Vermont Retail Association (VRA) Executive Director Tasha Wallis today hailed a US District Court judge’s July 31 decision overturning a Federal Reserve Board rule that had improperly capped the debit card fees which banks collect from merchants. Under the Fed rule, banks can charge retailers as much as 21 cents a transaction. The court decision could result in debit fees being cut by more than 50 percent, probably reverting to the 7 to 12 cents-per-transaction fee that the Fed had initially proposed.
Judge Richard Leon ruled that, after an extensive lobbying effort by the banking industry, the Federal Reserve improperly set transaction feeSs(also called ‘swipe fees’) caps too high. The judge wrote that the Fed’s rule ‘runs completely afoul of the text, design and purpose’of an amendment authored by Sen. Richard J. Durbin (D-Ill.) to limit fees to the actual cost of processing debit card transactions.
‘This decision is a major victory for retailers and the buying public in Vermont and across the U.S.,’noted Wallis. ‘It will stop the banks’practices that were completely at odds with Senator Durbin’s amendment.’
Marc Sherman, President of VRA’s Board of Trustees and owner of Stowe Mercantile, was also pleased with the ruling. "As a longtime retailer here in Vermont, I agree that the Fed's original standard was a continuation of the burdensome merchant fees for small business. Thankfully, Judge Leon's decision reverses that action and sets the stage for continuing improvement in reigning in debit card processing fees. In the highly competitive retail environment, these fees are passed onto the consumer who enjoys using their debit card so this action also benefits them."