Each time you buy something with a debit card, you and the issuer of your card pay an "interchange" fee for using the network that handles the purchase. Visa and MasterCard run the biggest networks and reap the most fees — directly from your card issuer and indirectly from you.

A new law, the Dodd-Frank Wall Street Reform and Consumer Protection Act, requires the Federal Reserve Board of Governors to issue rules capping the fees that big card issuers can charge.

The ruling in TCF Nat'l Bank v. Bernanke, No. 11-1805 (8th Cir. June 29, 2011), upheld the new regs over a challenge by a TCF National Bank. TCF argued that the Durbin Amendment in Dodd-Frank threatened to impose a "confiscatory rate" — which Blawgletter guesses means TCF feared it would lose money on its debit card business — and gave small debit card issuers an unfair break by exempting them from the cap. The district court denied TCF's request for an order blocking the Federal Reserve fee cap. The Eighth Circuit affirmed.

TCF had a gripe because it and other card-issuing banks impose the fees on merchants. They'd love for the interchange rates to stay sky-high. Today, they average almost half a dollar (44 cents) a swipe and under the new rules would fall to around 12 cents. The cap puts billions at risk.

The Eighth Circuit pointed out that "TCF is free under the Durbin Amendment to assess [other] fees on its customers to offset any losses" from passing on lower interchange charges. Id., slip op. at 7.