On January 9, several banking trade associations filed an amicus brief in the U.S. Court of Appeals for the 8th Circuit addressing an appeal concerning Regulation II (pronounced “eye-eye”), which the Fed promulgated in 2011 under the Durbin Amendment of the Dodd-Frank Act. Regulation II regulates the interchange fees that debit card issuers may receive for processing transactions. The appeal challenged the district court’s decision, which would require the Fed to promulgate new rules capping the interchange fees below most issuers’ transaction costs, something the amici argued would put their members at “significant risk.”

The brief asserted that slashing the interchange fee cap would not benefit consumers and would instead harm the debit card market. The amicus brief also argued that the only beneficiaries of Regulation II have been merchants as they have been unwilling to pass the savings from the reduced interchange fee cap to consumers. As previously covered by InfoBytes, the Fed appealed after a district court struck down Regulation II’s standard for setting interchange fees.