A federal judge has struck down a rule setting a cap on the fees that banks can charge merchants for handling debit card purchases, saying the Federal Reserve didn't have the authority to set the limit in 2011.

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The ruling by U.S. District Court Judge Richard Leon Wednesday handed a victory to a coalition of retail groups. They had sued the Fed over its setting the cap at an average of about 24 cents per debit-card transaction.

The previously unregulated "swipe" fee averaged 44 cents. The Fed initially proposed a 12-cent cap, and the retailers had argued that the Fed buckled under pressure from bank lobbyists when it set the cap higher.

The Fed now must craft a new rule. The current one will remain in effect in the meantime.

(Copyright 2013 The Associated Press. All Rights Reserved)

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