Why one debit card costs you 22¢ and another costs 61¢

Two customers buy the same $40 lunch. Both tap a debit card. One of those transactions costs you about 22 cents to accept. The other costs about 61 cents. Nothing about the sale is different — same amount, same terminal, same day. What differs is which bank issued the card, and a rule written in 2011.

That gap is not a rumour from a payments forum. It sits in a table the Federal Reserve publishes and updates every year, and the trend inside it is the opposite of what most operators assume.

The cap, and the exemption written into it

Regulation II, the Federal Reserve rule implementing the Durbin Amendment, took effect on 1 October 2011. For issuers it covers, the standard is specific: the base interchange fee may not exceed "21 cents plus a variable factor equal to 5 basis points multiplied by the value of the transaction". On a $40 sale that works out to roughly 23 cents.

But the same rule carves out an exemption. The standards "do not apply to interchange fees charged or received by an issuer that, together with affiliates, has total assets of less than $10 billion and that holds the account being debited."

In practice: a card from one of the large national banks is capped. A card from a community bank or a credit union usually is not. You have no say over which one a customer pulls out of their wallet, and nothing on the card tells you which it is.

The half of the market nobody capped

The cap did what it was designed to do on the regulated side. Covered dual-message interchange fell from about $0.58 before the standard took effect to $0.22 by 2024. The exempt side went the other way.

Exempt dual-message interchange averaged $0.53 in the three quarters before the cap. It drifted down slightly for a few years, then climbed: $0.60 in 2020, $0.64 in 2021 and 2022, and $0.61 in 2024. A merchant whose customers bank locally has watched the price of accepting their cards rise across a period widely described as the era of capped debit fees.

Worth being careful here: the Federal Reserve publishes these averages without attributing a cause, and this is a correlation over a long period in which a great deal else changed, including the mix of card products and the shift toward contactless and online payments. The chart shows what happened, not why.

The same card at two different prices

The second number that moves is the network the transaction runs over. Most debit cards can be processed two ways. Dual-message routing authorises and settles in separate steps, the traditional signature-debit path. Single-message routing does both at once, the path historically associated with PIN debit. Both reach the same account. They do not cost the same.

For capped cards the routing decision is close to irrelevant — 22 cents against 24 cents. For exempt cards it is the single largest lever visible in the data: 26 cents against 61 cents on the same card. That is where the money is.

Why small merchants often did not feel the benefit

If routing is a right and the savings are that large, the obvious question is why small merchants have not simply captured them. Research published by the Federal Reserve Bank of Kansas City in March 2025 looked directly at that question, examining whether the exclusivity and routing provisions reduced exempt fees charged to small merchants for in-person transactions.

The detail matters more than the headline. The paper finds that some networks cut exempt fees for certain merchant categories while others raised them or left them alone — and that "the size of the interchange fee increases was generally much greater than the size of the reduction". A right that exists in regulation, exercised unevenly across networks and merchant categories, does not produce a uniform saving.

For an independent operator, the practical translation is that this is not a problem that resolves itself in your favour. Nobody in the chain is incentivised to route your transactions the cheap way on your behalf.

What to actually do about it

None of this is solvable by switching to whichever processor advertises the lowest headline rate. It is solvable by knowing what you currently pay and what your setup currently does — which most operators do not, because merchant statements are not written to make it obvious.

Where this lands operationally is the point of sale, because that is where the payment path is configured. Whatever till you run — ours included — the routing behaviour is set by the payment configuration behind it rather than by the till itself, so the questions above go to whoever holds your merchant account. If you want a second opinion on how your setup is put together, tell us what you are running.

What this does not mean

Interchange is not your total cost of acceptance. Sitting on top of it are network assessment fees and whatever your processor adds, and on blended pricing the processor absorbs interchange movements rather than passing them through. A merchant on flat-rate pricing can read this entire article, discover their customers all bank locally, and still find that nothing on their statement changes — because their contract was written not to.

The published figures are also averages across every reporting network and merchant category. Your own rates depend on your merchant category, your average ticket and the specific card products your customers carry. The direction of the finding is solid; the exact cents on your statement will not match the table.