The legacy of the Durbin amendment continues: A U.S. District Court has now ruled against the Federal Reserve Bank in a lawsuit brought to the court by merchant groups. The ruling claims that the Fed disregarded the intent of the amendment by inappropriately inflating debit card transaction fees above the average cost of the fees. While there is no doubt that this ruling will be appealed and continue to play out in the courts, the consequences of this decision will be significant. If the ruling stands, the implications for the checking debit card and prepaid debit card markets could devastate the economics of these businesses.
Possible implications include: