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WASHINGTON, D.C. -- June 29 may very well be the most watched meeting the Federal Reserve holds this year. On that day, the board is slated to take up swipe fee reform.
According to a meeting notice on the Fed's website, the matters to be considered only lists one: “proposal governing debit card interchange fees, the fraud prevention adjustment, routing and exclusivity restrictions and related matters.” The meeting will be available for viewing via webcast through the Fed board's site.
With the July 21 implementation date less than a month away, it is highly expected that the Federal Reserve members will cast a final vote on proposed caps to swipe fees. The proposed cap still stands at 12 cents per transaction, a figure the board revealed in December.
No doubt both the retail and banking industry will be paying close attention to the meeting. Even though the swipe fee reform issue has been a sticking point for both industries for several years, the battle heated up this spring as the clocked ticked down to the final vote date (originally set for April 21) and the implementation date. The retail industry notched a win in the lobbying war earlier this month when the Tester-Corker Amendment failed to receive the 60 votes needed for adoption. That measure, which was viewed as some in the retail community as pro-bank, would have delayed any swipe fee reform for at least six months as the issue underwent further review.
But the banking industry is not giving up just yet. The American Bankers Association sent a letter to the Federal Reserve Board and Chairman Ben Bernanke asking for, among other things, a three-month delay in implementation. ABA President and CEO Frank Keating said the delay would give banks and payment networks "a reasonable chance to meet their obligations under the law. That period should be no less than the three-month window envisioned by the statute as enacted," as CSNews Online reported.
There are also rumblings that the reform fight could move to the legal arena. In October TCF Financial Corp., a Minnesota bank and one of the largest debit-card issuers, took to the courts to contest the constitutionality of the rules because they only apply to financial institutions with more than $10 billion in assets. Last week the bank's lawyers went before the U.S. Court of Appeals in hopes of delaying any movement on proposed swipe fee caps until a challenge to the law is decided. At this time no other banks have joined with TCF in its case or files suits of their own; however, the possibility still remains.