A Federal Reserve rule allowing banks to charge retailers 21 cents to process debit-card transactions has been upheld by a federal appeals panel, a blow to big merchants, such as Wal-Mart and Target.

A lower court judge invalidated the fee cap in July, ruling that the Fed’s formula included costs that weren’t allowed under the Dodd-Frank regulatory reforms that Congress passed after the financial crisis.

But in a ruling Friday for a three-judge panel, Judge David Tatel of the U.S. Court of Appeals in Washington said the central bank’s rules “generally rest on reasonable constructions of the statute.”

Merchants, who had argued that they were entitled to a lower cap, expressed disappointment, while financial firms said they were relieved.

“The Fed ignored congressional intent and worked to shield debit card companies and big banks,” the National Retail Federation said in a statement.

But the National Association of Federal Credit Unions said the decision “mitigates the harm that would have been done by the district court ruling.”

The dispute stems from a Dodd-Frank provision that required the Fed to set the so-called interchange fees, known colloquially as swipe fees, at a level reflecting the actual processing costs.

The Fed’s staff recommended cutting the fee from 44 cents per transaction on average to just 12 cents. But after heated protests from the financial industry, the Fed in June 2011 set a cap of 21 cents per transaction.