The D.C. Circuit Court of Appeals sided with the Federal Reserve Board in upholding virtually all aspects of the board’s interpretation of the Durbin Amendment and its final rules concerning interchange fees and routing. This reverses Judge Leon’s lower court decision in favor of the merchants.
Retailers including Wal-Mart Stores Inc. (WMT) and Target Corp. (TGT) were handed a defeat by a U.S. appeals court, which upheld a Federal Reserve rule governing how much banks can collect for debit-card transactions. The court also approved Fed rules that retailers argued restricted competition on debit- processing networks dominated by Visa Inc. (V) and MasterCard Inc. (MA) The Fed’s regulations, challenged by a national retail group, “generally rest on reasonable constructions of the statute,” Judge David Tatel of the U.S. Court of Appeals in Washington wrote today for a three-judge panel. The decision leaves in place a Fed regulation dating to October 2011 that cut the average swipe fee by almost half to about 24 cents a transaction, costing the banking industry an estimated $8 billion a year. The mechants sued the Fed, arguing that if it had followed the law, swipe fees would have been cut more and network competition enhanced.