Shares of Visa (V) and MasterCard (MA), the big card network companies, plunged as much as 12% Thursday after investors got a look at new fee rules proposed by the staff of the Federal Reserve.

The Fed proposal, which could go into effect in April, would cut the fees merchants pay on debit card transactions by as much as 80% to 90%, according to one analyst.

In a meeting that was broadcast over the Internet, the Fed proposed to cap so-called debit interchange fees at 12 cents. Debit interchange fees range widely depending on the issuing bank and the type of card, but JPMorgan analyst Tien-tsin Huang wrote in a note to clients that he estimates the current industry average at between $1 and $1.30.

Wall Street had expected a higher cap, with some estimates ranging as high as 75 cents. The interchange fees are a large driver of profits at both Visa and MasterCard, which have been Wall Street favorites for some time but have been hit hard in 2010 by new regulations.

The Fed was charged with regulating interchange fees under the Dodd Frank Act, which included a section called the Durbin amendment that sought to rein in financial company excesses in the fast-growing electronic payments business.

The Fed on Thursday voted to put the staff proposal out for public comment, though several governors expressed concerns about the decision to put the Fed in the position of setting prices.

Fed governor Kevin Warsh said he would like to see alternatives that allow the Fed to steer clear of that conflict, and governor Daniel Tarullo urged other members to seriously consider the public comments as they are submitted in coming months.

Governors should be “more than perhaps usually open to comments,” he said, owing to the complexity of the issue and the implications of the new rules.

Visa, whose debit business is about three times the size of MasterCard’s, dropped $8.24 to $68.71, putting it within $2 of its 52-week low. MasterCard dropped $19.59 to $229.63.