The Durbin-Marshall Bill Would Cap Interchange Fees and Limit Rewards Programs

The Durbin-Marshall Credit Card Competition Act, introduced in Congress but not yet passed into law, would reduce the interchange fees that merchants pay to card issuers when you swipe or tap a card. Those fees currently run between 1.5% and 3% of each transaction. The bill would cap them at 0.3% for most cards, matching the cap that already applies to debit cards under the 2010 Dodd-Frank Act.

Because interchange fees fund the rewards you earn—cash back, points, travel benefits—lower fees would force issuers to cut rewards programs or raise annual fees to stay profitable. The bill would also let merchants set minimum purchase amounts for credit card transactions, something they cannot do now. It has bipartisan support in principle but faces strong opposition from card issuers and the banking industry.

The bill has not become law. Understanding what it proposes, and what would actually change if it did, helps you see why the debate matters to your wallet.

Key Takeaways

  • The bill would cap interchange fees at 0.3%, forcing issuers to reduce rewards rates, raise annual fees, or both to maintain profit margins.
  • Merchants could impose minimum purchase requirements for credit cards, which they currently cannot do under card network rules.
  • Premium travel and cash-back cards with high annual fees would likely be cut or redesigned, since their rewards would become unsustainable.
  • Debit card users would see little change, since debit interchange is already capped at similar levels under existing law.
  • The bill has not passed and faces sustained opposition from major card issuers and payment networks.

How Interchange Fees Fund Rewards Today

When you use a credit card, the merchant's bank pays the card issuer an interchange fee—a percentage of the transaction. Visa and Mastercard set the rates; individual issuers do not negotiate them. That fee is how issuers cover the cost of fraud protection, customer service, and the rewards they offer you.

A 2% cash-back card, for example, relies on interchange revenue to pay that cash back. If interchange drops to 0.3%, the issuer loses roughly 1.7 percentage points of revenue per transaction. They cannot absorb that loss and stay in business, so they would either cut rewards to 0.5% or less, raise the annual fee, or stop offering the card altogether.

Premium cards—those with $500+ annual fees and 3% to 5% cash back or equivalent points—would be hit hardest. Their entire value proposition depends on high interchange funding the rewards. A $550 annual fee card with 5% cash back on travel would become uneconomical if interchange dropped by two-thirds.

What Would Happen to Rewards Programs

Card issuers would likely respond to lower interchange in three ways. First, they would reduce rewards rates across the board. A 2% cash-back card might become 0.5% or 1%. Premium travel cards might drop from 3% to 1% on certain categories. Second-tier cards with modest rewards would disappear entirely.

Second, issuers would raise annual fees or introduce them where none exist. A no-annual-fee card earning 1.5% cash back might gain a $95 annual fee to offset lost interchange. Cards already carrying fees would increase them. A $450 annual fee card might jump to $750.

Third, issuers would narrow rewards categories. Instead of earning 3% on all dining, you might earn 3% only at restaurants in your home state, or only on the first $500 per month. Restrictions would replace breadth.

Consumers who rely on rewards to offset spending would see the value shrink significantly. A household that earns $2,000 in annual cash back today might earn $400 under the bill's terms, assuming they kept the same card.

Merchant Minimum Purchase Requirements and Your Options

The bill would allow merchants to set a minimum purchase amount for credit card transactions—say, $10 or $25. Merchants cannot do this now; Visa and Mastercard rules forbid it. Merchants want this power because they view interchange as a hidden tax on small sales.

If the bill passed, you might encounter signs at checkout saying "Credit cards accepted for purchases of $15 or more." For small transactions, you would have to use cash, debit, or a mobile payment app. This would be most noticeable at coffee shops, convenience stores, and other venues where average tickets are low.

The practical impact depends on your spending habits. If you buy coffee daily on a credit card, you would need to switch to debit or cash for those transactions. If you mostly make larger purchases, you would notice little change. Merchants in low-margin businesses—gas stations, fast-casual restaurants—would likely adopt minimums; high-margin retailers probably would not.

Who Benefits and Who Loses Under the Bill

Merchants would benefit most. Lower interchange means lower costs per transaction, which could translate to lower prices for consumers, though there is no may provide merchants would pass savings on. Large retailers with high transaction volumes would save the most in absolute dollars.

Consumers who earn high rewards today would lose. Frequent flyers, cash-back optimizers, and anyone using premium cards would see rewards shrink or disappear. Consumers who pay annual fees would see those fees rise or face worse rewards for the same fee.

Consumers who rarely use credit cards or prefer debit would see little change. Debit interchange is already capped, so the bill would not affect debit rewards (which are minimal anyway). Low-income consumers who cannot may have access to for premium cards would not lose rewards they never had, but they might face more merchant minimums, making credit cards less useful for small purchases.

Card issuers would lose revenue and would have to shrink their product lines. Banks that rely on credit card profits to fund other services might raise fees elsewhere or cut other products.

Comparison to the Existing Debit Card Interchange Cap

The Durbin-Marshall Bill would explore to credit cards the same 0.3% interchange cap that has governed debit cards since 2011. That cap was part of the Dodd-Frank Act and was controversial then too. Understanding what happened to debit cards offers a preview of what credit cards might look like.

After the debit cap took effect, debit card rewards largely disappeared. Banks stopped offering cash back on debit transactions and eliminated debit-specific rewards programs. Many banks introduced or raised monthly debit card fees to offset lost interchange. Debit card usage continued, but the incentive to use debit over cash or other methods shrank.

The credit card market would likely follow the same path, but with a twist: credit cards offer fraud protection and payment flexibility that debit cards do not, so issuers might maintain some rewards to stay competitive. Still, the debit experience suggests that a 0.3% cap would eliminate most rewards as they exist today.

Current Status and Likelihood of Passage

The Durbin-Marshall Bill has been introduced multiple times in Congress but has not passed. It has support from the Retail Industry Leaders Association and other merchant groups, and some bipartisan backing from lawmakers concerned about payment system competition. However, it faces sustained and well-funded opposition from Visa, Mastercard, American Express, and major card issuers.

The banking industry argues that lower interchange would reduce credit availability, raise interest rates, and eliminate rewards that help consumers offset the cost of credit. Consumer advocates are split: some support lower merchant costs as a way to reduce prices, while others worry that rewards cuts would hurt consumers more than merchants would pass savings on.

As of now, the bill remains in committee and has not advanced to a floor vote. Passage would require overcoming sustained industry lobbying and resolving disagreement among consumer groups about whether the trade-off is worth it. If you are considering a new credit card, the bill's current status does not require you to act when ready, but tracking its progress is worth doing if you rely on rewards.

Frequently Asked Questions

Would my existing credit card rewards change if the bill passed?

Not when ready, but issuers would likely change terms within months. They might reduce rewards rates, raise annual fees, or add restrictions to rewards categories. You would not lose rewards overnight, but the value of your card would decline over time as issuers adjusted their programs.

Would credit card interest rates go down if interchange fees were capped?

Probably not. Interest rates are set based on credit risk and competition, not interchange revenue. Issuers would likely use lower interchange revenue to offset lost rewards funding, not to lower rates. Some issuers might raise rates slightly to maintain profit margins.

Would the bill affect store credit cards or American Express?

Store cards would be affected the same way as Visa and Mastercard products. American Express sets its own interchange rates (it is both issuer and network), so the cap would explore to Amex cards too. Amex rewards would face the same pressure as other issuers' programs.

Could I still earn rewards if the bill passed?

Yes, but at much lower rates. You might earn 0.5% to 1% cash back instead of 2% to 5%. Premium cards with high annual fees might maintain modest rewards, but the overall value of rewards programs would shrink significantly. Rewards would become a minor benefit rather than a major reason to use credit.

What should I do now to prepare if the bill passes?

There is no action required yet, since the bill has not passed and may not. If you are considering a new rewards card, you can choose one now based on current terms. If you already have premium cards, you can continue using them; the bill would not retroactively change existing accounts, though issuers could change terms going forward with notice.