WASHINGTON—The Supreme Court has declined to take up an appeal from retailers seeking to toughen Federal Reserve Board restrictions on debit interchange fees charged by financial institutions.
The high court's decision Tuesday not to hear the case effectively ends the legal battle over the Fed's debit price cap, which had banks and credit unions on one side and merchants on the other. Retailers argued that the Fed's ceiling of 24 cents per transaction was too high.
Credit union trade groups quickly spoke up in favor of the court's decision. For its part, NAFCU said the move helps "maintain stability in the marketplace, which is good for consumers and credit union members," SVP and general counsel Carrie Hunt said in a statement.
"NAFCU remains concerned that the current interchange cap imposes below-cost caps on interchange fees and fails to provide a reasonable return for credit unions," added Hunt. "We will continue to vigorously support a fair interchange fee for credit unions."
CUNA president and CEO Jim Nussle called the court's move "the correct decision for credit unions and consumers," and noted that "The Fed's rules aren't perfect for credit unions—but after years of fighting, we appreciate the ability to move forward."
The traditional banking sector was also in favor of the decision.
"Reasonable minds have prevailed," Richard Hunt, the president and chief executive of the Consumer Bankers Association, said in a joint press release made by several financial services trade groups. "Government-mandated price controls, known as the Durbin amendment, have yet to work as advertised, and retailers still have not proved savings have been passed on to consumers."
The provision in question, authored by Sen. Richard Durbin, D-Ill., and enacted as part of the Dodd-Frank Act, ordered the Fed to write rules requiring debit interchange fees to be proportional to transaction costs. But the final Fed rule triggered protests from the retail industry, which said the central bank was wrong to stray from its initial proposal to cap fees at 12 cents per transaction. In 2013 a district court judge sided with the merchants, but an appeals court upheld the Fed rule last year.
Mallory Duncan, the general counsel for the National Retail Federation, called the Supreme Court's decision "disappointing" and reiterated concerns that the Fed's rule does not follow the spirit of Dodd-Frank.
The decision "leaves merchants and their customers paying far more than intended by Congress," Duncan said in a press release. "Federal agencies have flexibility in implementing our nation's laws but do not have the discretion to blatantly ignore the wishes of elected officials and the clear language of the statute."
--Aaron Passman contributed to this report.