now June 8).
CUNA, as part of a coalition of financial services organization, has said the cap is too low. The merchants claimed the cap is too high. Although merchants argued that a lower cap would benefit consumers, no evidence exists to support that claim. (News Now Jan. 20).
After NACS’s initial lawsuit, Leon struck down the interchange fee cap in July 2013. That decision was overturned in March 2014 by the U.S. Court of Appeals for the D.C. Circuit.
In January, the U.S. Supreme Court rejected NACS’s petition to hear the case. The Supreme Court decision was “the correct decision for credit unions and consumers,” said CUNA President/CEO Jim Nussle (News Now Jan. 20).