Durbin AmendmentWhat It Is & What It Means for Your Debit Costs
Durbin Amendment — Definition & Guide
The Durbin Amendment is a provision of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act that capped debit card interchange fees for large card issuers and required that merchants have access to at least two unaffiliated debit routing networks. Named after Senator Dick Durbin of Illinois, it is the primary reason regulated debit interchange is significantly cheaper than credit card interchange — and one of the most merchant-favorable pieces of legislation ever passed in the payments industry. The Durbin Amendment debit interchange cap is implemented through the Federal Reserve’s Regulation II. The Federal Reserve publishes annual data on debit interchange rates under its Regulation II authority, which implements the Durbin Amendment.
Before the Durbin Amendment, debit card interchange worked just like credit card interchange — the card networks set rates and merchants paid whatever the issuer charged. After Durbin, large banks (those with $10 billion or more in assets) had their debit interchange capped at $0.21 + 0.05% per transaction, plus a $0.01 fraud adjustment for qualifying issuers. That is a fraction of what an unregulated debit card costs.
The result is visible on any interchange-plus statement. When a customer pays with a Chase debit card, the merchant pays regulated debit interchange — one of the lowest interchange rates in the entire system. When a customer pays with a debit card issued by a small community bank or credit union, the card is exempt from the cap and the merchant pays a higher unregulated rate. Same card type, dramatically different cost — entirely because of which bank issued it.
Under interchange-plus pricing, this difference is visible on every statement. Under flat-rate pricing, it is completely invisible — the processor charges the same 2.6% whether the card is a capped Chase debit or a premium rewards credit card. That is one reason the pricing model comparison consistently favors interchange-plus for businesses with significant debit volume.
The Durbin Amendment cap applies only to debit card issuers with $10 billion or more in assets. This includes the largest U.S. banks — Chase, Bank of America, Wells Fargo, Citibank, Capital One, and others. Their debit cards carry the capped regulated debit interchange rate.
Exempt from the cap: debit cards issued by banks and credit unions with less than $10 billion in assets. These smaller issuers can still charge unregulated debit interchange — often two to three times higher than the capped rate. Prepaid cards have their own separate interchange structure and are also generally exempt from the standard Durbin cap.
For merchants, this means your debit interchange cost depends heavily on which banks your customers use. A business serving customers who primarily bank with large national banks will see lower average debit interchange than one serving a rural customer base with heavy community bank and credit union card usage. The CFPB’s guidance on bank accounts and debit cards provides additional context on how issuers and networks interact.
Beyond the interchange cap, the Durbin Amendment includes a Durbin routing requirement that most merchants never use — and most processors never explain. Under Regulation II, merchants must have access to at least two unaffiliated debit networks for processing debit transactions. For in-person chip and PIN transactions, this typically means Visa or Mastercard plus a PIN debit network like Star, Pulse, or NYCE.
Why does this matter? Because the merchant — not the card network — has the right to choose which network processes a debit transaction. Routing a transaction over a PIN debit network instead of Visa or Mastercard can reduce interchange costs on qualifying transactions. Many processors default to Visa or Mastercard routing on every transaction, which is not always the cheapest option. Merchants on interchange-plus pricing who ask their processor about debit routing optimization can sometimes find additional savings — particularly on higher-volume debit-heavy businesses.
It capped debit interchange for large bank issuers at $0.21 + 0.05% per transaction, plus a $0.01 fraud adjustment for qualifying issuers. Before the cap took effect in 2011, debit interchange often ran $0.44 or higher per transaction. The cap cut regulated debit costs roughly in half for merchants — though only on cards issued by banks with $10 billion or more in assets.
No. The Durbin Amendment applies only to debit cards. Credit card interchange remains unregulated by federal law. This is why credit interchange rates vary widely by card type — from under 1% on basic consumer credit to over 3% on premium rewards and commercial cards — while regulated debit rates are capped and relatively uniform across large issuers.
On interchange-plus pricing, you benefit directly every time a customer pays with a regulated debit card — you pay the capped rate, not a blended flat rate. On flat-rate pricing, your processor captures that savings as margin. The routing requirement also gives you the right to choose which network processes your debit transactions — a right most merchants never exercise because their processor does not surface it.
Most Merchants Don’t Know How Much of Their Volume Qualifies for Regulated Debit Interchange.
Send us your last processing statement. We will calculate the share of your volume running through Durbin-regulated debit cards (capped at $0.21 + 0.05%) versus exempt debit and credit, verify your processor is passing through the regulated rate at cost, and show you what a fair effective rate looks like at your volume.
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