![handle is hein.crs/govedml0001 and id is 1 raw text is: S Congressional ______
North Dakota Merchants Sue Fed, Claiming
Debit Card Swipe Fees Exceed Those Allowed
by the Durbin Amendment to the Electronic
Funds Transfer Act
June 2, 2021
On April 30, 2021, two North Dakota retail merchant associations sued the Board of Governors of the
Federal Reserve System (Fed), claiming that the Fed's Regulation II authorizes debit card interchange
(swipe) fees that violate the statutory standard requiring fees that are reasonable and proportional to
bank costs in processing the transactions. In the case, North Dakota Retail Association v. Board of
Governors, the plaintiffs assert that increased debit card use has meant skyrocketing interchange fee
profits for banks and has left merchants no option but to accept debit cards and their high fees, especially
when consumers avoid cash during the pandemic.
Under the Fed's rule, large banks may charge merchants swipe fees up to a cap of 21 cents for each debit
card transaction, plus up to .05 percent of the value of the transaction, and up to one cent for fraud-
prevention adjustments. In their complaint, the plaintiffs allege that the Fed acted arbitrarily and
capriciously by including in the fees costs that the statute does not allow and in setting an illegal one-
size-fits-all fee when the statute requires the case-by-case calculation of fees.
This Legal Sidebar outlines the complaint in the case and its background, including how the Fed has
interpreted the statute and how the courts have dealt with an earlier case. It concludes with some
reflections on possible considerations for Congress.
Background
Prompted by merchant complaints about high debit card fees, Congress in 2010 included the Durbin
Amendment (named after the provision's sponsor, Senator Richard J. Durbin) in the Dodd-Frank Act (P.L.
111-203). The Durbin Amendment amended the Electronic Funds Transfer Act (EFTA) to require the Fed
to set debit card fees for banks with assets of $10 billion or more. The Durbin Amendment requires that
the resulting interchange fees be reasonable and proportional to the cost incurred by the issuer
[cardholder's bank] with respect to the transaction. It delineates the types of costs that the Fed may and
Congressional Research Service
https://crsreports.congress.gov
LSB10604
CRS Legal Sidebar
Prepared for Members and
Committees of Congress](ViewImageLocal?handle=hein.crs/govedml0001&div=1&collection=&method=preview&ext=.png&size=3)
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