National Association of Convenience Stores v. Board of Governors of the Federal Reserve System

Under the Durbin Amendment, the Federal Reserve Board (board) (defendant) was permitted to increase allowable interchange fees to reflect debit-card issuers’ incremental authorization, clearance, and settlement (ACS) costs. However, the Durbin Amendment forbade the board from considering nontransaction-specific issuer costs in determining allowable interchange fees. The Durbin Amendment did not expressly address whether the board could consider issuers’ transaction-specific costs that did not qualify as ACS costs. The board issued a rule increasing the allowable interchange fees. In doing so, the board considered transaction-specific, non-ACS costs. In addition, the board adopted a rule requiring that all debit cards be interoperable with at least two unaffiliated payment networks (nonexclusivity rule). A group of individual retailers that accepted debit cards for payment and merchant trade associations, including the National Association of Convenience Stores (collectively, merchants) (plaintiffs), sued the board, seeking vacatur of the two rules. The merchants asserted that (1) the board exceeded its authority under the Durbin Amendment by considering issuers’ transaction-specific, non-ACS costs and (2) the nonexclusivity rule contravened the Durbin Amendment because the statute required the board to mandate that all debit transactions, rather than just all debit cards, be capable of running over at least two unaffiliated networks.