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Fed Has 60 Days to Set Interchange Monitoring Costs
Tuesday, June 9, 2015 6:35 AM

The U.S. District Court for the District of Columbia Monday said it will issue an order providing the Federal Reserve Board 60 days to resolve the final issue remaining from merchants’ lawsuit challenging its debit card interchange transaction fees regulation: how it treats transactions-monitoring costs.

The hearing was another phase in the National Association of Convenience Stores (NACS) et al v. Board of Governors of the Federal Reserve lawsuit.

At the hearing, which representatives of CUNA attended, the Fed said it would need at least 60 days to resolve the issue of how its Regulation II treats transactions monitoring and whether those costs should be recovered through the base interchange fee or as part of the fraud-prevention adjustment.

Although NACS said at the hearing that 30 days should be enough time for the Fed to act, U.S. District Court Judge Richard Leon indicated he would issue an order providing the Fed with 60 days. The Fed’s counsel said the issue will not require notice or comment. Instead, the Fed likely will amend its current Regulation II to provide transparency in its approach to the issue.

In the lawsuit, the merchants challenged the Fed’s regulation allowing a maximum debit card interchange fee, the fee paid to card-issuing financial institutions when their cardholders make a debit card transaction. The Fed had set a cap, as required by the Dodd-Frank Act, and in 2011, it set the cap at 21 cents per transaction for issuers having more than $10 billion in assets (News Now June 8).