Durbin Amendment

The Durbin Amendment is Section 1075 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, codified at 12 U.S.C. 1693o-2. Implemented by the Federal Reserve as Regulation II (12 CFR Part 235), it established two major rules for debit card interchange:

1. Interchange fee cap: For issuers with $10 billion or more in assets, debit card interchange fees are capped at $0.21 + 0.05% of the transaction value, plus $0.01 for fraud-prevention costs. The cap itself is set by 12 CFR 235.3(b), which limits an interchange transaction fee to "the sum of (1) 21 cents and (2) 5 basis points multiplied by the value of the transaction"; the fraud-prevention adjustment is 12 CFR 235.4. The figures are unchanged from the 2011 implementation. Two things could change them. The Federal Reserve proposed in October 2023 to lower the base component to 14.4 cents; as of September 2026 that proposal has not been finalised. Separately, in Corner Post, Inc. v. Board of Governors the US District Court for the District of North Dakota vacated Regulation II on 6 August 2025, holding that the Board exceeded its authority. The court stayed its own vacatur pending appeal, expressly to stop interchange becoming an unregulated market, and the case is before the Eighth Circuit. So the cap remains in force for now, but its legal basis is under challenge.

2. Network routing requirement: Issuers must enable at least two unaffiliated networks on all debit cards, and merchants must be able to choose which network processes PIN debit transactions (Regulation II, 12 CFR 235.7). This is why debit cards often carry both a Visa/Mastercard logo and a regional network logo (STAR, NYCE, Pulse).

Exempt issuers: Banks and credit unions with assets below $10 billion are exempt from the interchange cap. These "small issuer" debit cards have higher interchange rates, comparable to credit cards. Merchants cannot identify small-issuer cards at the point of sale, so the cap's effective impact on smaller institutions is limited.

Consumer impact: The Durbin cap benefits merchants (lower card-acceptance costs) and, theoretically, consumers through lower prices. However, academic research (e.g., the Federal Reserve Bank of Richmond's analysis) suggests the price benefits to consumers from merchant cost savings were limited while bank revenue reductions led to the elimination of free checking accounts and reduced debit card rewards at large banks. Small banks were largely unaffected.

Senator Dick Durbin (D-IL) sponsored the amendment as part of the Dodd-Frank financial reform; the provision was heavily contested by the banking industry and remains a regulatory fault line between merchants (who benefit from lower interchange) and banks (who lose revenue).