The Durbin Amendment, added to the Dodd‑Frank Wall Street Reform Act in 2010, empowers the Federal Reserve to regulate debit card interchange fees for large banks. Its goal is to ensure these fees are “reasonable and proportional” to actual processing costs.

Why It Matters to Merchants

Before the Durbin Amendment took effect in October 2011, interchange fees averaged about $0.44 per transaction. The regulation capped this at $0.21 plus 0.05% of the transaction, with an optional $0.01 added for fraud prevention — totaling about $0.24, a nearly 50% reduction 

This cap applies only to banks with more than $10 billion in assets, which collectively handle the majority of debit card volume 

Key Provisions

1. Fee Caps on Interchange
Issuers of credit and debit cards from large banks are limited to a base fee of $0.21 plus 0.05% per transaction. A fraud-prevention reward of up to $0.01 is also allowed 

2. Competition in Routing
Merchants must have the option to route debit transactions over at least two unaffiliated networks (for example, Visa and Mastercard), increasing competition and potentially lowering costs 

3. Anti-Exclusive Network Rules
Banks and networks are prohibited from enforcing exclusive network routing agreements, ensuring merchants can choose where to send transactions 

4. Merchant Rights
Merchants may offer discounts for cash payments, promote alternative payment methods, or even refuse debit cards for very small purchases where fees exceed benefit 

Effects & Industry Response

• Interchange savings: Large merchants saw substantial savings, though the degree varied across sectors
• Bank responses: Many large banks raised monthly account fees, tightened free-checking qualifications or reduced rewards to offset lost interchange revenue
• Legal support: The Federal Reserve’s cap was challenged but ultimately upheld by the U.S. Supreme Court 

What This Means for Your Business

• Genuine debit cost savings: When paired with interchange‑plus pricing, merchants typically pay around $0.24 per debit transaction, not inflated rates.
• Pricing model awareness is essential: If you're on a flat-rate or tiered plan, you may not be capturing these regulated savings.
• Routing flexibility: You can benefit from lower-cost networks and reduce processing costs by selecting between available options.

How Beacon Payments Helps

• We use interchange-plus pricing, ensuring you always pay the regulated interchange fee plus a small markup.
• We support dual-network routing, giving you access to the most cost-effective networks for debit transactions.
• We provide 24/7 U.S.-based support and tools to track your savings and optimize routing strategies.

Ready to Maximize Savings?

Send us your recent processing statement. We’ll perform a free analysis to show whether you’re capturing full Durbin benefits—and identify opportunities to lower your costs further.