The National Association of Federal Credit Unions and other amici participated on Friday in oral arguments on the Federal Reserve’s appeal of a district court ruling that found the central bank’s rules on debit interchange fees to be invalid.
The oral arguments are the next step in the appeals process over the Fed’s debit interchange rule, which federal Judge Richard Leon ruled in July to be inconsistent with the requirements of the 2010 Dodd-Frank Act.
In his ruling Leon sided with retailers, declaring the interchange fee cap to be too high and that non-exclusivity provisions went against Congress’ intent. NAFCU, which has said the fee cap is set too low, and other amici filed in support of overturning Leon’s decision.
During the Friday hearing before a three-judge federal appeals panel, much of the discussion centered on the costs that may be included under the Fed rule.
Panel judges said the case could likely not be won based on the “Chevron One” case-law test, which is commonly used in similar cases and was used by the lower court as the basis for its legal reasoning.
Merchants expressed concern during the hearing that Visa and MasterCard’s internal rules did not allow cross-routing of transactions, though witnesses for the Federal Reserve said any restrictions were technology based, adding that the Fed’s rule did not provide for a restriction on cross-routing.