Retail trade groups expressed disappointment in a court decision that will keep the Federal Reserve’s cap on debit card swipe fees at 21 cents rather than reducing it to a lower level.

“Today we learned the disappointing news that the D.C. Circuit largely upheld the U.S. Federal Reserve’s debit card interchange fee rule and network non-exclusivity rule, reversing the decision of the U.S. District Court that had previously held for the merchants,” said Leslie G. Sarasin, president and CEO, Food Marketing Institute.


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Similarly, Mallory Duncan, SVP and general counsel, National Retail Federation, said NRF was disappointed in the ruling.

“NRF … remains confident that the Federal Reserve erred when it set the swipe fee cap far higher than intended by Congress,” he said. “The Fed ignored congressional intent and worked to shield debit card companies and big banks. A self-described victory for the banks usually results in higher costs for consumers.”

Under the Durbin Amendment provisions of the 2010 Dodd-Frank Consumer Protection and Wall Street Reform Act, the Federal Reserve was required to adopt regulations that would result in debit card swipe fees that were “reasonable” and “proportional” to the actual cost of processing a transaction. The Fed calculated the actual average cost at 4 cents per transaction and initially proposed a cap no higher than 12 cents, but eventually settled on 21 cents after heavy lobbying from the financial services industry, according to NRF.

The average debit card transaction fee was 45 cents before the cap was set, NRF said.

Sarasin said FMI was reviewing the latest decision to determine its next course of action.

“FMI remains dedicated to pursuing marketplace competition for our food retailer and wholesaler members,” she said. “The food retailing industry, unlike the banking industry, is highly competitive and has maintained a net profit margin of less than 1% for the last two decades.”

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