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WASHINGTON — The Supreme Court has handed a victory to financial institutions in their ongoing fight with retailers over “swipe fees” assessed on debit card and credit card transactions.
The Supreme Court has handed a victory to financial institutions in their ongoing fight with retailers over “swipe fees” assessed on debit card and credit card transactions.
The court last month declined to take up retailers’ challenge to Federal Reserve rules on fees businesses pay to banks each time a customer uses a card to pay for goods or services. The fees represent reimbursement to the financial companies for their costs in executing electronic debit transactions.
But the Fed set the fees too high, according to the National Retail Federation, the Food Marketing Institute and others who challenged the fees. A federal court agreed with the retailers in 2013, saying the Fed "clearly disregarded Congress’s statutory intent by inappropriately inflating all debit card transaction fees by billions of dollars." But that ruling was overturned last March by a federal appeals court that said the Fed acted reasonably in setting the average swipe fee at 21 cents per transaction. In 2010 Congress directed the Fed to bring the fees in line with the true costs of processing transactions. At the time, the average swipe fee was 44 cents. The Fed initially proposed slashing the fee to 12 cents. But after objection from banks, fees were set at 21 cents.
