Durbin Amendment Bolstered EFT Network Growth

Navigator Edition: April 2015
By: Frank Verhaegen

As many anticipated, the Durbin Amendment’s non-exclusivity routing provision has had a significant impact on the EFT network landscape, and it has proven to be a catalyst for the growth of non-Visa/MasterCard debit networks at the expense of Visa’s Interlink and MasterCard’s Maestro PIN debit networks.

Issuers have been required to participate in at least two unaffiliated debit networks since the legislation took effect in October 2011—which effectively means issuers must participate in an EFT network not associated with their card’s Visa or MasterCard brand. Pre-Durbin, many issuers had exclusive relationships with Visa or MasterCard for both signature and PIN (dual-message and single-message, respectively) debit routing. Post-Durbin, issuers were compelled to supplement or replace Interlink or Maestro with NYCE, Pulse, STAR, or another EFT network. As a result, these networks have seen significant increases in volume and market share over the past four years.

Between 2010 and 2013, total debit transactions increased at an average annual rate of 9%, from 41.9 billion to 53.7 billion. By comparison, EFT network transactions increased 24% annually (from 5.0 billion to 9.5 billion) while Interlink and Maestro’s combined transactions experienced an average annual decline of 5% over the same period (from 10.5 billion to 9.1 billion). Year-over-year growth rates show the impact of the Durbin Amendment implementation: non-Visa/MasterCard EFT networks experienced 21% transaction growth between 2010 and 2011, and 58% growth between 2011 and 2012. As a result, their share of single message transactions increased 19 percentage-points over the four-year period, from 32% in 2010 to 51% in 2013.

Non-Visa/MasterCard EFT networks currently route the majority of single message debit transactions, but whether they will maintain that position remains to be seen. Between 2012 and 2013, non-Visa/MasterCard EFT network growth slowed while Visa and MasterCard’s single message transaction volume rebounded as issuers’ network participation stabilized and the basis of routing competition shifted from issuers to merchants. Networks signed routing deals with larger merchants to guarantee transaction volumes, and we saw the expansion of routing services like Visa’s PIN-Authenticated Debit (PAVD) solution, which helped the brand recoup some of its lost PIN volume. Further changes are on the horizon with the migration to EMV and the roll-out of STAR’s dual-message alternative to Visa and MasterCard later this year. What impact these and other developments will have on issuers’ network participation and merchants’ transaction routing remains to be seen, and we will continue to monitor the shifting landscape.

Figure 1: U.S. Debit Transactions by Routing (#B)
Fig-1_-US-Debit-Purchase-Volume-by-Transaction-RoutingSource: 2013 FRB Debit Interchange & Cost Study Report, Visa & MasterCard Investor Relations, First Annapolis Consulting analysis.

For more information, please contact Frank Verhaegen, Associate,, specializing in Debit and Prepaid.

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