[12] The rule that the Federal Reserve issued went into effect on October 1, 2011 and capped the interchange rate paid to non-exempt card issuers at 0.05 percent plus twenty-one cents.
The MPC pointed out that the common practice of having customers merely signing for debit card purchases processed through the Visa and MasterCard payment networks instead of requiring a PIN greatly increases fraud.
Judge Leon ordered the Federal Reserve to re-write its rule governing the cap on debit card swipe fees and implement a temporary regulation as well.
[18] Judge Leon held the Federal Reserve Board "clearly disregarded Congress' statutory intent by inappropriately inflating all debit-card transaction fees by billions of dollars."
The judge also ruled that the Federal Reserve failed to ensure that merchants enjoy access to "multiple unaffiliated networks" to process each debit-card transaction, as also required by the Durbin amendment.
Circuit Court of Appeals reversed and held the Federal Reserve reasonably interpreted Congress' intent of the Durbin amendment through its 2011 rule limiting swipe fees.
"[20] The three judge panel noted that "Congress put the Board, the district court and us in a real bind...given that the Durbin amendment was crafted in conference committee at the eleventh hour, its language is confusing and its structure convoluted.
The decision upholds the Federal Reserve rule on the interchange rate paid to non-exempt card issuers at 0.05 percent plus twenty-one cents.