Southwest brings back debit-card rewards via Durbin small-issuer carve-out

Southwest Airlines plans a new Rapid Rewards debit card, issued by Sunrise Banks, that leverages the Durbin Amendment’s small‑issuer exemption. Because Sunrise’s assets are under $10 billion, standard debit interchange caps don’t apply, restoring enough economics to award points on debit purchases. That’s notable in a market where rewards debit largely vanished after Dodd‑Frank, as reported by View from the Wing.

What it means: A debit option could unlock points on everyday payments that are awkward or costly on credit, including rent portals, utilities, and even tax payments. Small‑issuer debit interchange can run around 0.80–1.15 percent plus a fixed fee, versus about 0.05 percent + $0.21 under caps, creating room for modest earn rates while keeping funding costs below typical credit card rewards. Fintechs like Chime and Cash App have used similar models for years.

Details to watch: Southwest hasn’t disclosed earning rates, caps, or fees. Key variables include whether earnings differ on signature versus PIN transactions, category exclusions (government or rent), monthly ceilings, and whether the product resembles prepaid or full checking. Expect tighter fraud controls and fewer perks than credit, but broad acceptance wherever Visa debit is taken.

Southwest has pursued new revenue streams and loyalty touchpoints. A debit product can attract value‑seekers who avoid credit or want incremental points without adding another credit line, while limiting dilution to existing co‑brand credit economics.

If the final offer lands competitively, a Rapid Rewards debit could re‑open a practical, low‑cost earn path and expand Southwest’s loyalty funnel—especially for households that prefer debit over credit. Announcement covered by View from the Wing; official product site is going live as details emerge.