Judge Strikes Down Caps on Swiping - NBC Right Now/KNDO/KNDU Tri-Cities, Yakima, WA |

Judge Strikes Down Caps on Swiping

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WASHINGTON, D.C. - A federal judge has struck down the rule that caps fees banks can charge merchants for handling debit card purchases.

U.S. District Court Judge Richard Leon ruled the Federal Reserve doesn't have the authority to set the limit.

A coalition of retail groups sued the Fed over its setting the cap at an average of about 24 cents per debit-card transaction. The previously unregulated "swipe" fee averaged 44 cents. The Fed initially proposed a 12-cent cap, and the retailers had argued that the Fed buckled under pressure from bank lobbyists when it set the cap higher.

The Fed now must craft a new rule. The current one will remain in effect in the meantime.