Retailers Big Winners in Court’s Swipe Fee Ruling
A federal judge today ruled against a 2011 Federal Reserve rule on fees charged for debit-card transactions. The judge sided with retailers’ arguments that the Fed was too lenient on banks when it capped the fees in October of 2011.
This has been an ongoing battle between banks and retailers over how much banks charge retailers when consumers swipe their debit cards.
U.S. District Judge Richard Leon said the Fed rule “runs completely afoul of the text, design and purpose” of a Dodd-Frank amendment to limit the fees. He delayed immediate enforcement of the ruling and set a court hearing on August 14 to determine what should happen next.
In 2010, the Federal Reserve capped debit swipe fees for non-exempt institutions at roughly 24 cents. The rule went into effect in October 2011. Retailers argued that the Fed rule hasn’t led to fair rates, and banks argued the rule has crimped profits.