Can banks skirt interchange caps by owning a debit network | American Banker

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Can banks skirt the Durbin Amendment by owning a debit network?<br>By Joey Pizzolato CloseText

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Published July 09, 2026, 7:00 a.m. EDT

6 Min Read

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Key insights : Some of the country's largest banks are reportedly considering buying a Fiserv-owned debit card network as a workaround to interchange caps instituted by the Durbin Amendment in the Dodd-Frank Act. It's an idea that looks good on paper, but could be harder to actually implement.<br>What's at stake : Any such acquisition would likely face challengers on multiple fronts, but could net those banks more than $3 billion in incremental annual revenue.<br>Expert quote : "The logic is regulatory driven. Own the network, and the cap disappears," Eamonn Moran, a partner at Holland & Knight, told American Banker.<br>Big banks have been fighting against the so-called Durbin Amendment since its inception. The latest potential workaround — buying a debit network — may not shake out as planned.<br>Processing Content<br>The Durbin Amendment, named after Illinois Democratic Senator Dick Durbin, is a federal provision in the 2010 Dodd-Frank Act that caps the interchange fees that issuing banks with more than $10 billion in assets can charge merchants to process debit card transactions. It also prohibits network exclusivity by requiring debit card issuers to enable at least two unaffiliated networks through which payments can run, and applies specifically to the four-party business model that includes the cardholder, issuing bank, payment network and acquiring bank.

Some of the country's largest banks, including JPMorganChase, Bank of America, Wells Fargo, and PNC, are reportedly considering an acquisition for a Fiserv-owned debit card network as a workaround to the regulation. The idea is that if a bank owns the payment network, then transactions processed through its own debit cards would exhibit a three-party model and not be subject to the regulation.<br>"The key here is that by owning a network, the debit transaction is not 'routed,'" Eric Grover, principal at Intrepid Ventures, told American Banker. "And the Federal Reserve, in implementing the Durbin Amendment, held that the debit transaction has to be 'routed' from a network that is independent of the issuer to a separate issuer."<br>There are no explicit interchange fees in a three-party system, according to Eamonn Moran, a partner at Holland & Knight. For example, the American Express model is a three-party system that consists of the cardholder, the merchant and the network provider — American Express — which serves as both the acquirer and the issuer.<br>"The logic is regulatory driven," Moran told American Banker. "Own the network and the cap disappears. Capital One demonstrated the play with its $35 billion purchase of Discover, which handed it a network, and with it, an exemption its competitors don't have."

Some analysts are skeptical of that logic, though. Dan Dolev, a senior analyst at Mizuho Securities, said that "while the idea looks good on paper, we are less optimistic about its implementation. For instance, prior attempts from the last decade like the ChaseNet closed-loop system were not successful."<br>Fiserv-owned debit networks Star and Accel are also different from the Discover Network, according to Keefe Bruyette and Woods analyst Vasundhara Govil, namely that Discover was originally structured to be a three-party network.<br>"STAR and Accel were established as four-party network models issued by thousands of financial institutions in the U.S.," Govil said. "This could lead to regulatory scrutiny as such a transaction could be viewed as an attempt to circumvent rules established under the Durbin Amendment."<br>The particulars of the acquisition will also inform whether the network owner will be able to get around fee limits on debit transactions, Intrepid Venture's Grover said.<br>A single purchaser approach in which one bank acquires the debit network from Fiserv would "be doing exactly what Capital One did with Discover," Grover said. "Capital One with Discover showed the industry how to do it, and conceptually it's not complicated. The execution is obviously complicated."<br>A consortium approach could throw a wrench in banks' ability to get around the provision because to be exempt from Durbin, the network and the issuer have to be owned by the same entity.<br>"There's still a handful of debit networks. They're owned as cooperatives by banks, mostly small banks, but those debit cards are subject to the Durbin Amendment," Grover said. "If...