Supreme Court Says ‘No’ to Hearing NACS Interchange Appeal (Jan. 20, 2015)
The U.S. Supreme Court today said it would not hear retailers’ challenge to the Federal Reserve’s debit card interchange fees, enforcing a lower court’s decision to keep existing regulations in place.
The high court’s decision in NACS et al v. Board of Governors ends a long-running legal battle over whether the Fed set too high a cap on interchange fees in 2011 when implementing Regulation II, based on the Durbin Amendment in the Dodd-Frank Act. The U.S. Court of Appeals for the District of Columbia last March reversed a lower court’s ruling that the Fed’s debit interchange cap was too high. A consortium of retail industry groups appealed the unanimous U.S. Court of Appeals decision, requesting the Supreme Court hear the case.
The case now will be remanded to trial to determine the lone remaining issue in the case, i.e., how to address the cost of transaction monitoring.
Reaction to the closely watched case varies as expected among stakeholders.
“I think there’s an audible sigh of relief across the financial services community,” Judith Rinearson, a partner at Bryan Cave LLP and Paybefore contributing editor, tells Paybefore. “While Reg II is by no means perfect, we finally have closure and that is good,” she adds.
“The Supreme Court’s decision today brings with it much-needed clarity for the myriad banks, program managers and other players in the payments value chain,” says Jonathan J. Wegner, a partner with Baird Holm LLP.
The American Bankers Association also applauded the Supreme Court’s decision, calling it “the right result” in a statement released today.
The National Association of Convenience Stores (NACS) and the National Retail Federation (NRF) expressed disappointment in the Supreme Court’s decision in separate announcements, and vowed to continue lobbying for changes in interchange fees.
“There is still litigation pending on credit card swipe fees, and policymakers continue to be concerned by the anti-consumer and anti-competitive practices of the card industry,” said Mallory Duncan, senior vice president and general counsel at the NRF.
See related stories:
