Appeals Court Upholds 21-Cent Swipe Fee Cap

WASHINGTON, D.C. -- A federal appeals court ruled today that the 21-cent cap on debit card swipe fees will stay.

The ruling issued by the U.S. Appeals Court for the District of Columbia overturned a lower court's decision in July that favored the merchants and was a setback for banks, according to The Associated Press.

In mid-January the three-judge panel began to hear arguments in the Federal Reserve's legal challenge of Judge Richard Leon's July 31 decision to strike down the debit card swipe fee rules that have been in place since October 2011.

In his ruling, Leon said the Fed disregarded Congress' intent when it decided how much banks can charge retailers to process debit card transactions. As part of the decision, the Fed was instructed to rewrite the rules governing swipe fees. The current rules, in part, include a 21-cent cap, as CSNews Online previously reported.

Shortly after the swipe fee rules were implemented, a group of retail associations including NACS, the Association for Convenience & Fuel Retailing; the Food Marketing Institute; the National Restaurant Association; and the National Retail Federation (NRF) filed suit claiming they would be "substantially harmed" by the fees set by the Fed.

Following today's ruling NRF said it was reviewing the decision and will determine whether to appeal.

"NRF is disappointed and remains confident that the Federal Reserve erred when it set the swipe fee cap far higher than intended by Congress," NRF Senior Vice President and General Counsel Mallory Duncan said. "The Fed ignored congressional intent and worked to shield debit card companies and big banks. A self-described victory for the banks usually results in higher costs for consumers."