Supreme Court Opens the Door for Swipe Fee Revisions

The Supreme Court has ruled that a convenience store has the right to challenge a 2011 Federal Reserve ruling setting a cap on debit card swipe fees. Corner Post, a truck stop based in North Dakota, argued that the Fed’s swipe fee cap was higher than the “reasonable” limit established by the 2010 Dodd-Frank Act. The decision reversed a lower court’s dismissal of the 2021 lawsuit by Corner Post, based on the store missing a six-year statute of limitations that generally applies to such litigation. The Supreme Court stated that this period under the Administrative Procedures Act does not start ticking “until the plaintiff is injured by final agency action.” The North Dakota Retailers Association and the North Dakota Petroleum Marketers Association had initially filed the suit, which was dismissed for being outside the limitation period. The groups then added Corner Post as a party to the suit, with the idea being that it hadn’t been harmed by the regulations until the store’s debut in 2018. The ruling opens the door for future challenges to even longstanding federal regulations, simply by recruiting newly incorporated plaintiffs.

The Falling Cap

Before the Dodd-Frank Act directed the Fed to cap swipe fees, retailers paid as much as 44 cents per transaction, making it difficult for small businesses to accept debit cards. The Fed then set the limit at 21 cents per transaction, although retailers had expected—and hoped for—a much lower cap. In 2015, the Supreme Court upheld a lower court’s ruling backing the regulation. Last year, the Fed proposed reducing the current cap to 14.4 cents per transaction. However, the National Retail Federation (NRF) suggested that the limit should be closer to 10.5 cents per transaction. The fees are determined by Visa, Mastercard, and other card processing networks. The decision highlights that the swipe fee battles are far from over. “Interchange fees remain a contentious issue for businesses, issuers, and regulators,” said Elisa Tavilla, Director of Debit Payments at Javelin Strategy & Research. “The Federal Reserve is currently reviewing the over 2,500 comments it received in response to its proposal to lower the cap to 14.4 cents. No matter the outcome, debates around swipe fees won’t be settled anytime soon. It’s possible that more cases like Corner Post’s could follow suit.”