No. The federal cap on debit card interchange applies to debit cards issued by large banks, and debit cards issued by smaller banks and credit unions are exempt, so they can cost a merchant noticeably more to accept. That does not make them expensive in the way a premium rewards card is, but it does mean that “debit costs almost nothing” is only true for part of your debit sales. This guide explains who is covered, what an exempt card costs in the inputs of NPS’s 2026 pricing study, why your blended debit cost is higher than the capped figure, and what to ask your provider so you can see your own mix.
The short answer
- The cap covers large-bank debit cards. It comes from Regulation II, a Federal Reserve rule that grew out of the Durbin Amendment.
- Smaller banks and credit unions are exempt. Their debit cards can carry higher interchange.
- You cannot tell by looking at the card. Two debit cards handed over on the same afternoon can cost you different amounts because of who issued them.
- Exempt debit is still cheaper than a flat rate in the study’s inputs, but the saving is smaller than on capped debit.
- Do not rely on an old figure. The Federal Reserve has proposed lowering the cap, and the proposal remains unresolved.
What the cap is, in plain words
Interchange is the fee a merchant’s side of a card payment pays to the bank that issued the customer’s card. Normally that fee is set by the card networks. For debit, a federal rule limits it. The Durbin Amendment, part of a 2010 financial reform law, told the Federal Reserve to make debit interchange reasonable and proportional to the issuer’s cost, and the Federal Reserve did it through Regulation II. Our guide on what the Durbin Amendment changed for small merchants covers the law in full, including the other things it did.
In NPS’s 2026 pricing study, “The Flat-Rate Tax”, the capped debit interchange used as an input is 0.05% plus 22 cents per sale. The study also describes the cap as 0.05% plus 21 cents with a 1 cent fraud-prevention adjustment. You can read the study here. It is a cost model built on published rate schedules by a processor that sells pass-through pricing, so it comes from a party with an interest in the question. It lists every input so that you can check it.
Interchange Rate Inputs
What each debit type costs per sale
- Capped debit0.05% + 22¢Large-bank debit cardAlso described as 0.05% plus 21 cents with a 1 cent fraud-prevention adjustment
- Exempt debit, in person0.80% + 15¢Small-bank or credit union, in-person saleOn a $75 sale, about $0.75 versus $0.26 for capped
- Exempt debit, online or invoice1.65% + 15¢Small-bank or credit union, online or invoice saleOn a $150 online sale, about $2.63 versus $0.30 for capped
Who is covered and who is not
The cap applies to debit cards from the largest card issuers. NPS’s Durbin guide states that smaller banks and credit unions are exempt from it, which means a debit card from one of those issuers can carry higher interchange than a debit card from one of the biggest banks. The study uses the same words: it calls these “exempt” or “small-bank” issuers.
We do not draw the line between large and small here, and we do not list issuers. The exact size test is in the Federal Reserve’s rule, and the Federal Reserve can revise it. Check the current rule with your processor or counsel before you rely on a number from an article, ours included.
The part that matters for a merchant is not the definition but the effect. A customer pulls out a debit card. You cannot see who issued it, and your cashier cannot either. Yet the cost to you differs. That is a fact about how the system is built, not something you did wrong.
Capped vs. Exempt Debit
Two debit cards, two different costs
- Who issues it?
- Capped debit (large bank)Largest card issuers
- Exempt debit (small bank or credit union)Smaller banks and credit unions
- Interchange rate
- Capped debit (large bank)0.05% + 22¢ per sale
- Exempt debit (small bank or credit union)0.80% + 15¢ in person; 1.65% + 15¢ online
- Cost on a $75 in-person sale
- Capped debit (large bank)About $0.26
- Exempt debit (small bank or credit union)About $0.75
- Can you tell from the card?
- Capped debit (large bank)No
- Exempt debit (small bank or credit union)No
You cannot see who issued it, and your cashier cannot either. Yet the cost to you differs.
What an exempt debit card costs in the study’s inputs
The study gives separate interchange inputs for exempt debit: 0.80% plus 15 cents for in-person sales, and 1.65% plus 15 cents for online and invoice sales. Here is our arithmetic on those inputs, showing the interchange alone, in dollars per sale, next to the capped input of 0.05% plus 22 cents. We have left out network fees and any provider markup so that you can see the issuer’s piece by itself.
Interchange by Sale Size
Interchange cost rises faster on exempt debit
| Sale amount | Capped debit | Exempt debit, in person |
|---|---|---|
| $15 | $0.23 | $0.27 |
| $40 | $0.24 | $0.47 |
| $75 | $0.26 | $0.75 |
| $150 | $0.30 | $1.35 |
| $300 | $0.37 | $2.55 |
| Sale | Capped debit | Exempt debit, in person | Exempt debit, online or invoice |
|---|---|---|---|
| $15 | $0.23 | $0.27 | $0.40 |
| $40 | $0.24 | $0.47 | $0.81 |
| $75 | $0.26 | $0.75 | $1.39 |
| $150 | $0.30 | $1.35 | $2.63 |
| $300 | $0.37 | $2.55 | $5.10 |
At $15 there is almost no difference between capped and exempt debit in person. The percentage part is what separates them, so the gap widens as the sale grows. On a $150 online or invoice sale, an exempt debit card costs about $2.63 in interchange against about $0.30 for a capped one. That is nine times as much. It is also less than the roughly $4.65 that a 2.9% plus 30 cent flat rate would cost on the same sale, so the exempt card is not the problem, but the saving from moving off a flat rate is smaller than it is on capped debit.
For the full per-sale view with network fees added, see what debit cards cost under flat rate and pass-through.
Why your blended debit cost is not the capped figure
Your debit sales are a mix of both kinds of card. The study assumes that 35% of debit volume comes from exempt issuers. That is a modeling assumption, not a measured national figure, and your own mix may be higher or lower. Using it, we can show how the mix changes the answer.
Take a $75 in-person debit sale. If every card were capped, the interchange would be about $0.26. If 65% are capped at about $0.26 and 35% are exempt at about $0.75, the blended interchange is about $0.43, which is roughly 65% higher than the all-capped figure. For a $75 online sale, the same mix gives about $0.65 instead of $0.26, about two and a half times as much.
This is why we do not repeat a shorthand that you may see elsewhere, that most debit cards cost a flat 0.05% plus 22 cents. The cap applies to large-bank debit. Small-bank debit costs more, and the blend depends on where your customers bank. A merchant in a town with a strong community bank or credit union may see more exempt cards than one whose customers use national banks. We have not measured that, so treat it as something to check on your own statements.
What it means for a flat-rate versus pass-through decision
The exemption changes the size of the saving, not its direction, in the study’s model. Even the exempt input is well under a flat rate such as 2.9% plus 30 cents, as the study uses. At the same time, anyone who says that debit is nearly free under pass-through pricing is overselling. If you are comparing, use a realistic blend.
Our check for a debit-heavy business is in mostly debit sales: flat rate versus interchange plus, and a plain-language look at what a flat rate bundles together is in where Stripe fees actually go: interchange plus versus flat rate. Both assume the blend described above.
Remember also that other layers sit on top of interchange. Card network fees apply to every sale, and your provider adds its own markup and fees. NPS’s Durbin guide makes the same point: a regulated debit cap lowers one line of the bill and leaves the others where they were. A provider with a high markup can still cost you more than a competitor, even on capped debit.
How to see your own capped and exempt mix
The best answer is on your own statement. These steps are free.
- Find the debit lines. Check whether your statement separates debit from credit at all. NPS’s statement guide points out that average fees depend on your debit and credit mix, and that regulated debit lowers your effective rate.
- Ask for a report by card type and issuer group. Ask your provider whether it can show capped and exempt debit separately. Some can and some cannot, and the answer tells you something about the plan.
- Look at the debit line price on an interchange-plus statement. If your debit transactions land at different interchange amounts, that is the mix showing up. On a flat rate, the mix is invisible, because every card costs the same to you.
- Calculate your effective rate. Total fees divided by total card sales, for three months. Our guide on why your effective rate is higher than the rate you were quoted lists the usual reasons for a gap.
Check Your Statement
How to see your own capped and exempt mix
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Find the debit linesCheck whether your statement separates debit from credit at all.
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Ask for a report by card type and issuer groupAsk your provider whether it can show capped and exempt debit separately.
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Look at the debit line price on an interchange-plus statementIf your debit transactions land at different interchange amounts, that is the mix showing up.
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Calculate your effective rateTotal fees divided by total card sales, for three months.
NPS offers a free statement review, which includes looking at how your debit is priced.
What the cap does not change
A few things stay the same no matter which issuer’s debit card you take.
- Routing. Regulation II requires debit cards to work on at least two unaffiliated networks. Your processor, within network rules, decides how debit is routed. NPS tells merchants to ask how debit is routed and whether the decision considers your costs.
- Card minimums and fees. NPS’s Durbin guide says a merchant may set a minimum of up to $10 on credit card sales but may not set a minimum or fee on debit cards, and that a surcharge can never be applied to a debit card. Ask your provider, because rules vary by state and card network.
- Credit card interchange. There is no federal cap on it, and the cap on debit did nothing to change that.
- Your processor’s markup. This is the part of your bill you can negotiate.
The rule may change, so avoid old numbers
The study notes that the Federal Reserve proposed revisions to Regulation II, published in the Federal Register on November 14, 2023, and that the proposal to lower the debit interchange cap remains unresolved. NPS’s Durbin guide gives the same advice in general terms: the Federal Reserve can revise the cap, so check the current rule with your processor or counsel instead of relying on a figure printed in an old article.
If the cap is lowered, capped debit would cost the merchant side less, and the exempt cards would probably be affected differently. We do not predict what would happen, and we suggest you ask your provider how it would handle a change mid-contract. Our guide on why the same card costs different amounts explains how interchange categories work more generally.
Questions to ask your provider
- Can you show my debit sales split between capped and exempt cards?
- What interchange did my exempt debit carry over the last three months?
- How is my debit routed, and does that decision consider my costs?
- If I am on a flat rate, what would my last three months have cost under pass-through with every fee listed?
- What happens to my pricing if the Federal Reserve changes the cap?
Questions to Ask
Ask your provider these five questions
- Can you show my debit sales split between capped and exempt cards?
- What interchange did my exempt debit carry over the last three months?
- How is my debit routed, and does that decision consider my costs?
- If I am on a flat rate, what would my last three months have cost under pass-through with every fee listed?
- What happens to my pricing if the Federal Reserve changes the cap?
For the full picture across every sales channel and average ticket, read our guide to cheapest payment processing in 2026.
Who wrote this, and where NPS fits
Nationwide Payment Systems publishes this guide. We are a payments company based in Fort Lauderdale, Florida, in business since 2001, and we sell interchange-plus processing, so we are not neutral. We do not publish a rate, because the right price depends on your volume, ticket size, card mix and industry. The rules around debit change, so where this guide describes them in general terms, check the current rule with your processor or counsel. You can browse our payments guides for more on fees.
We are not the right fit for everyone. If you are new, run very low volume, or want the simplest possible sign-up, a flat-rate plan may suit you better. Ask any provider for pricing in writing, based on your own statements.
Bottom line
The federal debit cap does not apply to every debit card. It covers debit cards from large banks, and smaller banks and credit unions are exempt, so their cards can cost you more. In the study’s inputs an exempt card costs more than a capped one, and your real blended debit cost sits between the two, depending on where your customers bank. Do not rely on a shorthand that all debit costs almost nothing. Ask your provider to split your debit, check the current rule, and compare total cost on your own statements. If you would like a second opinion, contact our team, and if another setup fits you better, we will say so.
Frequently asked questions
Does the debit interchange cap apply to small-bank debit cards?
No. The cap covers debit cards from large banks. Smaller banks and credit unions are exempt, so their debit cards can carry higher interchange.
How much more does an exempt debit card cost?
In the inputs of NPS’s 2026 pricing study, exempt debit interchange is 0.80% plus 15 cents in person and 1.65% plus 15 cents online and on invoices, against 0.05% plus 22 cents for capped debit. On a $75 sale that is about $0.75 in person and $1.39 online, against about $0.26.
Can I tell from the card whether it is capped?
No. You and your cashier cannot see it, which is why two debit cards on the same afternoon can cost you different amounts.
How much of my debit is probably exempt?
It depends on where your customers bank. The study assumes 35% of debit volume is exempt, but that is a model assumption, not a measured figure for your business. Ask your provider for a report.
Is exempt debit still cheaper than a flat rate?
In the study’s inputs, yes, even the exempt input is well below a 2.6% to 3.3% flat rate. The saving is smaller than on capped debit.
Can the cap change?
Yes. The Federal Reserve proposed lowering it, and the study says that proposal remains unresolved. Check the current rule with your processor or counsel.
Can I charge extra for debit cards?
NPS’s guidance is that a merchant may not set a minimum or a fee on debit cards and that a surcharge can never be applied to a debit card. Ask your provider, because rules vary.
