The Federal Reserve disregarded the Congress' intent in deciding how much banks can charge merchants for debit-card transactions, a judge ruled, handing a victory to retailers who challenged the fees as being too high, Bloomberg reported.


In a 58-page opinion, U.S. District Judge Richard Leon in Washington, D.C., ruled today that the Fed considered data it wasn't allowed to use in setting a 21-cent cap on debit-card transaction fees under the Dodd-Frank law. Leon said the rule, in effect since October 2011, would remain in place until the Fed drafts new regulations or interim standards.


Swipe, or interchange, fees are set by Visa Inc. and MasterCard Inc., the biggest electronic-payment networks, which collect the money and remit it to card-issuing member banks.


"The board has clearly disregarded Congress's statutory intent by inappropriately inflating all debit-card transaction fees by billions of dollars and failing to provide merchants with multiple unaffiliated networks for each debit card transaction," Leon said in his ruling.


The decision, unless overturned on appeal, will force regulators to revisit rules that bankers said would cost them 45 percent of their swipe-fee revenue. Lenders collected about $16 billion annually from those fees before the Fed's regulation and responded by cutting back on perks such as rewards programs and free checking to soften the blow to their profits.


"Today's decision is a victory for small businesses and consumers across the country," the Merchants Payments Coalition, whose members operate about 2.7 million stores with approximately 50 million employees, said in a release. "The court has told the Federal Reserve to go back to the drawing board on debit card swipe fees to make sure the fees are reasonable and proportional to what it costs banks to process debit transactions."