Supreme Court move on debit-card fees a win for Bank of America, Wells Fargo

Retailers will have to live with a U.S. regulation they say lets banks overcharge merchants by $3 billion a year.

The U.S. Supreme Court, without comment, on Tuesday left intact a Federal Reserve rule governing how much banks can collect for debit-card transactions. The retail industry argued the regulation didn’t go far enough in capping swipe fees at 21 cents per transaction.

The rebuff is a victory for Charlotte-based Bank of America and Wells Fargo, the top U.S. debit-card issuers, preserving a multibillion-dollar revenue stream for the industry. The largest banks earn as much as 5 percent of their revenue from card fees. The rejection also benefits the leading debit-processing networks, Visa Inc. and MasterCard Inc.

Disappointed by the Supreme Court’s move, the National Retail Federation said it will mean retailers “will keep paying billions of dollars more than they should and that fee-hungry banks will continue to rake in unearned profits that ultimately come out of consumers’ pockets.”

The use of debit cards has soared in the last decade. Consumers used them for 47 billion transactions in 2012, according to federal statistics. Wal-Mart Stores Inc. alone says it handled more than 3 billion debit-card transactions at its stores in the last fiscal year.

The Fed rule is a product of the 2010 Dodd-Frank financial-reform law, which told the board to set limits on what are known as interchange fees. Those fees averaged 44 cents in 2009, and the Fed originally proposed capping them at 12 cents.

After a lobbying campaign by banks and payment networks, the board decided to set the limit instead at 21 cents, plus an additional sum to account for fraud losses. The final rule is costing banks an estimated $8 billion annually.

As the cap took effect, the response of some banks was to announce plans for monthly fees on debit-card use. Bank of America announced a plan for a $5 monthly fee but backed off after public backlash.

Bank of America and Wells Fargo declined to comment.

The American Bankers Association, a trade group, lauded the Supreme Court’s decision, calling it the “right result.”

Charlotte Observer staff writer Deon Roberts contributed.

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