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Banks Score Come From Behind Victory on Interchange Fees

March 24, 2014

Authors

Dan Wheeler

Banks Score Come From Behind Victory on Interchange Fees

March 24, 2014

by: Dan Wheeler

In the bankers’ version of March Madness drama, on March 21, 2011, a three judge panel of the U.S. Court of Appeals for the D.C. Circuit handed down a decision that is broadly perceived as a significant victory for banks at the expense of merchants.  (The decision is captioned NACS f/k/a National Association of Convenience Stores, et al. v. Board of Governors of the Federal Reserve System.)

The issue was the legality of the Federal Reserve’s rules implementing the “Durbin Amendment” portion of Dodd-Frank.  That portion of the legislation is generally viewed as having required regulatory caps on the interchange fees that can be charged to merchants.  Merchants criticized the Federal Reserve’s rules for allowing interchange fees at a level much higher than allowed by Dodd-Frank and for allowing interchange competition rules less strict (and thus more favorable to banks) than permitted under Dodd-Frank.  The merchants essentially won this argument

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District Court Judge Strikes Down Federal Reserve Board’s Interchange Rule

August 5, 2013

Authors

Bryan Cave

District Court Judge Strikes Down Federal Reserve Board’s Interchange Rule

August 5, 2013

by: Bryan Cave

Decision Favoring Merchants Could Potentially Cost Banks Billions

A U.S. District Court judge recently granted summary judgment against the Board of Governors of the Federal Reserve System (the “Federal Reserve” or “Board”), ruling that the Federal Reserve disregarded Congress’s statutory intent by “inappropriately inflating all debit card transaction fees” and considering data it was not permitted to use in setting a 21-cent cap on debit-card transaction fees under the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”). In NACS v. Board of Governors of the Federal Reserve System, 11-cv-02075, U.S. District Court, District of Columbia (Washington), Judge Richard J. Leon also ruled in favor of the retailers’ challenge to the network non-exclusivity and routing provisions, stating that the Board’s rule is inconsistent with the “clear, defined language in the network non-exclusivity and routing provisions” and does not support competition or choice in the marketplace.

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The Durbin Amendment: What Does the Final Ruling Mean for Prepaid?

August 4, 2011

Authors

Bryan Cave

The Durbin Amendment: What Does the Final Ruling Mean for Prepaid?

August 4, 2011

by: Bryan Cave

Final interchange regulations under the Durbin Amendment of the Dodd-Frank Act will go into effect October 1, changing the rules for interchange transaction fees.  Judith Rinearson, Linda Odom and Courtney Stolz of the Bryan Cave Payments team presented a webinar on August 2, 2011 explaining what the new interchange and routing rules mean for the prepaid industry and how to comply.   A copy of the slides is available online.

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Durbin Amendment Webinar

July 25, 2011

Authors

Bryan Cave

Durbin Amendment Webinar

July 25, 2011

by: Bryan Cave

Final interchange regulations under the Durbin Amendment of the Dodd Frank Act will go into effect October 1, changing the rules for interchange transaction fees.  The Bryan Cave Payments team will present a live webinar and Q&A session on Tuesday, August 2, 2011 from 2:00 to 3:00 pm EDT explaining what the new interchange and routing rules mean for the prepaid industry and how to comply.

The Durbin Amendment: What Does the Final Ruling Mean for Prepaid?

You can register for free online. Attendees are encouraged to submit in advance and without attribution, any questions they would like addressed during the webinar.  Please enter your questions when you register.

The Webinar will be presented by Judie Rinearson (Bryan Cave – New York), Linda Odom (Bryan Cave – Washington, D.C.) and Courtney Stolz (Bryan Cave – Washington, D.C.).

CLE credit for this webinar will

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New "Durbin" Interchange and Routing Final Regulations Issued

July 1, 2011

Authors

Bryan Cave

New "Durbin" Interchange and Routing Final Regulations Issued

July 1, 2011

by: Bryan Cave

On June 29, 2011, the Federal Reserve Board approved its final interchange rules, entitled Regulation II, “Debit Card Interchange Fees and Routing,” setting the maximum permissible interchange fee that an issuer may receive for an electronic debit transactions made with debit cards and general use prepaid cards, codes, and other account access devices.

Under the final rules, issuers are permitted to charge a base fee of 21 cents plus 5 basis points (.05%) multiplied by the full value of the transaction, to cover fraud losses.  In addition, a 1 cent per transaction fraud prevention adjustment was also proposed, for those issuers who meet eligibility requirements (such as having fraud prevention and data security policies and procedures in place, which must be updated and certified on an annual basis.)  The fraud prevention adjustment rules are new, and are open for comment through September 30, 2011.

Under the new rules, a covered

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Final Interchange Rules Approved

June 30, 2011

Authors

Bryan Cave

Final Interchange Rules Approved

June 30, 2011

by: Bryan Cave

Prepaid Industry Gets Some Relief but General Purpose Reloadable Cards Face Unanticipated Restrictions

At a publicly held board meeting on June 29, 2011, the Federal Reserve Board approved its final interchange rule, entitled Regulation II, “Debit Card Interchange Fees and Routing,” setting the maximum permissible swipe fee an issuer may receive for an electronic debit transactions, adopting routing requirements and applying unanticipated new restrictions to General Purpose Reloadable (GPR) cards to take advantage of the interchange cap exemption. In addition—to the relief of the banking industry—the Fed announced that the rules on pricing requirements will go into effect on Oct. 1, 2011, as opposed to July 21 as dictated by the Durbin Amendment.

Under the final rule, issuers are permitted to charge a base fee of 21 cents (representing 80 percent of an issuer’s average transaction cost), plus five basis points on the full value of the

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Financial Services Update – June 10, 2011

June 12, 2011

Authors

Bryan Cave

Financial Services Update – June 10, 2011

June 12, 2011

by: Bryan Cave

Goldman Settles Massachusetts Trading Investigation

On Thursday, the Massachusetts Securities Division announced that Goldman Sachs agreed to a consent order to pay $10 million and to ban so-called “trading huddles.”  The Massachusetts Securities Division had been investigating Goldman for the past two years to determine whether the trading ideas that analysts had shared with traders during these huddles “favored the interests of certain priority clients.”  Goldman settled the matter without admitting or denying the state regulator’s allegations and agreed to disclose to future research clients that they would not all be treated equally.  In its consent order, the Massachusetts regulator said it found no instances of fraud.

Senate Defeats Bill to Delay Interchange Fee Caps

On Wednesday, after a long and divisive lobbying fight, retailers defeated the banking industry in the Senate on a vote to delay new caps on debit-card swipe fees.  The legislation was offered by Sens.

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Senate Defeats Bill to Delay Interchange Fee Caps

June 8, 2011

Authors

Bryan Cave

Senate Defeats Bill to Delay Interchange Fee Caps

June 8, 2011

by: Bryan Cave

After a long and divisive lobbying fight, retailers defeated the banking industry Wednesday as the Senate narrowly defeated legislation to delay new caps on debit-card swipe fees.

The legislation was offered by Sens. Jon Tester (D-Mont.) and Bob Corker (R-Tenn.) and failed on a 54-45 vote, falling just six votes shy of the 60 needed for passage and clearing the way for a provision in last year’s Dodd-Frank Wall Street reform law to take effect July 21.

The provision, often referred to as the “Durbin Interchange Amendment” required the Federal Reserve to establish fair and reasonable interchange fees for many debt and prepaid card transactions.  Last Fall, the Federal Reserve proposed new rules which (among other things) would limit to 12 cents per transaction the fee that large banks (with more than $10 billion in assets) can charge merchants every time a consumer uses a debit card or a prepaid

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Financial Services Update – April 1, 2011

April 6, 2011

Authors

Bryan Cave

Financial Services Update – April 1, 2011

April 6, 2011

by: Bryan Cave

Government Shutdown Looms

With the current temporary funding resolution set to expire April 8, House and Senate Appropriations committees worked toward crafting a six-month compromise bill, setting annual spending at $1.055 trillion, $28 billion more than the House-passed level but still a $33 billion cut from the original spending measure. However, House Republicans remain splintered over whether a shutdown would be good politically, or whether they should compromise with Democrats in order to move on to larger future battles such as next year’s budget and the debt ceiling increase. Meanwhile, Democrats also remain divided over whether to allow a shutdown to happen or acquiesce to Republican cuts. Whether a compromise can be reached to avoid a shutdown will be known next week.

Unemployment Rate Drops to 8.8%

On Friday, the Department of Labor announced that the unemployment rate dipped to 8.8% in March from 8.9% in February. Nonfarm payrolls gained 216,000,

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Financial Services Update – March 18, 2011

March 18, 2011

Authors

Matt Jessee

Financial Services Update – March 18, 2011

March 18, 2011

by: Matt Jessee

G7 Rescues the Yen

On Friday, the central banks of the United States, the United Kingdom, Canada, and the European Central Bank joined with Japan to intervene and strengthen the Yen in foreign exchange markets. The Yen’s unexpected surge on Wednesday was driven by speculation that Japanese firms would repatriate some of their huge foreign assets to help meet insurance claims and pay for reconstruction.

Temporary Government Funding Bill Passed and Signed into Law

The House and Senate passed, and President Obama signed into law, a stopgap spending measure to keep the government operating through April 8. The 87-13 Senate vote averts any threat of a shutdown Friday and delivers another $6 billion in cuts to current fiscal year spending. The temporary funding bill is the sixth such continuing resolution, or CR, for the 2011 fiscal year which began October 1. To an unprecedented degree, the entire government, including war

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