More Swipe-Fee Drama: Fed Wants Higher Cap
On Friday, a U.S. appeals court will hear another chapter in the swipe-fee drama that’s seen the Federal Reserve, credit card companies, big banks, and retailers embroiled in a battle over the transaction fees that retailers are charged each time a consumer makes a purchase with a credit or debit card.
The court will hear a request from the Fed to override an earlier court decision that a cap of 21 cents on swipe fees was far too high; the National Retail Federation is asking the court to uphold the ruling.
“Nearly four years after the law was passed, debit swipe fees are still far higher than they should be, and banks are raking in billions of dollars in unearned profits every year as a result,” NRF Senior Vice President and general counsel Mallory Duncan said in a press release. “Instead of doing what Congress ordered, the Fed gave in to pressure from big banks — and retailers and their customers are paying the price. It’s time for the Fed to follow the law instead of catering to the industry it is supposed to regulate.”
The fight between retailers and credit card companies over swipe fees (also known as transaction fees) has been raging since 2005, when Visa (NYSE:V) and MasterCard (NYSE:MA) were accused of fixing the fees, preventing retailers from steering customers toward other forms of payment, and other anticompetitive behavior.