Supreme Court Expected to hear Interchange Case while Fed Looks at Possible Rate Rule
Posted by John Trull on October 18, 2023
The Supreme Court is expected to hear a case filed by Corner Post a convenience store located in North Dakota challenging the Federal Reserve’s Regulation on interchange. The Supreme Court is expected to issue a narrow ruling on whether the case can move forward. If the case is allowed to move forward, then the lower courts will be asked to determine whether the interchange fee set by Reg II meets the statutory requirement of being “reasonable and proportional to the cost incurred by the issuer with respect to the transaction.”
While the case moves forward the Fed is re-looking at the interchange fee rules and is expected to issue a notice of proposed rulemaking that would reduce the amount of interchange fees allowed on debit card transactions by regulated entities. By rule debit card transactions on interchange fees are limited to .05% + 21 cents for financial institutions over $10B. The Association is monitoring this and will weigh in on any proposal that would reduce interchange fees.