ALEXANDRIA, Va. – Yesterday, the U.S. District Judge Richard Leon ruled in favor of NACS and other plaintiffs, finding that the Federal Reserve misapplied Congress’ intent when it implemented required swipe fee reforms. Click here to read the opinion. 

“The Court has vindicated our position that the final Federal Reserve rules on the implementation of the Durbin Amendment were flawed,” said NACS Senior Vice President of Government Relations Lyle Beckwith. “We look forward to the Fed revisiting their initial analysis that concluded the actual cost of a debit transaction was only 4 cents. By following the law and using their own data, the Fed should produce a debit card rule that lowers these outrageous fees paid by merchants and ultimately consumers.”

“[The] decision by the Federal District Court is a victory for consumers and small business around the country and will lead to lower interchange rates for billions of debit card transactions each year,” said Assistant Majority Leader Dick Durbin (D_IL), in a statement. “The Fed’s 2011 decision to bend to the lobbying by the big banks and card giants cost small business and consumers tens of billions of dollars and did not do enough to rein in the anti-competitive, anti-consumer practices of Visa and MasterCard.”

Durbin, the author of the swipe fee legislation, wrote an amicus brief challenging the Fed’s interpretation of the law in Federal District Court. “By requiring debit card fees to be reasonable, and by cleaning up Visa’s and MasterCard’s worst abuses, small businesses and their customers will be able to keep more of their own money and common sense and fairness – not big bank profits – will be the guiding force of the swipe fee system,” he said.

“From the very beginning, retailers and restaurants knew the Federal Reserve Board of Governors had grossly misapplied the swipe fee law, also known as the Durbin Amendment,” added Mallory Duncan, National Retail Federation senior vice president and general counsel, in a statement. “They failed to heed Congress’ call to set fee standards that were ‘reasonable’ and ‘proportional’ to the actual cost of a transaction. Instead, the Board manufactured a standard that was two to three times higher than the Fed staff recommended.”

NACS, the National Retail Federation, National Restaurant Association, Food Marketing Institute, Miller Oil Co. and Boscov's Department Store LCC filed the initial complaint with the court. There will be a status conference to determine next steps on August 14.