Amicus Brief Filed in Interchange Fee Case

Bank and credit union trade groups yesterday filed a friend of the court brief in the case over the Federal Reserve’s interchange rule, noting that they oppose the Fed’s rule capping interchange fees but are even more strongly against Judge Richard Leon’s ruling that the fee cap should be lower still.

“The district court’s decision, if affirmed, would make things significantly worse,” the groups said. “It compounds the Board’s legal error through a construction that would require deep cuts -- amounting to many billions of dollars each year -- into issuers’ remaining interchange-fee revenues.”

The groups argued that Leon misinterpreted how much of the card issuer’s cost can be recovered under the statute, that he ignored the statute’s “reasonable and proportional” fee allowance and that he went beyond the law’s requirements on exclusivity. “The district court’s constructions would gravely harm all participants in the electronic debit-card system through reduced services, diminished investment in innovation, increased fees to consumers, and disruptive technological changes -- all with no tangible offsetting economic benefit,” they argued.

In July, Leon said that the Fed’s rule violated congressional intent in the Dodd-Frank Act by setting the interchange fee cap too high and failing to allow merchants to choose multiple unaffiliated PIN and signature networks for each card transaction they process. The case is currently on expedited appeal to the D.C Circuit Court of Appeals.

Read the brief.