Retailers file lawsuit against OCC, NCUA swipe fee rule

A major legal battle is brewing over how much it costs you to accept credit cards. Retail groups have sued federal regulators (the OCC and NCUA) to defend an Illinois law that would stop banks from charging 'swipe fees' on the tax and tip portions of a transaction. Currently, when a customer pays a $100 bill plus $10 tax, you pay interchange fees on the full $110. Illinois wants to ban fees on that extra $10, but federal agencies say national banks don't have to follow state-level rules. For your business, this lawsuit is a fight for lower overhead. If the retailers win, it sets a massive precedent that could spread nationwide, potentially saving you 2% to 3% on every dollar of sales tax and gratuity you process. The federal regulators argue that having different fee rules in every state creates chaos for the banking system. However, merchants argue that banks are overstepping their bounds by collecting fees on money that actually belongs to the government (taxes) or your employees (tips). While this specific case focuses on Illinois, the outcome will dictate whether other states can pass similar laws to lower your credit card processing costs.

Source: American Banker — Top News

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