NEW YORK (AP) — Two trade groups representing businesses in North Dakota filed a lawsuit Thursday against the Federal Reserve, asking the agency to lower its 10-year-old cap on “swipe” fee banks charge to process debit card transactions.
The lawsuit, filed by the North Dakota Retail Association and the North Dakota Petroleum Marketers Association in U.S. District Court in Bismarck, North Dakota, argues that the agency failed to follow instructions outlined by federal law and said it should abandon the rule that caps those fees at 21 cents for cards from the largest U.S. banks. The suit comes as the popularity of debit cards has surged, and retailers have paid billions of dollars more than Congress intended while banks’ costs have dropped.
The lawsuit argues the cap is higher than allowed under the Durbin Amendment, a law passed by Congress in 2010 to address soaring swipe fees set by Visa and Mastercard and lack of competition among the card-issuing banks that receive the fees. The amendment set a standard for interchange fees that was supposed to be reasonable and proportional to the cost incurred by the issuer regarding the transaction, the lawsuit said.
“Those fees have become a lush profit center for issuers— contrary to Congress’s express instructions in 2010,” the lawsuit contends.