Navigating Being Network Neutral

Navigating the payments ecosystem can be overwhelming, especially for community-based financial institutions (FIs) that need to evaluate the right network partners for their card programs. Choosing the right processor can help cut through the complexity by offering unbiased guidance, greater flexibility, and more choice. While neutrality plays an important role in both credit and debit, the debit space brings added complexity due to regulatory requirements and the broader range of debit networks available.

Overview of Payment Networks

Payment networks are the systems that facilitate the transfer of funds between two parties, such as a cardholder and a merchant. These networks fall into four categories: credit card networks, electronic funds transfer (EFT) networks for debit card transactions and wire transfers, ATM networks, and peer-to-peer networks like Cash App or Venmo.

While credit card networks are dominated by four major players, the U.S. has over a dozen ATM and EFT networks such as Accel, Pulse, and NYCE.² These networks route transactions such as ATM withdrawals and PIN-based debit transactions.

Why Network Neutrality is Important for Debit Payments

As FIs navigate a complex debit landscape, choosing the appropriate networks can be critical to both profitability and performance.

Federal Regulation II (also referred to as the Durbin Amendment) mandates that all issuers, regardless of asset size, enable at least two unaffiliated payment card networks for electronic debit transactions.³ To comply, many issuers configure their debit cards with one global, signature-based network (often shown on the front of the card) and a secondary unaffiliated PIN-based network (typically shown on the back of the card).

A network-neutral processor can offer an advantage by remaining independent of any specific network and providing unbiased guidance to help FIs evaluate the full landscape of available debit networks. This neutrality empowers FIs to select networks based on their unique goals, rather than being locked into predetermined relationships.

Benefits of Network Neutrality

Partnering with a network-neutral processor offers a range of strategic benefits that can influence profitability, flexibility, and compliance when selecting debit networks:

• Interchange revenue: Optimizing interchange revenue is a critical factor for FIs aiming to enhance their return on investment for debit transactions. Interchange fees, the per-transaction charges paid by acquirers to card issuers, are set by payment networks and can vary significantly depending on the chosen network. TransFund can assist clients in evaluating the profitability of various card networks. For instance, TransFund leverages insights from the Federal Reserve’s study² on average debit card interchange fees to educate clients in selecting the optimal debit network. TransFund collaborated with Journey Federal Credit Union to analyze their network mix, resulting in a $0.10 increase in interchange income per transaction and a 50% reduction in per-transaction costs.
• Network flexibility: Network flexibility is essential for FIs to stay competitive and responsive to changing market conditions, especially as interchange rates fluctuate. TransFund’s network-neutral approach gives FIs the ability to easily select PIN networks without the burden of separate agreements or long-term contracts. This simplified access enables institutions to secure better interchange rates while avoiding the operational complexity and added costs associated with exclusive network arrangements.
• Compliance with regulations: The Durbin Amendment mandates that issuers must offer at least two unaffiliated networks for processing electronic debit transactions.⁴ By partnering with a network-neutral provider like TransFund, FIs can navigate this requirement effectively while retaining the flexibility to select the most appropriate networks for their needs.

TransFund collaborates with its clients to assist them in choosing the appropriate card networks using a data-driven approach which incorporates interchange rates and network acceptance.

Conclusion

Understanding the factors that influence network selection, including interchange fees, is crucial for making strategic decisions that drive profitability while complying with regulations. With TransFund’s unbiased network expertise and data-driven resources, FIs can navigate the complexities of the debit ecosystem and deliver seamless, efficient payment experiences for their cardholders.

Interested in a partnership with TransFund? Click here to connect with us.

Sources:

1. The Federal Reserve, Average Debit Card Interchange Fee by Payment Card Network, 2025
2. The Federal Reserve, Regulation II: Debit Card Interchange Fees and Routing, 2025