The Federal Reserve will not meet an April 21 deadline for issuing a final rule cracking down on the fees banks charge merchants when a debit card is used, Fed Chairman Ben Bernanke said in a letter to U.S. lawmakers on Tuesday.
The reduction in fees is required under the Dodd-Frank financial reform law. Bernanke said the Fed is committed to having a final rule in place by July 21 when the limit is supposed to go into effect.
Continue Reading Below
The Fed in December proposed capping the fees at about 12 cents per transaction -- a 75 percent cut.
Bank of America Corp (BAC.N), the largest U.S. bank, has said the cap could cost it as much as $2.3 billion in fee revenues annually. BofA declined to comment on the Bernanke letter on Tuesday.
At the Fed's proposed level, the cap would cost banks about $13 billion in revenue, CardHub.com has said.
Banks and card network companies such as Visa (V.N) and MasterCard (MA.N) have loudly complained the proposed limit is far too strict and are pitted against merchants and retailers in what has been a fierce lobbying brawl.
In explaining the delay, Bernanke pointed to the more than 11,000 comments his agency has received as well as the complexity of the issue.
"The issues raised by the comments are complex and difficult and are significant to the payments system, its providers, and its users," Bernanke wrote.
The delay provides a small reprieve for banks and card companies but they are seeking a far longer delay or to have the crackdown rescinded.
Democratic Senator Jon Tester has introduced legislation that would delay the crackdown for two years while the issue is studied further.
Senator Richard Durbin, the Democratic author of the fee limit, has argued a delay is simply a tactic to buy time for a repeal.