Sen. Richard Durbin (D-Ill.) has taken the side of retailers in their attempt to force the Federal Reserve to re-consider the regulations it implemented to enforce the Durbin interchange amendment.
The amendment which bears his name capped debit card interchange for debit card issuers of more than $10 billion in assets and its regulations forced all debit card issuers to include at least two unrelated processing networks on their cards.
Retail trade associations have sued the Federal Reserve to try to force the regulator to issue regulations which will cut interchange costs even further.
Durbin agreed with the retailers' arguments in a friend of the court brief he filed Thursday in their case.
“In its efforts to accommodate the banks, the board's Final Rule failed in several respects to follow the law. As the plaintiffs have correctly argued, the board's final rule making exceeded the statutory authority that Congress gave the board,” Durbin argued in the brief.
Trish Wexler, spokesman for the Electronic Payments Coalition, an association of card issues and payment networks that includes credit unions, expressed surprise at Durbin's move.
“It's remarkable that Senator Durbin is pushing for more even after the Fed's report shows retailers getting an $8.4 billion windfall,” Wexler said. “The merchants promised to lower prices if Congress capped interchange fees, but consumers haven't seen any benefit whatsoever. After all this, the only thing that's changed is that retail profits have gotten higher.”
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