Legal Battles over Swipe Fee Continues a Year after Durbin Amendment

by San Antonio Attorney

At first glance, the Durbin Amendment would appear to be a definite win for retailers. The Federal Reserve placed a limit to the average fee at 21¢ for every swipe, which is less than 50% of the bank charge. While merchants are pleased with the triumph, they are claiming they still deserve more.

In 2011, National Retail Federation and other retailers filed a lawsuit against the Federal Reserve, saying that the Fed itself had discovered that banks pay only 4¢ to process every transaction and originally wanted a 12¢ limit. The case is still open and ongoing.

According to the Electronic Payments Coalition, which consists of community banks, credit unions, and payment card networks, the Durbin limits are very low and need not go lower. The group believes that the merchants won this legislation by guaranteeing that consumers are going to save all this cash. But so far, they have not passed along any savings. The notion that merchants are making use of the savings to balance out possible price hikes, as suggested by Moody’s, seems like a convenient alibi, the EPC said.

This legal battle is only about processing transactions of debit-card. Another legal battle covering all transactions, which includes credit cards, is also heating up. Several large banks agreed to pay $6 billion in July to settle claims over price-fixing filed by retailers in a lawsuit that began in 2005.

A number of major merchant groups have been against the settlement offer, one after the other. First owners of convenience store, then big retailers, and lastly, the National Restaurant Association vowed to oppose the proposed settlement in court. According to the retailers, the settlement is not going to alter the market structure and will continue to give card networks the ability to fix prices. In addition, they are opposed to parts of the settlement that restrict possible legal challenges against the card networks, including merchants who are not yet around today.

A court ruling in January is expected to decide whether the settlement offer will receive preliminary approval.

– If you have been a victim of any unfair practices by your credit card company, such as high rate increases, unfair charges or broken promises, and want to take action against them, you should ask a San Antonio Lawyer to review your claim.

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