Durbin Amendment

Also called Durbin, Section 1075 Dodd-Frank, 15 U.S.C. 1693o-2

The 2010 Dodd-Frank provision capping debit interchange at large issuers and guaranteeing merchants a routing choice.

What it is

The Durbin Amendment is Section 1075 of the Dodd-Frank Act, codified at 15 U.S.C. 1693o-2, and implemented by the Federal Reserve as Regulation II. It does two structurally different things and merchants routinely conflate them. First, it directs the Federal Reserve to ensure that debit interchange fees are reasonable and proportional to the cost incurred by the issuer, and applies that cap only to issuers with 10 billion dollars or more in assets. Smaller issuers are exempt, which is why debit costs on the same card type vary depending on which bank issued the card. Second, it prohibits network exclusivity and routing restrictions. Debit cards must be enabled on at least two unaffiliated networks, and issuers and networks may not inhibit a merchant's ability to route transactions over the network of its choice. This part applies regardless of issuer size. Durbin also expressly permits merchants to offer discounts for payment method and, importantly for this glossary, its framework underpins the rule that surcharging applies to credit only. Debit and prepaid may not be surcharged. Two live developments sit on top of it. The Fed's proposal to lower the interchange cap has not been finalized, and a federal court vacated Regulation II's interchange fee standard in Corner Post while staying its own ruling pending appeal, so the existing cap remains operative today.

Why it matters to your business

Durbin is the reason your debit costs are not one number, the reason you have a right to route debit transactions, and the reason nobody may lawfully surcharge a debit card. If a processor's program is adding a percentage to debit transactions and calling it a surcharge, that is a problem worth raising immediately. It is also the clearest illustration of why pricing structure matters more than rate. Regulatory changes to interchange only reach merchants billed at interchange plus a stated markup. On a flat rate, they reach your processor instead. This is education, not legal advice; the statute and its implementing regulation are subject to pending litigation and proposed rulemaking.

Where it gets contested

Fifteen years on, both sides still claim vindication. Merchant groups say the cap saved billions and that issuers offset it by killing free checking. Banks and credit unions say the savings never reached consumers and that small issuers were squeezed by market pressure despite the statutory exemption. Independent studies have supported pieces of both narratives. The more useful controversy for a merchant is pricing structure. A cap on debit interchange only reaches a merchant who is billed on a pass-through basis. On tiered or flat-rate pricing, the cap sets the processor's cost, not the merchant's price, and the difference is retained margin. That is the whole argument in one sentence, and it is about to be tested again by the Corner Post appeal. What remains unresolved is the future of the cap itself. If the Eighth Circuit affirms the district court, debit interchange could be rebuilt around issuer-specific incremental cost, plausibly lower and certainly more variable, and once again only pass-through merchants would see it.

How to check it yourself

Look at a month of statements and find your debit transactions. If you cannot see an interchange amount and a separate markup on them, you are not on pass-through pricing, and no change to the debit cap will ever reach you.

Receipts

Claims above that are checkable, with where to check them. Published so you do not have to take anyone's word for it.

Regulation II implements the Durbin Amendment debit interchange standard and routing provisions
federalreserve.gov ↗
Average debit interchange fee data published by the Federal Reserve
federalreserve.gov ↗
A district court vacated Regulation II's interchange fee standard but stayed the vacatur pending appeal, so the existing cap remains operative
cooley.com ↗