Merchants seeking a court ruling that would cause the Federal Reserve Board to re-establish debit cap fees at a lower rate want more time to consider bringing the case to the Supreme Court.
Merchants have been challenging the Federal Reserve's 24-cent debit fee cap since it took effect October of 2011. The Federal Reserve was required by the Dodd-Frank act to set a new rate, and it considered its cap significantly lower than the 1% to 5% merchants had been paying.
Credit union and bank coalitions, meanwhile, argued that the cap as set is too restrictive. The Credit Union National Association informed its members Jun 2 of the merchant extension request.
The National Association of Convenience Stores and other groups filed an application May 30 with the Supreme Court, asking for 30 more days to decide whether to file a document asking the court to review an earlier decision in the case that went against the merchants, CUNA explains. A petition to seek Supreme Court review is due June 19, but acceptance of a 30-day extension would move that deadline to July 21.
Last month, the National Association of Federal Credit Unions informed its members that the merchants had missed an initial May 5 deadline to request a rehearing of the appeals court decision to uphold the debit interchange rule. By not acting on that deadline, the merchants' only alternative was to seek a Supreme Court review of the case. It also allowed the appeals court ruling to become final on May 12.
If the Supreme Court grants the requested extension, the merchants intend to ask the nation's top court to rehear the entire case, says Douglas Kantor, an attorney representing the NACS in the case.
"We have decided we are going forward and we feel the Supreme Court is the right venue to have the final word on this," Kantor says.
If the merchants file the request for a rehearing by July 21, lawyers for the Federal Reserve and others would have time to express their views on whether it is suitable to rehear the case, Kantor says. "We would then have to time to respond to all of that," he adds.
The merchants would not know until the end of this year or early next year whether the court would take on the case, Kantor says.
In a previous interview, Kantor told American Banker and PaymentsSource that the merchant group has been contemplating its appeal options since March 21, when a three-judge panel in the U.S. Court of Appeals for the District of Columbia Circuit ruled in favor of the banks and credit unions, stating the existing price caps and rules on competition should stay in place.
That court ruling also overturned a decision by U.S. District Court Judge Richard Leon in July of 2013, effectively putting on hold Leon's ruling that the Federal Reserve revisit its process for determining the cap. Leon and merchants stated that the Fed did not properly take into consideration an initial proposal from lawmakers of a 12-cent cap.
The Federal Reserve appealed Judge Leon's ruling in December of 2013, saying it followed a proper system for establishing the cap fee base at 21 cents, with adjustments for up to 24 cents.
Leon's ruling focused on the fee cap amount and the number of networks that merchants should have available for routing transactions, but the Federal Reserve said it followed the spirit of the law in establishing a cap and the mandate for at least two unaffiliated routing options that would eliminate any exclusivity.
The NACS is also involved with a large contingent of retailers in the ongoing antitrust legal battle against Visa and MasterCard over how they establish swipe fees. The case has lasted nine years, with the most recent episodes involving retailer complaints over the details of a $5.7 billion settlement in the case approved in December of 2013.
This story has been updated with comments from Douglas Kantor, who responded to an inquiry after deadline.