The Federal Reserve told Congress on Thursday that it may reconsider its proposal to limit the fee that banks charge merchants for debit card transactions to 12 cents per swipe, the latest twist in a battle over billions of dollars.

The financial overhaul bill that President Barack Obama and Congress enacted last summer ordered the Fed to issue rules that would set the fees at a reasonable rate. Currently, merchants typically pay between 1 and 2 percent of the transaction's total.

The question of where to set the fees has triggered a lobbying battle pitting merchants and some consumer groups against banks and credit card networks like Visa and Mastercard. The Fed's proposed 12-cent cap would be a major victory for merchants, who say higher fees are hurting their businesses and their ability to create jobs. Banks say cutting the fees would cause them to lose money and force them to raise their charges for checking accounts and other services.

Fed Governor Sarah Bloom Raskin told a House Financial Services Committee subcommittee that the Fed has received thousands of comments on the proposal and expects many more.

"The other board members and I are reserving judgment on the terms of the final rule until we have an opportunity to consider these comments," she said, citing the complexity of the issue.

The period for reviewing public comments ends next Tuesday. The financial overhaul law requires the Fed to issue final standards by April 21.

Reducing the fee to a maximum of 12 cents would cost banks $14 billion, according to prepared testimony by David W. Kemper, representing the American Bankers Association and the smaller Consumer Bankers Association. Kemper asked the financial institutions subcommittee "to immediately take all necessary congressional action to stop the Federal Reserve" from implementing the proposal.

Doug Kantor, a lawyer representing a coalition of merchants, said that for most merchants the fees trail only labor as their highest operating cost.

"Debit card swipe fees as they exist today cannot be justified. Banks benefit every time a debit card is used," he said in his written statement.

According to a recent Fed survey, debit cards account for 35 percent of noncash payments and are used more often than checks. They have grown from 8 billion payments in 2000 to 38 billion in 2009, and are accepted at 8 million stores.