What Regulation II does
Regulation II is a rule from the Federal Reserve Board. The Fed’s own page calls it “Debit Card Interchange Fees and Routing”. It does two things:
- Caps debit interchange for large card issuers. Interchange is the fee your processor pays your customer’s bank on each card sale. The issuer is that bank.
- Sets routing rules, so each debit card can be processed over more than one network.
The Fed’s Regulation II FAQ refers to Section 920 of the Electronic Fund Transfer Act (EFTA). Law firm and banking press coverage of the rule, such as Cooley’s and the ABA Banking Journal’s, calls the law behind it the “Durbin Amendment”. The rule is in the US Code of Federal Regulations, 12 CFR Part 235.
The cap
12 CFR 235.3 says a covered issuer’s interchange fee must be “no more than the sum of— (1) 21 cents and; (2) 5 basis points multiplied by the value of the transaction.” Five basis points is 0.05%.
12 CFR 235.4 adds a fraud-prevention adjustment of “no more than 1 cent per transaction” for issuers that have fraud-prevention policies that meet the rule’s standards, and that tell their card networks each year that they comply.
Regulated and exempt issuers
12 CFR 235.5 exempts three groups from the cap:
- Small issuers: an issuer that holds the account and, “together with its affiliates, has assets of less than $10 billion as of the end of the calendar year preceding” the sale. The rule says the Board publishes lists that can be used to check an issuer’s size. An issuer that grows past $10 billion must comply by July 1 of the next calendar year.
- Government-administered programs: debit cards given under a federal, state or local government payment program.
- Certain reloadable prepaid cards.
Visa’s US rate sheet uses the words “Regulated” and “Exempt” for these two groups:
| Visa US debit, in person | Exempt Visa debit | Regulated Visa debit |
|---|---|---|
| CPS/Retail, Debit | 0.80% + $0.15 | 0.05% + $0.21 |
| CPS/Supermarket, Debit | $0.30 | 0.05% + $0.21 |
Visa’s sheet adds: issuers “that certify to Visa their compliance with the interim fraud prevention standards will receive an additional US $0.01.”
What the Federal Reserve’s data shows
The Fed publishes the average debit interchange each year. For 2024, across all networks:
| Covered transactions | Exempt transactions | All transactions | |
|---|---|---|---|
| Share of the number of transactions | 60.7% | 39.3% | — |
| Average sale | $48.95 | $42.27 | $46.32 |
| Average interchange per sale | $0.23 | $0.51 | $0.34 |
| Interchange as % of the average sale | 0.47% | 1.21% | 0.73% |
The Fed says “covered transactions” are those on cards from issuers subject to the cap, other than exempt prepaid or government program cards. The Fed also notes that networks may offer several pricing programs, so the table “does not reflect what a particular issuer will earn”.
What it means for your bill
Interchange is one part of what you pay. Your processor adds its own fees. How a debit sale shows on your statement depends on your pricing:
- Interchange plus: regulated and exempt debit show at their own interchange, with the processor’s markup on top. See What Is Interchange Plus Pricing?
- Flat rate: one published rate covers the sale, whatever the card. Square US, for example, lists 2.6% + 15¢ for in-person card payments on its Free plan.
More: What Is Interchange? and Per-Transaction Fees.
Debit routing choices
12 CFR 235.7 sets two rules for all issuers, large and small:
- Two networks. An issuer or network may not restrict a debit card to fewer than “two unaffiliated networks.”
- Merchant routing. An issuer or network may not “inhibit the ability of any person that accepts or honors debit cards for payments to direct the routing of electronic debit transactions” over any network the issuer has enabled.
The Fed’s overview says these rules apply to “all issuers and networks.” Your processor can say which networks your debit sales are routed over.
The court case and the 2023 proposal
Regulation II is being challenged in court. What the sources say, with their dates:
- August 6, 2025, district court. In Corner Post, Inc. v. Board of Governors of the Federal Reserve System, the US District Court for the District of North Dakota vacated (set aside) Regulation II. Cooley’s summary says the court concluded “the rule is contrary to law and the Federal Reserve exceeded its statutory authority.”
- The cap stays in force for now. The same court stayed (paused) its own ruling while the case is appealed, “to prevent interchange transaction fees from becoming a completely unregulated market,” as Cooley and the ABA Banking Journal both quote it.
- The appeal. The case is before the US Court of Appeals for the Eighth Circuit. On February 2, 2026, the ABA Banking Journal reported that the American Bankers Association filed a brief asking the Eighth Circuit to reverse the district court.
- The 2023 proposal is not final. On October 25, 2023, the Federal Reserve Board “requested comment on a proposal to lower the maximum interchange fee that a large debit card issuer can receive.” Consumer Finance Monitor (August 14, 2025) lists the proposed numbers: 14.4 cents instead of 21 cents, 4.0 basis points instead of 5.0, and a fraud-prevention adjustment of 1.3 cents instead of 1.0 cent. It says: “This proposal was never finalized by the Board.” The Fed’s press release gives the effect on an average $50 sale: from 24.5 cents to 17.7 cents.
The rule text on eCFR, as of October 1, 2026, still sets 21 cents plus 0.05%. This page will be updated when the court cases or the rule change. The appeal’s outcome is not known.
Where to go from here
For the rest of US card processing, see card processing in the United States. On an interchange plus statement, card types are listed with their own interchange. Reading a US Merchant Statement shows where they sit, including the regulated and exempt debit lines.
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