Fed compromises on debit card fee cap

WASHINGTON, June 29 (UPI) -- The Federal Reserve voted Wednesday to cap debit card fees for purchases in the United States at 21 cents per transaction.

Large banks can also charge storeowners .05 percent of the purchase price -- 1 cent per $20 -- the Los Angeles Times reported. Swipe fees, as they are known, now average 44 cents per transaction.

Under the original proposal, swipe fees would have been capped at 12 cents with no percentage on top. MasterCard, Visa and banks objected, saying they needed more revenue to cover fraud losses.

The cap does not apply to small banks with less than $10 billion in assets. But merchants could start refusing their cards if they charge more than larger banks.

Wednesday's vote was 4-1. The fed also voted to delay the cap's effective date to Oct. 1.

"I think this is the best available solution," Chairman Ben Bernanke said of the increase in the cap.

The American Bankers Association predicted a 45 percent drop in debit card revenue.

"Consumers will see higher fees for basic banking services, and banks -- particularly community banks -- will still feel the revenue pressures that this rule will cause," the group said in a statement.