Appeals court upholds swipe fee decision, Fed must rewrite rule

A federal appeals court has ordered the Federal Reserve to recalculate the cap on debit card 'swipe' fees. This decision follows a legal challenge arguing that the current 21-cent limit is too high because it allows banks to recover costs that aren't directly tied to processing individual transactions. For your business, this likely means a future reduction in the fees you pay every time a customer swipes a debit card at your register or online checkout. The court specifically took issue with how the Fed factored in 'fixed' costs—like equipment and software—which are not supposed to be included under the Durbin Amendment. By stripping these costs out, the new rule will almost certainly lower the maximum interchange fee banks can charge. While the banking industry warns this could lead to higher consumer account fees, the immediate impact for retailers is a lower cost of doing business. This ruling adds to the current downward pressure on transaction costs, following the Fed's separate proposal last year to drop the cap even further. You should keep a close eye on your merchant processing statements over the next 12 to 18 months, as these regulatory shifts will eventually translate into lower processing overhead for your store.

Source: American Banker — Top News

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