ARLINGTON, Va. — FMI – The Food Industry Association welcomed a federal appeals court ruling Monday that upheld the rejection of the Federal Reserve’s debit card swipe-fee cap and urged the central bank to set a new rate.
The U.S. Court of Appeals for the Eighth Circuit affirmed a lower court’s decision vacating the 21-cent cap in Corner Post, Inc. v. Board of Governors of the Federal Reserve System. The ruling sided with merchants who challenged the Fed's calculation of allowable processing costs under its 2011 regulation.
“Today’s decision is an important victory for grocery customers and food retailers in our long fight against unreasonably high debit card swipe fees,” said Leslie G. Sarasin, president and CEO of FMI.
Sarasin said the Fed’s data shows that banks’ debit transaction processing costs have fallen substantially since the regulation took effect, while the rate charged to merchants has remained unchanged.
FMI filed an amicus brief with other retail associations supporting the lower court’s decision.
The Durbin Amendment requires debit interchange fees to be reasonable and proportional to the issuer’s transaction costs. The Fed’s regulation set a base cap of 21 cents per transaction, plus 0.05% of the transaction’s value to cover fraud losses, with an additional penny permitted for qualifying fraud-prevention measures.
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