U.S. Eighth Circuit Court of Appeals overturns Federal Reserve’s 21-cent debit card interchange fee cap
Fed loses debit card cap appeal
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The U.S. Eighth Circuit Court of Appeals ruled that the Federal Reserve should not include fixed costs unrelated to individual transactions when setting the cap on debit card interchange fees, and vacated the current 21-cent rate cap. Current rules also include 0.05% of the transaction amount and a 1-cent fraud-prevention adjustment, and apply to banks and financial institutions with deposits of USD 10 billion or more; the Federal Reserve’s 2023 proposal to reduce the base rate to 14.4 cents has not moved forward.
The ruling focuses the calculation of the debit card interchange fee cap on the marginal cost of transactions, allowing relevant institutions to understand the regulatory basis of the dispute between merchants and banking groups.
Source:Payments Dive · paymentsdive.com