Fed to appeal debit card fees ruling

{mosads}Retailers dismissed the appeal decision, saying it amounted to “giving in to the banks.”

“The Fed has taken a position that will drag this out while retailers and their customers continue to pay billions of dollars in inflated fees that harm the U.S. economy,” said J. Craig Shearman of the National Retail Federation. “We want to see this case resolved today, not next year.”

Meanwhile, financial institutions applauded the Fed’s decision.

“Although the Fed’s rule is far from perfect for credit unions, the district court’s decision compounds Durbin’s already negative consequences and is the wrong result for consumers,” said Bill Cheney, chief executive of the Credit Union National Association.

Leon determined in July that when the Fed finalized the new caps in 2011, it “clearly disregarded” Congress’s intent in writing the law, and ordered officials back to the drawing board to set lower limits on how much banks could charge. 

The Fed originally proposed a cap of 12 cents per transaction, but ultimately hiked it to roughly 21 cents when finalizing the rule. The increase was a boost for banks, which still faced a big cut in revenues from the industry average of 44 cents per transaction that existed before the limits.

The banking industry vocally pushed the Fed to appeal the decision.

The language of the so-called “Durbin Amendment,” named after the provision’s biggest backer, Sen. Dick Durbin (D-Ill.), stated that the Fed should limit fees so they are “reasonable and proportional” to the cost of processing a debit card transaction.

This post updated at 4:06 pm.