Appeals Court Rules in Banks’ Favor on Debit Card Swipe Fees

By SEMA Washington, D.C., Staff

A U.S. appeals court has overturned last July’s district court ruling that the Federal Reserve improperly inflated the fees banks and card companies are allowed to charge retailers when their customers swipe debit cards. The fees are currently set at $0.21 per transaction plus $0.01–$0.03 more to cover fraud prevention and other adjustments. Retailers argued that the fees are too high to compensate the financial institution’s “authorization, clearance or settlement” costs.  

The Dodd-Frank financial reform law provides the Federal Reserve with oversight of fees for processing debit card transactions (“interchange” fees). When the Dodd-Frank legislation was being debated in 2010, SEMA and 54 other trade associations asked Congress to limit the amount card companies could charge merchants when processing payments. Congress addressed swipe fees but not credit card fees. The Federal Reserve had initially recommended a $0.12 transaction cap but then raised the fee to $0.21.   

The lower court ruling had not taken effect pending the appeal. Retailers will now consider asking the appeals court to reconsider its decision or petition for a Supreme Court review. 

For more information, please contact Stuart Gosswein at