Following two deadline extensions, the merchants in the interchange fee dispute finally appealed their lawsuit against the Fed to the U.S. Supreme Court. This was a widely expected development in NACS v. Board of Governors of the Federal Reserve System, since the National Retail Federation previously announced their plans to appeal the case.
This past March, the Court of Appeals decision sided with the Fed and overturned a July 2013 district court decision that ruled in favor of merchants by determining that the Fed’s interchange rate cap of 21 cents was too high. In its ruling, the Court of Appeals stated that the Dodd-Frank Act was a “confusing” and structurally “convoluted” law, but the Fed’s rule “generally rests on a reasonable interpretation of the statute.” As a result, the Court of Appeals ruling validates the Regulation II implementation of the Durbin Amendment, upholding the Fed’s use of fixed costs, network processing fees and fraud loss costs in the interchange fee cap calculation.
It is difficult to predict whether the Supreme Court will decide to hear the case. If not, the Court of Appeals decision will be enforced and the case will be remanded to the trial court to determine the lone remaining issue in the case, namely the cost of transaction monitoring of the fee cap.
More information may be found here.