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US: Fed, NRF again face-off over interchange

 |  January 19, 2014

The Federal Reserve is continuing its legal battle involving major US retailers and top credit card companies over interchange fees as the Fed requested an appeals court to overrule an earlier ruling regarding swipe-fee caps, say reports.

The Fed has reportedly filed its expected appeal of Judge Richard Leon’s earlier decision, asking the court to uphold a previous ruling that set swipe-fee caps at 21 cents; that cap was later overturned by Judge Leon, arguing that it was much higher than Congress had intended.

Now, say reports, the Fed is looking to maintain that 21-cent swipe-fee – but not without backlash from major US merchants.

The National Retail Federation, which represents some of the largest merchants, claims that the Federal Reserve originally intended to set interchange caps at 12 cents, but nearly doubled the limit following pressure from major banks and credit card companies, which benefit from interchange fees every time a card is swiped at the register.

”Instead of doing what Congress ordered, the Fed game in to pressure from big banks,” NRD Senior Vice President Mallory Duncan said in a press release issued last Friday, following the Fed’s court request, in efforts to have the court uphold the ruling that the 21-cent cap was too high.

The Fed’s request follows another judge’s approval last month of a $5.7 billion antitrust settlement offered by Visa and MasterCard to major US retailers, which sued the credit card companies and various banks over the interchange fees. The retailers have vowed to appeal the settlement, arguing it is insufficient.

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