Banks win swipe fee battle after all

This post comes from Stacy Johnson at partner site Money Talks News.

As we reported in "Fed to cast final vote on debit card fees," the Federal Reserve was poised this week to nail big banks by radically reducing the fees they collect for processing debit card transactions. 

So-called "swipe" or interchange fees now average 44 cents per transaction, but were set to drop to 12 cents. That would have been a boon for the merchants shouldering the expense and a bust for the banks, which now take in about $16 billion a year from those fees. After a final vote on June 29, the new rules were slated to go into effect on July 21.

As has happened with the banking industry on so many occasions, they managed to dodge a bullet. Post continues after video.

After months of intense lobbying to convince the Fed that 12 cents isn't enough to profitably process debit card transactions -- and threatening to replace the lost revenue by raising fees on things like checking accounts -- banks managed to cajole the Fed into capping rates at 21 cents. Banks can also charge 0.05% of each transaction as reimbursement for fraud losses, and the Fed may let them collect another 1 cent per transaction if they take steps to prevent fraud. The start date was also pushed back from July 21 to Oct 1.

• Bing:The war over swipe fees

If there's any doubt as to whether this was good news for credit card processors, Visa's stock closed Wednesday at $86.57 per share, up $11.29 or 15%. MasterCard finished the day at $309.70/share, up $31.47, or 11%.

Of course, most major banks that will benefit from the Fed's generosity already starting raising fees months ago on checking accounts and other products in anticipation of this revenue setback.

Now that they've scored a multibillion-dollar victory at the expense of retailers, will they start announcing rollbacks of recent fee hikes?

I wouldn't hold my breath.

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