🇺🇸 US debit and Durbin routing

Two debit networks on one card

A US debit card carries several network brands, and each of them can route the payment to the issuer. The front of the card shows a global brand: Visa Debit, Debit Mastercard, or, less often, Discover Debit. The chip and magnetic stripe also carry one or more EFT network brands. What the merchant pays depends on which network ends up carrying the transaction.

The EFT networks grew out of regional ATM networks between 1976 and 1985. At the time, they exchanged PIN-authenticated cash withdrawals in a single message that carried both the authorization and the settlement request. Point-of-sale payments came later. Visa and Mastercard added so-called signature debit, carried over their credit card rails in two messages: the authorization first, then the clearing presentment. The two architectures have coexisted on the same card for four decades.

PIN debit networks: who owns what

Single-message debit networks, which US usage calls “PIN debit” even though a PIN is not always entered, fall into three ownership groups. Two banking technology providers account for most of them: Fiserv runs STAR and Accel, and FIS runs NYCE and Culiance. The global brands each own one: Interlink at Visa, Maestro at Mastercard, and PULSE at Discover. A cooperative fringe survives outside this consolidation, and SHAZAM is its best-known member.

Fiserv holds several positions in the US debit chain at once. It provides the core banking platform for a large share of US community banks, as well as issuer processing and merchant acquiring under the Clover brand. It also runs two debit networks and the MoneyPass surcharge-free ATM network. An issuer that picks STAR or Accel as its second network therefore often buys that service from its own processor. This stacking of roles is rarely assessed as a concentration risk during negotiations. Yet it is one, because the choice of second network, the price of processing, and access to the ATM network are then all negotiated with a single counterparty.

The Durbin Amendment and Regulation II

The Durbin Amendment is a set of provisions inserted into an existing law, not a standalone statute. Section 1075 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, signed into law on July 21, 2010, adds a Section 920 to the Electronic Fund Transfer Act. The Federal Reserve implemented it through Regulation II, which is codified at 12 CFR Part 235.

Section 920 creates two separate regimes, which the industry often conflates. First, it caps debit interchange for issuers whose total assets exceed a statutory threshold. Second, it prohibits limiting the networks available for a transaction to fewer than two unaffiliated networks, and prohibits preventing the merchant from choosing among them. The two regimes have different scopes. An issuer exempt from the cap is still fully subject to the routing rules.

Cap applicable to a covered issuer (12 CFR 235.3 and 235.4)
  base ................. 21.0 cents
  ad valorem ...........  0.05% of the transaction value
  fraud adjustment .....  1.0 cent   (12 CFR 235.4, if conditions are met)

Purchase of   $4.00
  21.0 + 0.2 + 1.0 = 22.2 cents            i.e., 5.55% of the value

Purchase of  $40.00
  21.0 + 2.0 + 1.0 = 24.0 cents            i.e., 0.60% of the value

Purchase of $250.00
  21.0 + 12.5 + 1.0 = 34.5 cents           i.e., 0.14% of the value

The cap combines a fixed component of 21 cents with an ad valorem component of 0.05% of the transaction value. This structure produces very different effective rates depending on the ticket size. The fixed component dominates on small tickets and becomes negligible on large ones. A $4 coffee carries more than 5% in interchange, while a $250 grocery run carries 0.14%. In 2023, average interchange on a capped transaction was $0.22 on dual-message networks and $0.24 on single-message networks. Both were right at the regulatory cap (Federal Reserve, biennial report, December 2025).

The exemption below $10 billion in assets

The exemption from the cap rests on a single criterion: the size of the issuer's balance sheet. 12 CFR 235.5 exempts any issuer that, together with its affiliates, had less than $10 billion in assets at the end of the calendar year before the transaction. An institution that crosses the threshold gets a grace period and must comply by July 1 of the following year. The threshold is measured in nominal terms and is not indexed.

• Small issuers: less than $10 billion in assets, consolidated with affiliates, measured at the end of the previous calendar year.
• Government programs: cards issued under a federal, state, or local program, where the cardholder can access only program funds. The EBT rail and its QUEST acceptance mark fall into this category.
• General-purpose reloadable prepaid: a card not linked to a deposit account, reloadable, and not marketed as a gift card.
• The condition that voids the last two: since July 21, 2012, the exemption no longer applies if the cardholder can be charged overdraft fees, or a fee for the first withdrawal each calendar month at ATMs in the issuer's network.

The cost gap between the two network types depends on the issuer's status under the cap. On a card issued by a capped bank, the choice of network moves interchange by two cents: $0.22 versus $0.24. On an exempt transaction, the same payment costs $0.61 on average through Visa or Mastercard. It costs $0.26 through STAR, NYCE, or Accel. Exempt transactions made up 38.8% of US volume in 2023, or 39.02 billion transactions. Routing choices therefore affect more than a third of debit card payments.

Dual routing: two unaffiliated networks per card

12 CFR 235.7(a) prohibits both issuers and networks from limiting the networks available for a debit transaction to fewer than two unaffiliated networks. The obligation falls on the issuer, which must have enabled them, and it applies to all issuers, including those not covered by the cap. A community bank with $2 billion in assets is exempt from the interchange cap but still bound by the dual routing requirement.

235.7(b) completes the framework by prohibiting both issuers and networks from preventing the merchant from directing routing to any of the enabled networks. The merchant, or its acquirer acting on its behalf, makes that choice transaction by transaction, among the paths the card supports. Because interchange differs from one path to another, exercising that right determines part of the merchant's acceptance costs. What sets the US regime apart is that a federal rule requires both paths to exist, and gives the routing choice to the party that bears the cost.

• The issuer must have enabled two unaffiliated networks, not just listed two brands in the card's record.
• Enablement is assessed by category: geographic area, specific merchant, merchant type, and transaction type. A path that is open in store but closed online does not meet the requirement for the online channel.
• No network rule, contract clause, or penalty may effectively recreate a single path.
• The BIN tables provided to acquirers must reflect the networks actually enabled; otherwise, the merchant's right is meaningless.

Extension to e-commerce, July 2023

The final rule of October 3, 2022 settled a question that had been open for a decade. The Federal Reserve clarified that the two-unaffiliated-network requirement also covers card-not-present transactions, and that the issuer must have enabled those networks. Compliance was required by July 1, 2023. Since then, single-message networks have been able to compete to route online payments, a channel they had in practice been shut out of.

PINless means routing a transaction over a single-message network without a PIN. A checkout page has no way to capture a PIN. The clarification therefore makes PINless a technical necessity: for a single-message network to process a card-not-present transaction, the issuer must accept such transactions, within amount and merchant-category limits it sets itself. Without that enablement, the card offers only one path for card-not-present payments, and the merchant has no choice at all, whatever brands are printed on the card.

• Network tokens: a token issued by Visa or Mastercard for a stored card cannot be freely detokenized outside its original network. Policies differ by brand, and routing a tokenized transaction to another network is still impossible or degraded in many setups.
• Wallets: a card enrolled in Apple Pay or Google Wallet reaches the merchant as a token, with the same constraint.
• Recurring payments: subscriptions based on a stored card inherit the limits of the token behind them.
• PINless eligibility: it depends on the issuer, which sets it by amount limit and merchant category. A cart above the limit falls back to dual message.
• Authentication: 3-D Secure is specified by the global brands. Single-message networks offer no uniform equivalent, which shifts the fraud burden to the merchant.

Managing debit routing: the merchant's actual job

A routing table is a set of rules, ranked by priority, that the acquirer or gateway applies to each transaction to decide which network carries it. The merchant sets the rules and their order. Standard practice is to write the table, review it every quarter, and measure the paths it produces on live transactions. The inputs it depends on keep changing: PINless eligibility, issuer-set amount limits, and pricing schedules. A table that is never revised eventually stops matching the paths actually available.

1. Is the card PINless-eligible?
     source: BIN file + networks actually enabled
     no  -> dual message (Visa Debit / Debit Mastercard)

2. Amount <= PINless limit set by the issuer?
     no  -> dual message

3. MCC accepted by the single-message network?
     no  -> dual message

4. Cost comparison for this ticket
     interchange + network fees + acquirer pricing, path by path
     -> pick the cheapest path

5. Authorization rate guardrail
     if the selected path's observed rate over a rolling 30 days
     is more than X points below the alternative path
     -> switch to the alternative path

6. Permanent exclusions
     EBT / QUEST: dedicated rail, never routed to a global brand
     high-refund flows: check the selected network's
     credit procedure first

• Cost vs. approval: a cheaper network may show a lower authorization rate on some segments. The gap must be measured on the merchant's own data, never on a market average.
• Refunds: credit procedures differ from one network to another. A refund sent to the wrong network is rejected, and the customer complaint arrives before the fix.
• Small tickets: the cap includes a fixed 21 cents. On a $4 purchase, capped interchange exceeds 5% of the value. The structure of US debit mechanically penalizes businesses with a low average ticket.
• EBT rail: SNAP food benefits run on dedicated cards under the QUEST acceptance mark, with their own product eligibility and routing rules. Every grocery merchant has to certify for them separately.
• Cash access: for a card program, the choice of surcharge-free ATM network (MoneyPass at Fiserv, Allpoint at NCR Atleos, Culiance for credit unions) drives coverage and cost, independently of payment routing.

A cap hanging on a federal appeal

The interchange cap has been vacated by a court, but the vacatur itself is stayed. On August 6, 2025, the US District Court for the District of North Dakota held in Corner Post, Inc. v. Board of Governors of the Federal Reserve System that the Federal Reserve had exceeded its authority by including in the cap calculation a category of costs the statute did not cover. The court vacated the interchange standard, then stayed its own ruling.

The stay keeps the cap in force in 2026. Without it, the vacatur would take effect and US debit interchange would be deregulated overnight, an outcome the court explicitly sought to avoid. The case is pending before the US Court of Appeals for the Eighth Circuit. The Federal Reserve filed its opening brief on December 30, 2025, Corner Post responded on February 13, 2026, and oral arguments were heard in May 2026. No ruling had been issued as of early August 2026.

The case began with a question about the deadline to sue. Corner Post, a North Dakota truck stop that opened in 2018, did not exist when Regulation II was adopted. The Supreme Court resolved that point on July 1, 2024, in a 6–3 decision: the six-year statute of limitations under the Administrative Procedure Act runs from when the plaintiff is injured, not from when the rule is adopted. That ruling reopened a 2011 rule to challenge, 14 years after its adoption.

Interchange on US credit cards falls under a separate framework, shaped by private antitrust litigation rather than federal regulation. A settlement was announced on November 10, 2025 in the MDL 1720 litigation before the US District Court for the Eastern District of New York. It provides for a 0.1 percentage point cut in interchange for five years and a 1.25% cap on standard consumer card rates for eight years. It needs final court approval to take effect. Judge Brian Cogan granted preliminary approval on June 9, 2026, and will consider final approval at a November 16, 2026, hearing; approval is not guaranteed. An earlier settlement was rejected in 2024, and the major merchant trade groups consider the concessions insufficient.

• Refresh the BIN file and the list of networks enabled per card with the acquirer at least once a quarter.
• Measure the share of volume actually routed over each path, month by month and channel by channel: a reported share is not a measured one.
• Map the scope of tokenized stored cards, and quantify the routing cost it locks in.
• Track the Eighth Circuit appeal: its outcome sets the level of the cap, and therefore half of the US debit cost equation.