Merchants and FIs continue to duke out their differences in court over the Durbin amendment interchange fee cap. Yesterday FIs, retailers and the Fed presented oral arguments in a U.S. District Court in a suit brought by merchants seeking to further limit the amount that card issuers can charge for debit transactions.
The suit — brought by the National Retail Federation, the Food Marketing Institute, the National Association of Convenience Stores and two retailers — alleges that the Federal Reserve's interchange fee cap is set too high.
For their part, FIs argued that the cap on fees is too low and doesn't allow a reasonable return on their investment in debit card programs, said a report by CUNA.org.
Caps imposed by the Fed apply to card issuers with $10 billion or more in assets. For these FIs, the cap is 21 cents, plus an additional five basis points to cover losses from fraud, plus an additional penny if they comply with federal fraud-prevention standards.
The affected financial institutions have said that the caps cost them a total of $6 billion dollars annually and that merchants have not passed the savings on to consumers as the legislation intended, but have kept the windfall for themselves.
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