Large US banks are exploring acquisitions that would let them sidestep federal caps on debit-card interchange fees, a regulatory workaround that could reshape the payments industry and unlock billions in revenue that’s been off-limits since 2011.

The Durbin problem, explained

The Durbin Amendment, part of the Dodd-Frank Act, went into effect on October 1, 2011. It directed the Federal Reserve to cap debit interchange fees for banks with more than $10 billion in assets.

Every time you swipe your debit card, your bank charges the merchant a small fee. Before Durbin, big banks averaged about 50 cents per transaction. After the regulation kicked in, that dropped to roughly 22 cents.

Smaller banks, the ones under $10 billion in assets, are exempt. They still collect an average of about 43 cents per swipe. That’s nearly double what their larger competitors earn on identical transactions.

Capital One’s Discover play

The most prominent example of this strategy is Capital One’s acquisition of Discover Financial Services, announced in February 2024.

The Durbin Amendment’s fee caps apply specifically to four-party payment networks, which is the structure used by Visa and Mastercard. In that model, there’s the cardholder, the issuing bank, the merchant’s bank, and the network itself.

Discover and American Express operate differently. They use a three-party model where the network itself acts as the issuer. This structure falls outside the scope of the Durbin Amendment and Regulation II.

By acquiring Discover, Capital One gains access to a payment network that isn’t subject to the same interchange fee caps. The bank could potentially route its debit card transactions through Discover’s three-party rails, collecting fees closer to the pre-Durbin levels that larger issuers haven’t seen in over a decade.

The money at stake

US banks collected nearly $66 billion in total interchange fees in 2025, spanning both credit and debit transactions. A large bank earning 22 cents per debit transaction instead of 43 cents is leaving roughly 21 cents on the table every single swipe.

Community banks and credit unions, shielded by the $10 billion asset threshold, have enjoyed a structural advantage in debit interchange revenue since 2011.

What this means for investors

The problem is supply. There aren’t many payment networks available for purchase. Discover was a major card network with a three-party structure that was actually acquirable. American Express, the other prominent three-party network, isn’t on the auction block.

Investors evaluating bank stocks should track which institutions are actively pursuing network-level acquisitions, and whether Congress or the Fed signals any appetite to close the three-party loophole. Any expansion of Durbin-style regulations to cover three-party networks would collapse the entire thesis.