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National Restaurant Association - Supreme Court won’t hear case on inflated swipe fees

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Supreme Court won’t hear case on inflated swipe fees

The U.S. Supreme Court will not hear the appeal the National Restaurant Association and other merchant groups and businesses filed last year concerning the Federal Reserve’s rule allowing inflated debit swipe fees to be charged to restaurants and other retailers.

The Supreme Court’s decision not to hear the case effectively ends the legal effort against the Federal Reserve over inflated debit swipe fees, which the NRA maintains violate the 2010 Durbin Amendment calling for fees “reasonable and proportional” to the cost of the transaction. The Fed had initially proposed a 12-cent cap on fees, but later raised the cap to 21 cents per transaction in their final rule on debit swipe fees.

“We are disappointed in the Supreme Court’s decision not to hear our appeal,” said Scott DeFife, senior vice president of policy and government affairs for the National Restaurant Association. “Inflated swipe fees are gouging restaurant operators and the business community at large. We will continue to fight for a solution and hope the Federal Reserve will exercise its existing authority to reconcile this and ensure the major card brands cannot continue to levy exorbitant debit card fees on restaurateurs nationwide.”

The swipe fee is paid by merchants who accept debit cards and is a significant cost for restaurants and retailers, particularly on small-ticket items. It also well exceeds the actual cost of processing the transaction. Research conducted by the Federal Reserve has shown that 90 percent of debit-card transactions cost less than two cents to process.

NRA fought back against the inflated swipe fees and won the first round of the court battle when U.S. District Court Judge Richard Leon ruled that the Federal Reserve’s swipe-fee regulations violated congressional intent by allowing inflated transaction fees, especially for merchants with lower-dollar transactions. But in January of last year, a three-judge panel in the U.S. Court of Appeals overturned Leon’s ruling and upheld the Fed’s final rule that allowed for a 21-cent swipe fee per transaction.

Joining the National Restaurant Association in the appeal against the Federal Reserve were the Food Marketing Institute, National Association of Convenience Stores, the National Retail Federation, Boscov’s Department Store and Miller Oil Company.

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