On Tuesday, U.S. District Court Judge Richard Leon will hear U.S. government, retailer and debit card issuer arguments on the Federal Reserve’s regulations capping debit card interchange.
The retailer position is that the debit card interchange did not go far enough, while issuers argue that the cap went too far, CUTimes reports.
“Credit unions are already feeling the pinch of the Durbin amendment’s rate cap, despite the exemption for institutions with less than $10 billion in assets,” NAFCU President and CEO Fred Becker said, according to CUTimes. “The government should not set market prices.”
Card issuers argue that debit cap regulations prevent debit issuers from covering the cost of running debit card programs or from earning a reasonable return on their investments.
An amicus brief was filed in the case earlier this year by a coalition that included CUNA and NACFU, as well as the coalition includes the Independent Community Bankers of America, Midsize Bank Coalition of America, Consumer Bankers Association, The Clearing House Association, the ABA, the Clearing House Payments Company and the Financial Services Roundtable.
Retail associations, however, have taken their battle with the Federal Reserve to court, arguing that the regulator must lower the rate of debit interchange more, which they argue is required by the Durbin Amendment, according to CUTimes.
“The merchants have claimed all along that imposing government price controls on interchange fees would directly benefit consumers, yet there is absolutely no evidence that consumers are benefiting,” coalition spokeswoman Trish Wexler said, CUTimes reports. “So while consumers have gotten nothing from the retailers, the merchants are back asking the courts to add even more to the $6 billion windfall they are now enjoying.”