No Easy Ending In Sight As Fed Battle Over Debit-Card Transaction Costs Rages On‏

The U.S. Federal Reserve is stuck in fight over debit-card transaction costs between banks and retailers. In a Bloomberg article on Friday, reporter Andrew Zajac wrote that the Federal Reserve is in the U.S. Court of Appeals today defending the decision to cap swipe fees at 21 cents. Zajac noted that this ceiling could cost financial firms $8 billion per year. Banks are arguing that the cap is too low to cover costs and make a profit. Retailers report that they continue to be gouged, with the average swipe fee cut to 44 cents. The National Association of Convenience Stores (NACS) and other merchants envisioned a swipe fee of no more than 12 cents. Bloomberg noted, “The Fed's appeal is the latest step in a more than four-year battle over a $16 billion revenue stream for banks that has pitted retailers of all sizes.” Visa Inc.

and MasterCard Incorporated

own the payment networks and set the fees under the Federal Reserve's cap. Zajac reported on a comment in a filing where Congress gave the fed “broad discretion” to work “as an arbiter in determining reasonable and proportional fees."