A U.S. District Court held that the Federal Reserve rule on debit card swipe fees improperly set the limits too high in a ruling last week, the Washington Post reported.  The rule, made by the Federal Reserve as a result of financial reform legislation passed in 2010, set the limit for debit card swipes at $.21 per transaction.  The law specified that the fees should be set to cover costs, and the Fed used too broad a measure of those costs, according to the ruling. 

Senator Richard Durbin of Illinois, who authored the amendment on debit card swipe fees, said the Fed’s decision "to bend to the lobbying by the big banks and card giants cost small business and consumers tens of billions of dollars and did not do enough to rein in the anti-competitive, anti-consumer practices of Visa and MasterCard."

Banks predicted that the decreased fees, which would probably fall to $.07 to $.12 per transaction, would ruin them.  The "court’s interpretation will have disastrous consequences for the institutions affected and the communities they serve," Frank Keating of the American Bankers Association said.

The Fed could appeal the ruling, so implementation of the lower rate could take a while.