US Judge Strikes Fed’s Cap on Debit ‘Swipe’ Fees
WASHINGTON (AP) — A federal judge has struck down a rule setting a cap on the fees that banks can charge merchants for handling debit card purchases, saying the Federal Reserve didn’t have the authority to set the limit in 2011.
The ruling by U.S. District Court Judge Richard Leon Wednesday handed a victory to a coalition of retail groups.
They had sued the Fed over its setting the cap at an average of about 24 cents per debit-card transaction. The previously unregulated “swipe” fee averaged 44 cents.
The Fed initially proposed a 12-cent cap, and the retailers had argued that the Fed buckled under pressure from bank lobbyists when it set the cap higher.
The Fed now must craft a new rule. The current one will remain in effect in the meantime.