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Reuters reports that the US Supreme Court has declined to weigh in on debit card swipe fee rules, leaving in place a Federal Reserve determination that 21 cents per transaction is appropriate. An appeals court already had confirmed the Fed's position, but that decision was appealed by a coalition of retailers, grocers and restaurateurs.

According to the story, "The dispute between banks and merchants centers involves swipe, or interchange, fees that are determined by Visa Inc, MasterCard Inc, and other card networks.

"Before Congress intervened, retailers paid as much as 44 cents per transaction, which they said made it hard for small businesses to accept debit cards.

"In 2010, lawmakers ordered the Fed to cap the fees in a bid to reduce prices for consumers. Banks said lower fees might not cover all of the costs in providing cards, such as monitoring for fraudulent purchases." But the Fed did not go as low as retailers hoped, and as low as they believed the spirit of the legislation required.

Leslie G. Sarasin, president/CEO of the Food Marketing Institute (FMI), responded to the Court decision: “We are disheartened that the Court rejected our case, reflecting utter failure to recognize the significance the ‘swipe fee’ issue holds for consumers and American businesses. The food retail industry, on average, operates at a 1-to-2 percent profit margin, so every penny matters. When transaction fees are arbitrarily set by the big banks and the card companies they service, this becomes a matter of justice that threatens the economic survival of community grocery stores, businesses, charities, schools and every institution utilizing a debit and credit cards payment system. We now look to the Fed to improve this rule and carry out both the clear language of the statute and the intent of Congress.”
KC's View:
Fascinating to see a conservative, GOP-dominated court rule against business interests. Although I think it also could be argued that it ruled against consumer interests and for the banking business.

I think that one thing that is likely to happen is the development of competitive payment methods that would hurt companies like MasterCard and Visa in the long run.