Magazine article American Banker

Fed Will Appeal Swipe Fee Ruling

Magazine article American Banker

Fed Will Appeal Swipe Fee Ruling

Article excerpt

Byline: Joe Adler

WASHINGTON -- The Federal Reserve Board will appeal a court ruling that calls for the central bank's debit swipe fee cap to be invalidated, its top lawyer said.

Scott Alvarez, the Fed's general counsel, told Judge Richard Leon that the agency planned to file an appeal as early as Wednesday before it considers redrafting the interchange rule that Leon threw out last month. The Fed also plans to ask Leon for a longer stay of his ruling to allow for the current swipe fee rule to stay in effect until the legal process plays out.

Alvarez said issuing a new interim rule sooner - which Leon supports - could get too far ahead of the appeals process. He suggested that writing a rule satisfying the court would be a lengthy process considering the breadth of Leon's ruling.

"You ruling is very broad in its effect," Alvarez said at the hearing Wednesday.

Leon said even though he was "not inclined" to extend the stay, he would "keep an open mind" since the retailers groups that originally challenged the Fed's interchange rule also support a longer stay. If the stay was lifted, that would mean the Fed's 2011 interchange rule was no longer in effect, removing a cap of roughly 24 cents per transaction. Retailers fear that without any rule in place, payment networks could begin charging much higher fees.

A group of retailers -- the National Retail Federation, the National Association of Convenience Stores and the Food Marketing Institute -- filed their suit against the Fed in November 2011 arguing that the Fed's initial proposal, which would have capped such fees at 12 cents, had complied with the intent of lawmakers. …

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