Credit/Debit Cards, Federal, Regulation

Judge grants stay for Federal Reserve interchange rule

debit_cardsDistrict court Judge Richard Leon issued an order last week granting the Federal Reserve’s request to keep its debit interchange rule in effect until the appellate process is completed.

Leon, who previously said he was not included to grant the central bank’s request, and the court faced pressure from the Fed and plaintiffs in the case who said that immediately removing the current system would cause fees to rise sharply, The Wall Street Journal reports.

“Judge Leon’s stay means some level of certainty for the marketplace until this matter is settled,” Consumer Bankers Association President and CEO Richard Hunt said. “His ruling had left consumers in limbo, all while the retailers continue to scheme to pocket interchange rate reductions without passing along any savings.”

The case centers on debit interchange fees banks collect from merchants to process customer debit transactions. Merchant groups have maintained that banks and the card companies’ interchange rates are well-above what it costs to actually process a payment, according to The Wall Street Journal.

Banks, however, maintain that interchange fees help cover fraud prevention costs and payment system infrastructure that customers can immediately access around the world.

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