Merchants ready Supreme Court 'swipe fee' challenge

Retailers are getting ready to take the fight over debit card fees all the way to the Supreme Court.

Mallory Duncan, senior vice president and general counsel for the National Retail Federation (NRF), told The Hill on Monday that his group and other merchants were preparing to petition the high court on the hotly contested limits on how much banks can charge retailers for using debit cards.

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“We’ve decided the issues are sufficiently important that we ought to present them to the Supreme Court,” he said. “We feel very strongly about this.”

The petition, which will be due by July 21 and will likely include other merchant associations, means the long-running fight that has pitted two huge business sectors against each other over billions of dollars in revenue is headed to the highest court in the land.

Reuters first reported that retailers were prepared to take the case to the Supreme Court.

Banks and retailers have been feuding over “swipe fees” in Congress and the courts ever since it was included in the Dodd-Frank financial reform law. Banks pushed extremely hard to delay the so-called “Durbin Amendment,” named after its primary backer, Sen. Dick Durbin (D-Ill.), but came up short in one of the fiercest lobbying battles of 2011.

But it was retailers that cried foul when the Federal Reserve rolled out the new fee limits, as the 21-cent cap was much higher than what had been originally proposed by the regulator, which once stood at 7-to-12 cents per transactions.

A group of retailers, including the NRF, sued the Fed over the limits, and banks weighed in supporting the higher caps. The limits were originally thrown out by a U.S. District Court Judge, but a U.S. Appeals Court reinstated them in March after the Fed challenged that ruling.

That leaves retailers to make their case to the Supreme Court, and the NRF is likely to be joined by the other original plaintiffs: the National Association of Convenience Stores, the Food Marketing Institute, the National Restaurant Association, Miller Oil Co. and Boscov’s department store.

Duncan said retailers are eager to make their case before the justices.

“This is a huge grab by the banks through the Fed in direct contravention of the language that congress passed,” he said.

The Dodd-Frank provision on swipe fees required the Fed to set a cap that is “reasonable and proportional” to the actual costs of processing a debit card transaction. But retailers and banks have long fought over whether costs tied to the business of offering debit cards, like fraud prevention and transaction monitoring, should be considered part of those costs.