The U.S. Senate rejected on Wednesday a measure to delay a cap on what banks can charge merchants when a debit card is used.
The vote was a major defeat for the banking industry, which stands to lose billions of dollars when the cap goes into effect later this year.
The final vote for the amendment was 54 to 45, but it needed 60 votes under Senate rules to be adopted.
Banks of all sizes and retailers have been engaged in a fierce lobbying fight over a provision in the 2010 Dodd-Frank financial oversight law that requires the Federal Reserve to set a cap on the fees banks can charge merchants when a customer uses a debit card.
The Fed in December proposed capping the fees at about 12 cents per transaction -- a 75 percent cut. The banking industry estimates this would cost them about $12 billion annually.
The measure considered by the Senate on Wednesday would have delayed the Fed rule for up to one year while the cap's impact was studied.
The law specifically exempts small banks, those with less than $10 billion in assets, from the fee cap. But these smaller institutions argue the exemption will not work in practice and have joined larger banks in lobbying against the cap
Copyright 2016 by The Associated Press. All Rights Reserved.