ACU, DCUC Join Amicus Brief Defending Current Interchange System
By CU Today Staff —
WASHINGTON—Working to protect the current interchange system, America’s Credit Unions, the Defense Credit Union Council and several other financial services organizations filed an amicus brief Monday in Linney’s Pizza v. Federal Reserve in the U.S. Court of Appeals for the Sixth Circuit.
The case involves a small business that sued the Federal Reserve over its debit interchange cap rule, claiming it improperly includes certain costs in the fee cap calculation.
The district court ruled against the business in 2025, and Monday’s brief encourages the appeals court to affirm its dismissal as it correctly decided that the Fed’s debit interchange rule complies with statute, ACU said.
The brief notes that the Linney’s Pizza interpretation of the Durbin Amendment would give merchants a financial windfall while harming card issuers and consumers, and the argument runs contrary to statutory text, structure, and purpose along with well-established constitutional and statutory interpretation principles.
The coalition argued that the Federal Reserve's rule appropriately reflects congressional intent by ensuring interchange fees remain "reasonable and proportional" to the costs financial institutions incur in authorizing, clearing, settling, securing, and maintaining debit card transactions:
“Congress thus directed the Board to issue regulations ensuring that interchange fees for debit card transactions would be 'reasonable and proportional' to issuers’ costs. Following that directive, and after an extensive rulemaking process, the Board issued Regulation II in 2011. The rule was promptly challenged by a merchant trade association making many of the same statutory interpretation arguments raised here, but the D.C. Circuit upheld the regulation and the Board’s statutory interpretation on which it is based. NACS v. Bd. of Governors of Fed. Rsrv. Sys., 746 F.3d 474 (D.C. Cir. 2014). In the decade-plus since, issuers have relied on Regulation II and the understanding it reflects that the interchange fee cap should be “reasonable and proportional” to their costs, subject to one express textual exception but no extra-textual ones. They have thus continued to invest heavily in maintaining and improving the debit card payments system for consumers and merchants alike.”
Also joining the brief were the American Bankers Association, Association of Military Banks of America, Consumer Bankers Association, Independent Community Bankers of America and Mid-Size Bank Coalition.
The case is closely related to Corner Post v. Federal Reserve, another challenge to interchange fee caps. America’s Credit Unions filed a brief in Corner Post in January, that a district court’s decision would force the Federal Reserve to impose interchange fee caps far below the actual costs incurred by debit card issuers.
Originally reported by CU Today.