A federal judge has ruled that the Federal Reserve’s 2011 cap on debit card “swipe” fees was set higher than intended by Congress, prompting calls for updated regulations. The decision came in a case brought by the Corner Post, a North Dakota convenience store, which argued that the rate exceeded what a 2010 law considered “reasonable” and “proportional” to banks’ costs.
Judge Daniel Traynor vacated the existing rules but placed the decision on hold during any appeal to avoid leaving the market unregulated. The ruling does not prevent the Fed from moving forward with its 2023 proposal to adjust the rate. That proposal would lower the base fee from 21 cents to 14.4 cents per transaction, adjust fraud loss and fraud prevention allowances, and is currently under consideration.
The Merchants Payments Coalition welcomed the decision, citing the potential to ease cost pressures for businesses and consumers. While merchants have saved an estimated $9 billion annually since the 2011 cap was introduced, swipe fees still totaled $38.7 billion in 2024. Industry leaders will be watching closely as the Federal Reserve considers next steps that could impact transaction costs nationwide.
