The fees the nation's biggest banks charge merchants accepting debit cards plunged in October 2011, the first month of a cap on the fees, according to the Federal Reserve Board.
A report from the Fed says the average fee assessed by large banks, such as US Bank, fell by about half to 24 cents. Meanwhile, the average fee set by smaller banks, which were exempt from the cap, remained essentially the same, at 43 cents.
Banks complain the law capping debit card fees unfairly shifts $7 billion a year from banks to retailers. Merchants say the savings are passed on to shoppers.
"We know that many merchants are saving money," said Brian Dodge, a spokesman for an industry trade group representing Target, Best Buy and other leading retailers. "That's being factored into pricing. The retail environment is an intensely competitive environment."
Bankers contend smaller banks will eventually have to cut their fees, too.