The Supreme Court agreed to take up a case Friday on "swipe fees" — fees that banks charge merchants each time a customer swipes a debit card, Law360 reported.
North Dakota Retail Association v. Board of Governors of the Federal Reserve was brought up in 2021 when the Corner Post, a North Dakota-based truck stop, joined two state trade groups in challenging the Federal Reserve's treatment of swipe fees.
The plaintiffs argued that the Fed's cap on swipe fees, a direction given to them in the Dodd-Frank Wall Street Reform and Consumer Protection Act, was too high.
The 2010 bill requires the Fed to set a "reasonable" cap on the fees that are "proportional" to banks' costs. A year later, the board capped fees for financial institutions with over $10 billion in assets at 22.05 cents.
The plaintiffs argued that the cap set was higher than Congress intended in Dodd-Frank. Even the Fed's initial proposal, they argued, would have been over 10 cents lower — around 12 cents.
The original legal challenge against excessive swipe fees was dismissed by both the federal court in North Dakota and the 8th U.S. Circuit Court of Appeals.
However, their argument now appears to be strengthened by the fact that Sen. Dick Durbin, who placed the amendment in the original Dodd-Frank bill, is authoring a new bill that could further lower the cap.
The Illinois Democrat's Credit Card Competition Act of 2023 requires banks with over $100 billion in assets to offer at least two options to process card transactions — one of which has to be an option other than Visa and Mastercard.
"Banks' costs of processing transactions have fallen dramatically, and these fees continue to drive up costs for merchants and prices for consumers," stated Stephanie Martz, the National Retail Federation's chief administrative officer and general counsel.
"Retailers are now paying twice as much as they should if the Fed had followed the law," she continued. "If the Fed isn't going to act on its own, the courts need to enforce the law."
Luca Cacciatore, a Newsmax general assignment writer, is based in Arlington, Virginia, reporting on news and politics.
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