D.C. District Court Overturns Durbin Amendment Rule’s Debit Interchange Fee Limit

By Styskal, Wiese & Melchione

In an August 8, 2013 E-Bulletin, the Business Law Section of the California Bar and SW&M Partner Raza Ali notified California attorneys of an important ruling regarding interchange fees by the Federal District Court for the District of Columbia:

“In a victory for retailers seeking to invalidate debit card interchange fee and transaction routing limits set by the Federal Reserve Board (FRB), the U.S. District Court for the District of Columbia concluded that the FRB’s Final Rule was clearly contrary to Congress’ intent. The Durbin Amendment required the FRB to limit per transaction interchange fees that large debit card issuers receive from merchants to ensure that the fee is “reasonable and proportional” to the issuer’s costs incurred in relation to a transaction. The Court found that the FRB’s Final Rule impermissibly expanded the allowable costs it considered in setting the maximum limit on debit card interchange fees, in a manner “contrary to the expressed will of Congress.” As a result, the Court vacated the FRB’s interchange fee regulations, although it stayed the vacatur in an effort to reduce disruption while the FRB develops new rules to replace the invalid portions of its Final Rule.”

For a copy of the ruling, Mr. Ali can be reached by e-mail and LinkedIn.