The Durbin Amendment: What Merchants Should Know

The Durbin Amendment, implemented as the Federal Reserve's Regulation II, caps the debit interchange a large issuer may receive at 21 cents plus 5 basis points of the transaction, plus up to 1 cent if the issuer meets the fraud-prevention standard. Issuers with less than $10 billion in assets (together with affiliates) are exempt from that cap. Routing is the other half of the statute: every debit issuer, large or small, must enable at least two unaffiliated networks, and neither issuers nor networks may inhibit you from directing a debit sale over any network the issuer has enabled (Federal Reserve, Regulation II compliance guide, last update 23 Jun 2023). Durbin does not cap credit. It does not set your processor's markup. It does not make every debit card cheap.

Two jobs, two sets of people

"Durbin" is section 1075 of the Dodd-Frank Act. It added section 920 of the Electronic Fund Transfer Act (15 U.S.C. 1693o-2). The Board implemented it as Regulation II, 12 CFR part 235 (Federal Reserve, Regulation II about page, last update 17 May 2024). The rule has two jobs, and they do not apply to the same people.

The interchange fee standard applies to issuers with $10 billion or more in total assets, including affiliates, that hold the account being debited. Five basis points is 0.05 percent, or $0.0005 per dollar. A covered issuer may add up to 1 cent if it meets the fraud-prevention standard: policies reasonably designed to identify and prevent fraudulent debit transactions, monitor fraud, respond to suspicious activity, and secure card data, reviewed at least annually (Federal Reserve, Regulation II compliance guide, last update 23 Jun 2023).

Routing and exclusivity apply to all debit issuers. An issuer may not restrict processing to fewer than two unaffiliated networks, and neither issuers nor networks may inhibit you from routing over any enabled network. The Board's October 2022 final rule made the exclusivity prohibition explicit for card-not-present debit, effective 1 Jul 2023. It did not change the cap (Federal Reserve press release, 3 Oct 2022). The fee standard and the ban on routing restrictions took effect 1 Oct 2011. Network exclusivity for most cards was required by 1 Apr 2012.

Who is under the cap

Covered or not is an issuer fact, not a merchant-category fact. The Board measures consolidated assets, including affiliates, at the end of the calendar year preceding the transaction, and publishes exempt and not-exempt lists. The current lists use institutions in existence on 31 Dec 2025, data revised 27 May 2026 (Federal Reserve, Interchange Fee Standards: Small Issuer Exemption, last update 13 Jul 2026). A small issuer that crosses $10 billion by year-end must comply no later than 1 Jul of the next year.

Networks are not required to pay small issuers more. They are allowed to. That two-tier structure is why a community-bank or credit-union debit card often costs more at interchange than a large-issuer debit card on the same sale. You cannot read the bucket off the plastic.

Two other exemptions sit on the card. Even a covered issuer is not capped on a government-administered payment card that can only move those program funds, or on a qualifying reloadable general-use prepaid card that is not marketed as a gift card. Credit, checks, ACH, fees charged to cardholders, and transactions where the merchant or the account is outside the United States are outside the standard (Federal Reserve, Regulation II compliance guide, last update 23 Jun 2023).

The arithmetic on one sale (illustrative)

The cap is a ceiling on what the issuer may receive, not the whole merchant discount. Assessments and processor markup still stack on top. Walk three tickets. These figures are illustrative of the cap, including the 1 cent fraud add-on.

The 21 cent floor is why regulated debit is cheap as a percent on a large ticket and expensive as a percent on a tiny one. Mix and average ticket decide whether it moves your effective rate.

The Board's averages match that picture. In 2024, average debit interchange was $0.23 per covered transaction and $0.51 per exempt transaction (Federal Reserve, Average Debit Card Interchange Fee by Payment Card Network, last update 19 Dec 2025). Covered interchange sat at $0.51 in the first three quarters of 2011, then $0.24 in the fourth quarter after the cap took effect, and has been $0.23 every year from 2013 through 2024 on that series.

Those are interchange averages, not your all-in rate. Interchange, assessments, and markup are still three layers. Durbin only touches the first, and only on some debit. It does not cap credit. It does not write your markup. If your customers skew toward local credit unions, your debit mix will not look like the capped number in a sales deck.

Routing: the other half

Routing is which rail moves the sale. An issuer must enable at least two unaffiliated networks that, together, are not limited to one geography, merchant type, or transaction type (such as card-not-present only), and that can handle the volume they would expect. The rule does not require two networks per authentication method. Signature plus an unaffiliated PIN network can satisfy it. Two unaffiliated PIN networks can satisfy it. ATM-only networks do not count (Federal Reserve, Regulation II compliance guide, last update 23 Jun 2023).

You rarely pick a network swipe by swipe. You, or your processor, gateway, or POS, set a default and a fallback. That preference is the merchant-visible control the statute protects. Ask which networks are enabled for PIN and for card-not-present, who sets the default, and whether you can change it. A "PIN debit savings" pitch is a routing choice, not a Durbin discount.

Debit is not a rounding error. U.S. cards made 79 percent of noncash payments by number in 2024: 120.6 billion debit transactions and 67.1 billion credit (Federal Reserve FRPS, CY 2024, released 1 Jul 2026). The Durbin split inside that debit pile moves the statement more than a two-basis-point markup argument.

Section 920 also has two self-executing tools that are not in Regulation II: networks may not inhibit discounts or in-kind incentives for cash, check, debit, or credit (they may prohibit discounts that differentiate among issuers or networks), and they may not inhibit credit-card minimums below $10 that do not differentiate among issuers or networks (Federal Reserve, Regulation II compliance guide, last update 23 Jun 2023). Those are network-rule limits, not a license to invent a surcharge program.

How it shows up on a statement

On interchange-plus, look for regulated or covered debit versus exempt, unregulated, or small-issuer debit. The capped columns should sit near the 21-cent-plus-5-basis-point math. If "debit" is one line, you cannot see the split.

On tiered or flat pricing, the Durbin split is inside the blend. Qualified, mid-qualified, and non-qualified buckets, or a single flat percentage, do not have to pass the cap through. Add every processing line for the month, divide by card volume, and read the effective rate.

Watch Board notices the same way you watch April and October network bulletins. On 25 Oct 2023 the Board proposed lowering the cap and updating it every other year; under that proposal, the cap on an average-sized $50 debit sale would fall from 24.5 cents to 17.7 cents (Federal Reserve press release, 25 Oct 2023). The Board's Regulation II data-collections page, last updated 23 Jan 2026, still describes that change as a proposal. Until a final rule says otherwise, price debit on 21 cents plus 5 basis points, plus up to 1 cent.

If you would rather not hunt covered versus exempt lines by hand, upload last month's statement. As-billed first. Pass-through versus markup. Then see whether debit is coming through at a Durbin floor or at a blended rate that ignores it.

FAQ

What is the Durbin Amendment? It is section 1075 of the Dodd-Frank Act, which added section 920 of the Electronic Fund Transfer Act. The Federal Reserve implements it as Regulation II: a cap on debit interchange for large issuers, plus rules that require two unaffiliated debit networks and let merchants route.

Does Durbin cap credit card interchange? No. The interchange fee standard applies to electronic debit transactions, not credit. Credit stays on the network schedules, which is why rewards credit is usually the expensive column even when regulated debit looks cheap.

Why is some debit still expensive if Durbin exists? The cap applies only to issuers with $10 billion or more in assets. Community banks and credit unions are usually exempt, and certain prepaid and government-program cards are exempt even at large issuers. Processor markup also sits on top of interchange, capped or not.

What is debit routing, and do I control it? Routing is which network processes a debit sale. Regulation II says every issuer must enable at least two unaffiliated networks and may not block you from using any network they enabled. In practice you set routing preferences with your processor or gateway, not swipe by swipe.

How do I see regulated vs unregulated debit on a statement? On an interchange-plus statement, look for regulated or covered debit categories versus exempt, unregulated, or small-issuer debit. On a tiered or flat statement those buckets are bundled. Compare total fees to card volume; that effective rate is what the mix actually cost.

Did the Federal Reserve lower the 21-cent debit cap? Not as of the Board's latest Regulation II pages. On 25 Oct 2023 the Board proposed lowering it (a $50 sale would fall from 24.5 cents to 17.7 cents under that proposal). The data-collections page, last updated 23 Jan 2026, still describes that change as a proposal. The standard in force remains 21 cents plus 5 basis points, plus up to 1 cent for fraud prevention.

Sources

• Federal Reserve, Regulation II (Debit Card Interchange Fees and Routing) about page (last update 17 May 2024)
• Federal Reserve, Regulation II compliance guide to small entities (last update 23 Jun 2023)
• Federal Reserve, Interchange Fee Standards: Small Issuer Exemption (lists as of 31 Dec 2025; last update 13 Jul 2026)
• Federal Reserve, Average Debit Card Interchange Fee by Payment Card Network (last update 19 Dec 2025)
• Federal Reserve, Average Interchange Fee per Transaction Chart, accessible version (2024 covered $0.23, exempt $0.51)
• Federal Reserve, "Board finalizes updates to the Board's rule concerning debit card transactions," 3 Oct 2022 (card-not-present exclusivity effective 1 Jul 2023)
• Federal Reserve, "Board requests comment on a proposal to lower the maximum interchange fee," 25 Oct 2023
• Federal Reserve, Regulation II reports and data collections (last update 23 Jan 2026)
• Federal Reserve, FRPS topline CY 2015-24 (last update 1 Jul 2026)