The banking industry is not backing down from its fight over a new rule capping the amount they are allowed to charge every time a debit card is swiped.
The regulation, known as the Durbin Amendment, was part of the Dodd-Frank consumer protection and Wall Street reform law, the Wall Street Journal reports. The rule is scheduled to take effect July 21. A recent attempt in the Senate to delay the start date and require further research on its effects was quashed on a 54 to 45 vote as 60 votes were necessary.
The banks, which collect about $14 billion annually for interchange fees, have collected an average of 1.14 percent of the price on every debit card purchase. The Federal Reserve Board of Governors plans on knocking that down to no more than 12 cents a swipe.
Industry lawyers are already challenging the constitutionality of the rule, claiming the Fed was directed to find a “reasonable and proportional” regulated fee but instead imposed an illegally low fee, according to the Wall Street Journal.
Currently, the Minnesota-based TCF National Bank is in the appeals process with the Fed and Chairman Ben Bernanke. Because the rule only applies to banks with more than $10 billion in assets, TCF argues that the rule violates equal protection laws.