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The Wall Street Journal reports that a US District Court Judge "threatened to further crimp a once-lucrative profit center for banks and credit-card companies, saying they may need to reimburse retailers potentially billions of dollars in debit-card transaction fees he previously ruled were set too high."

Judge Richard Leon ruled earlier this month that the Federal Reserve exceeded its authority when it set a 24 cent-per-transaction cap on debit card usage, Including the improper use of data that made the cap too high. The Fed had capped fees at 21 cents per transaction, much higher than the initial 12 cent cap it proposed, though half the average of 44 cents per transaction that traditionally has been charged.

But the judge said that the Fed ruling was completely at odds with "the text, design and purpose" of the Dodd-Frank financial reform legislation. Now, in addition to saying that the fed must lower the rate cap immediately, Judge Leon is suggesting that banks may have to rebate too-high fees - to the tune of millions of dollars - that already have been charged.

It is unknown whether the Fed will appeal the ruling, though the financial services industry is expected to do so.
KC's View:
It would be great if the banks/card companies were forced to cut a big check to retailers for overcharged swipe fees. Poetic justice.

But here's what I think retailers ought to do if it happens. The smart ones will immediately turn around and tell their customers that they are somehow passing on those rebates to shoppers, and explain precisely how., and how lower swipe fees will impact prices in the broader sense.

This will do two things. It will allow them to lower prices in a demonstrable way. And, it will allow them to establish themselves as being advocates for the shopper, which always is a good place to be.