The Durbin-Marshall bill would cap the fees that banks charge merchants when you swipe a credit card

The Durbin-Marshall Credit Card Competition Act is a proposed federal law that would limit the interchange fees — the per-transaction charges that Visa and Mastercard set and that your bank collects when you use a credit card to pay. Right now, these fees typically run 2 to 3 percent of the purchase amount. The bill would cap them at 0.3 percent plus a flat fee of a few cents, similar to the rules already in place for debit card transactions under the 2010 Dodd-Frank Act.

The bill has been introduced multiple times since 2009 but has not yet become law. It remains a subject of debate between retailers, who say high interchange fees raise prices for everyone, and banks and card networks, who say lower fees would reduce the rewards and benefits they can offer cardholders. Understanding what this bill proposes — and what would actually change if it passed — helps you see how credit card economics work and why different groups want different rules.

Key Takeaways

  • Interchange fees are charges that Visa and Mastercard set and that your bank keeps when you swipe a credit card; they currently range from 2 to 3 percent of each purchase.
  • The Durbin-Marshall bill would cap interchange fees at roughly 0.3 percent plus a small flat fee, matching the debit card rules that have been in effect since 2010.
  • If the bill passed, retailers would likely lower prices, but credit card rewards programs and benefits might shrink because banks would earn less from each transaction.
  • The bill has not passed Congress, and both the financial industry and retail industry have strong reasons to lobby for or against it.
  • Your credit card usage would not change mechanically, but the rewards you earn and the perks your card offers could look different over time.

How interchange fees work today

When you swipe or tap a credit card at a store, several parties take a cut. The merchant (the store) pays a fee to its bank, which is called the acquiring bank. That acquiring bank then pays an interchange fee to your bank (the issuing bank). Visa or Mastercard sets the interchange rate, and your bank keeps that money. The merchant's total cost is the interchange fee plus a small markup that Visa or Mastercard takes, plus the acquiring bank's own fee.

For a $100 purchase, interchange fees typically cost the merchant $2 to $3. That cost gets passed along in the form of higher prices for all shoppers, whether they pay with cash, debit, or credit. Retailers argue this is unfair — they say they should not have to subsidize rewards that only credit card users receive. Banks argue that interchange fees fund fraud prevention, customer service, and the rewards programs that make credit cards attractive.

What the Durbin-Marshall bill proposes

The bill would set an interchange fee cap of 0.3 percent of the transaction amount, plus a fixed fee of a few cents per transaction. This mirrors the Durbin Amendment, which capped debit card interchange at roughly the same level in 2010. Under that rule, a $100 debit card purchase costs the merchant about 30 cents in interchange, not $2 or $3.

The bill would explore the same cap to credit cards issued by banks with more than $10 billion in assets. Smaller banks and certain card types might be exempt, similar to how the debit card rules work. The cap would be set by the Federal Reserve, which means Congress would not have to pass a new law every time the rate needed adjustment.

What would likely happen to credit card rewards and benefits

Banks currently use interchange revenue to fund rewards programs, cash back offers, travel perks, and other cardholder benefits. If interchange fees dropped by 85 to 90 percent, banks would lose a major source of income. Most would respond by reducing or eliminating rewards on lower-spending cards, raising annual fees, or cutting back on premium benefits like travel insurance or concierge services.

High-end rewards cards might survive because wealthy customers would still pay annual fees for premium perks. But the everyday cash back card or the card with no annual fee would likely become less generous. Some banks might exit the credit card business altogether if margins became too thin.

This is not speculation — it is what happened after the Durbin Amendment capped debit card fees. Debit card rewards largely disappeared, and banks introduced monthly maintenance fees on checking accounts to make up the lost revenue.

What would likely happen to prices and merchants

Retailers would save money when ready. A store processing $1 million in credit card transactions per month would save roughly $20,000 to $30,000 monthly under the proposed cap. Retailers argue they would pass these savings to customers through lower prices. Some probably would, especially in competitive categories like groceries or gas.

However, not all savings reach the customer. Some retailers would keep the difference as higher profit margins, and some would use the savings to offset other rising costs like labor or rent. There is no mechanism in the bill to force retailers to lower prices, so the actual benefit to shoppers would vary by store and by industry.

Why the bill has not passed despite multiple attempts

The credit card industry — banks, Visa, Mastercard, and American Express — opposes the bill strongly. They argue that lower interchange fees would reduce innovation in payment technology, cut rewards for cardholders, and hurt smaller banks that depend on interchange revenue. They also point out that the Durbin Amendment's debit card cap did not lead to lower prices for consumers, only to fewer free checking accounts and higher fees elsewhere.

Retailers support the bill, but their political power on this issue is weaker than the financial industry's. The bill has been introduced in multiple Congressional sessions but has not advanced to a floor vote. Both parties have members who oppose it, partly because of lobbying by banks and partly because of genuine disagreement about whether price controls on financial services work as intended.

How this compares to other countries

The European Union has capped credit card interchange at 0.3 percent since 2015, and debit card interchange at 0.2 percent. Australia capped credit card interchange at 0.5 percent. These caps did reduce merchant costs, but they also led to smaller rewards programs and higher fees for premium cardholders, much as the financial industry predicted. Prices for consumers did not fall uniformly — some categories saw reductions, while others saw little change.

The Durbin-Marshall bill would bring the United States closer to the European model. Whether that is good or bad depends on whether you value lower prices more than you value credit card rewards, and whether you believe retailers would actually pass savings to customers.

Frequently Asked Questions

Would my credit card stop working if this bill passed?

No. Your card would work exactly the same way. The only changes would be behind the scenes — the fees merchants pay would drop, and over time, the rewards and benefits your card offers might shrink. You would not notice a difference in how you use the card day to day.

Would I lose my rewards points or cash back?

Not when ready, but rewards programs would likely become less generous over time. Cards with high cash back rates (like 2 percent or more) would probably be scaled back or converted to cards with annual fees. Cards with no annual fee might drop from 1 percent cash back to 0.5 percent or lower. Premium cards with annual fees might keep their rewards intact.

Would my credit card interest rate go up?

The bill does not regulate interest rates, so rates would not change because of this law. However, if banks lost interchange revenue and wanted to maintain profit margins, they might raise rates on certain cards or tighten credit standards for new applicants. This is not certain — it depends on how each bank responds to lower interchange income.

When is this bill likely to become law?

There is no set timeline. The bill has been introduced multiple times without passing. It would require Congressional action and would face strong opposition from the financial industry. It is possible but not imminent, and the political environment would need to shift significantly for it to advance.

How is this different from the Durbin Amendment that already exists?

The Durbin Amendment capped debit card interchange fees in 2010. The Durbin-Marshall bill would extend a similar cap to credit cards. Credit card interchange is currently much higher than debit card interchange, so the impact would be larger. The bill would also give the Federal Reserve authority to adjust the cap over time without requiring a new law.