Trade groups representing banks such as JPMorgan Chase & Co. and Bank of America Corp. urged the Federal Reserve to delay and revise its proposed caps on debit-card “swipe” fees to study the rules’ impact on smaller firms.

The proposal, in its current form, could “dramatically lower the revenue” of banks and credit unions, which may result in increased costs to consumers, industry groups including the Financial Services Roundtable and the Clearing House wrote in a comment letter filed with the Fed today.

The 72-page letter, which was endorsed by nine groups including the Independent Community Bankers of America and National Association of Federal Credit Unions, represents the financial-services industry’s closing argument against the plan to cap so-called interchange fees charged to retailers at 12 cents per transaction. Bankers have united against the proposal, part of the central bank’s rulemaking under the Dodd-Frank Act.

“With virtually unprecedented unanimity, every major bank and credit union trade association is writing to express opposition to the rule proposed by the Board of Governors of the Federal Reserve system,” the groups said in the letter, which termed the Fed proposal “legally defective.”

In congressional testimony last week, Federal Reserve Chairman Ben S. Bernanke, Fed Governor Sarah Bloom Raskin and Federal Deposit Insurance Corp. Chairman Sheila Bair aired concerns that could slow implementation of the rules.

Two-Pronged

The banking industry is using a two-pronged approach to attack the measure since it was released for comment in December, with member firms filing hundreds of comment letters seeking changes, while trade groups lobbied lawmakers for legislative fixes. The comment period on the rule closes today.

The largest U.S. banks stand to lose more than $12 billion in annual revenue under the Fed’s proposal to limit debit-card swipe fees under a Dodd-Frank directive to align the charges with the cost of processing the transactions. The cap was favored by retailers, which stand to benefit from lower fees.

Retail groups representing 7-Eleven Inc. and Home Depot Inc. have defended the proposal, saying the savings they would reap under the caps could lower costs for consumers and help merchants recover from the 2008 credit crisis.

“Such relief is crucial as retailers continue to struggle to recover from the worst recession of our lifetime,” Jan Teague, chief executive officer of the Washington Retail Association, wrote in a Feb. 11 comment letter.

Dodd-Frank requires the Fed to complete work on the cap provision by April 21 and have the rules take effect in July.

Bernanke told the Senate Banking Committee that he was “not certain” that an exemption for banks and credit unions with assets under $10 billion would help smaller lenders.

Raskin, testifying before the House Financial Services Committee the same day, echoed Bernanke and said the rule may result in “significant market changes.”