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Fed’s Debit Card Swipe Fee Rule Quashed By Appeals Court

A federal appeals court has struck down the 21-cent cap on debit card swipe fees, potentially leading to higher transaction costs for retailers.

A federal appeals court has officially struck down the Federal Reserve’s long-standing 21-cent cap on debit card swipe fees. For retailers, this means the cost of accepting debit payments could soon rise. The court ruled that the Fed did not follow the law correctly when it set the cap back in 2011, siding with banking groups that argued the limit was too low to cover their operational costs. This ruling creates significant uncertainty for your bottom line. Since the Durbin Amendment was passed, merchants have relied on predictable, capped costs for debit transactions. If the Fed is forced to rewrite these rules, banks will likely push for significantly higher interchange fees. Higher fees mean tighter margins for every sale you process. This decision comes at a complicated time, as the Fed was already considering lowering the cap to 14 cents. This court ruling effectively resets the board. Operators should prepare for potential fee increases and watch for new proposals from the Federal Reserve. It also makes alternative payment methods, such as private-label financing or direct bank transfers, more attractive as a way to bypass traditional card networks.

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