The U.S. Supreme Court on Tuesday denied a petition by the Food Marketing Institute, National Association of Convenience Stores, National Retail Federation and other groups, which challenged the Federal Reserve’s rule on debit card swipe fees.
“We are disheartened that the Court rejected our case, reflecting utter failure to recognize the significance the ‘swipe fee’ issue holds for consumers and American businesses,” said FMI president and CEO Leslie Sarasin, in a statement. “The food retail industry, on average, operates at a 1-to-2 percent profit margin, so every penny matters.”
In 2013, nearly 70% of transactions were made with a credit or debit card, with the interchange fee often exceeding the profit margin on the item purchased, according to FMI’s U.S. Food Retailing Industry Speaks 2014 report.
“When transaction fees are arbitrarily set by the big banks and the card companies they service, this becomes a matter of justice that threatens the economic survival of community grocery stores, businesses, charities, schools and every institution utilizing a debit and credit cards payment system,” Sarasin said. “We now look to the Fed to improve this rule and carry out both the clear language of the statute and the intent of Congress.”
FMI lobbied for the passage of the Durbin amendment to cap debit card swipe fees, but contends the Federal Reserve’s final ruling in 2011 to implement the law failed to reflect the intent of Congress, which set off a legal battle. The Federal Reserve's final rule allows banks to collect 21 cents plus a fraud adjustment per transactions vs. the original Federal Reserve proposal of 7 to 12 cents, according to FMI.
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