Debit routing is an extremely powerful, though complex, payments cost optimization lever available to U.S merchants. Optimized routing strategies can deliver up to $5 billion in potential annual savings for U.S. merchants according to CMSPI estimates and analysis of PIN and PINless network routing dynamics. However, maximizing this opportunity is not simple. It requires navigating complex BIN-level dynamics and shifting partner capabilities while keeping up to date with the impact of the latest payments product innovations on debit routing strategies. To understand the intricacies of routing dynamics, it helps to break down the basics.

What is Debit Routing?

Debit routing refers to the process by which a merchant chooses the network over which a debit transaction is processed. When a customer uses their debit card, merchants have the option to route the transaction via one of several networks available on that card. While customer experience at checkout remains unaffected, the network choice can impact the merchant’s interchange and network fee costs as well as approval rates.

The modern debit routing landscape was shaped by the Durbin Amendment, part of the Dodd-Frank Act passed in 2010. It introduced three requirements:

1. The No Network Exclusivity (NNE) clause: Issuers must enable at least two unaffiliated debit networks on every debit card. This clause unlocked the ability for merchants to route individual debit transactions.
2. Routing guarantees for merchants: Issuers cannot inhibit merchants’ ability to choose networks to route their transactions.
3. Interchange Caps: For regulated issuers (those with over $10 billion in assets), debit interchange fees are capped at a base component of 21 cents, along with a 5 basis point ad-valorem component and a fraud prevention adjustment of 1 cent.

Merchant Routing in Action

In practice, a debit routing strategy will vary by transaction size and network pricing model. For example, consider a debit card badged with three different networks. A $100 purchase and a $10 purchase on the same card can result in varying associated interchange and network fees depending on which network the transaction is routed to, as shown in Figure 1.

Figure 1. Sample Debit Routed Transactions for Cost Optimization

What is PINless Routing?

PINless transactions are debit transactions processed through a debit network without requiring the cardholder to enter their PIN. Traditional card-present debit transactions may require a PIN entry at checkout, but PINless technology removes this step, creating more flexibility for online and in-store merchants.

The Federal Reserve’s clarification of Regulation II that went into effect on July 1, 2023, extended the NNE requirement to cover all transaction types, including card-not-present. This is intended to ensure that merchants can route debit transactions over alternative networks for not only in-store purchases, but also for ecommerce and digital transactions. Since the clarification, card-not-present PINless enablement has significantly increased and is estimated to have remained over 90% over the last 2 years according to CMSPI estimates (Figure 2).

Card-Present Enablement Lags Behind Card-Not-Present

Card-present PINless, the ability to route transactions via a merchant’s choice of network for in-store transactions without PIN authentication, has seen varying degrees of change as issuer enablement of alternative networks for card-present PINless routing has not followed the same growth trajectory as CNP. Today, CP PINless enablement is estimated to hover at around 50% with few of the top 10 issuers estimated to reach over 90% as of July 2025 according to CMSPI estimates (Figure 3). Limited enablement of CP PINless can impact merchant acceptance and routing strategies in high throughput environments such as QSRs, or limit merchant access to alternative networks in the case a customer bypasses PIN entry. Despite limited enablement, however, merchants can still achieve huge potential savings by implementing CP PINless routing.

Benefits of Competition and Routing

With the Durbin amendment’s NNE clause, merchants could save up to an estimated $5 billion according to CMSPI analysis of PIN and PINless network routing dynamics.

Prior to the Durbin amendment, limited competition in the debit market drove costs upward.³ With the Durbin amendment and the Federal Reserve’s 2023 clarification, merchants can route transactions via the most efficient network. Many are also able to establish commercial relationships with networks for priority routing agreements.

Routing Creates Leverage

Debit routing enables retailers to establish routing agreements to generate incentivized rates with available networks. Empowered by the competitive dynamics afforded by the NNE, merchants can agree to route a certain share or amount of available volume to specific networks in exchange for lower rates on routed transactions. These agreements can establish significant savings but can be complex due to shifting market conditions.

Routing Can Minimize Network Fee Increases

Debit routing can not only help retailers control interchange fees, but also network fees, which for single-message transactions, have hovered between 0.09% and 0.10% for the last decade, according to Federal Reserve estimates. Conversely, network fees for dual-message transactions (typically less routable than single-message transactions), rose from 0.18% to 0.20% over the same period.⁴ Monitoring these agreements adds another layer of difficulty as both interchange and network fees fluctuate regularly, requiring merchants’ consistent oversight to capture and maintain savings.

Now You Know the Basics, Here’s What Comes Next

Debit routing is much more than a regulatory mandate; it is a strategic opportunity. Regulation has laid a foundation for cost optimization for merchants. With clear opportunity, merchants that actively engage in routing strategies are well positioned to capture meaningful savings.

Reach out to CMSPI to get the latest on PINless enablement, market insights and emerging innovations, and dive into our upcoming follow-up piece “Why Routing Strategies Are Complex”, to see what it takes to translate regulatory opportunity into long-term competitive advantage.