WASHINGTON – For U.S. banks, the days of playing defense with respect to the billions of dollars they collect when consumers swipe their debit cards may finally be over.

Retailers have had the financial industry standing on its back foot over the last five years – first by persuading Congress to enact a price cap on swipe fees, and later by arguing in court that the Federal Reserve Board's interpretation of the cap, which is named after its sponsor, Illinois Sen. Richard Durbin, was too bank-friendly.

But on Jan. 20 the U.S. Supreme Court ended the merchants' legal case, which gives banks the opportunity finally to seize the initiative. That doesn't mean the Durbin amendment is going to be repealed or even pared back, but it does probably mean that further incursions by the retail industry are unlikely.

"The best way to prevent Durbin from getting worse is to go on the offense and try to repeal it. So I wouldn't be surprised to see the banking industry come out swinging," said Jaret Seiberg, an analyst at Guggenheim Partners.

Yet in Congress, there appears to be little appetite for revisiting a fight that forces lawmakers to choose sides between two large, influential industries — especially after the Supreme Court avoided weighing in.

The high court declined to take up an appeal from retailers seeking to toughen Federal Reserve Board restrictions on debit interchange fees charged by financial institutions.

Its decision not to hear the case effectively ends the legal battle over the Fed's debit price cap, which had banks and credit unions on one side and merchants on the other. Retailers argued that the Fed's ceiling of 24 cents per transaction was too high.

"Reasonable minds have prevailed," Richard Hunt, the president and chief executive of the Consumer Bankers Association, said in a joint press release made by several financial services trade groups. "Government-mandated price controls, known as the Durbin amendment, have yet to work as advertised, and retailers still have not proved savings have been passed on to consumers."

The provision in question, authored by Sen. Richard Durbin, D-Ill., and enacted as part of the Dodd-Frank Act, ordered the Fed to write rules requiring debit interchange fees to be proportional to transaction costs. But the final Fed rule triggered protests from the retail industry, which said the central bank was wrong to stray from its initial proposal to cap fees at 12 cents per transaction. In 2013 a district court judge sided with the merchants, but an appeals court upheld the Fed rule last year.

Mallory Duncan, the general counsel for the National Retail Federation, called the Supreme Court's decision "disappointing" and reiterated concerns that the Fed's rule does not follow the spirit of Dodd-Frank.

The decision "leaves merchants and their customers paying far more than intended by Congress," Duncan said in a press release. "Federal agencies have flexibility in implementing our nation's laws but do not have the discretion to blatantly ignore the wishes of elected officials and the clear language of the statute."

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