Fed’s debit interchange rule in effect through appeal
Sept. 23, 2013 – The Federal Reserve and amici in the debit interchange rule lawsuit – including NAFCU – are due to submit their briefs by Oct. 21 supporting the Fed’s appeal of a district court ruling to vacate the Fed’s regulation, which is to remain in effect throughout the appeal process.
Last week, the U.S. Court of Appeals for the District of Columbia Circuit received and granted a motion filed jointly by all parties in this suit for an expedited schedule for briefing and consideration of the appeal. D.C. district court Judge Richard Leon also issued an order that grants the parties’ earlier motion for stay of his July 31 ruling declaring the Fed’s rule invalid.
According to Leon’s order, the Fed’s current regulation will remain in place “until further order of this Court following a ruling on the Board’s appeal.”
NAFCU Senior Vice President of Government Affairs and General Counsel Carrie Hunt welcomed Leon’s decision. “NAFCU staunchly advocated for keeping the status quo to avoid confusion with a new interchange rule,” she said. “Interchange is an enormous issue for credit unions, and an interim or expedited rule could have had catastrophic effects on credit unions’ ability to serve their 96 million members.”
NAFCU is in discussions with other amici on a brief that will be submitted in support of the Fed’s appeal. Merchants will have until Nov. 20 to file their response to the Fed's brief, and the Fed will have until Dec. 4 to respond to that.
In his July 31 ruling, Leon said the Fed’s rule is illegal because the Fed considered prohibited factors in setting a debit interchange fee cap. He also said the Fed’s provisions against network exclusivity were inadequate. He holds that there should be two methods of authentication available for each signature and PIN transaction.
The fee cap, 21 cents per transaction plus 1 cent for anti-fraud costs, applies directly only to debit card issuers that have more than $10 billion in assets, but market forces are expected to bring the fees down for all issuers over time.
Leon's order for stay
Order for expedited briefing
Motion to expedite
More on interchange fees