The Credit Card Competition Act is a pending federal bill that would require the largest U.S. banks to enable at least two unaffiliated payment networks on every credit card they issue, letting merchants choose which network processes each transaction instead of defaulting to Visa or Mastercard. It has been introduced in three consecutive sessions of Congress and has not yet passed either chamber. If it becomes law, it would rearrange how roughly $148.5 billion in annual credit card swipe fees moves through the payments system, with real consequences for what merchants pay, what shoppers pay, and what rewards cardholders earn.
What the Bill Would Require
The core rule is short. Banks with more than $100 billion in assets would have to enable at least two unaffiliated credit card networks on the cards they issue. At least one of those networks cannot be Visa or Mastercard, and neither network can be owned by or affiliated with the issuing bank. When a customer pays, the merchant, not the bank or the card brand, decides which of the available networks handles the transaction.
That structure already exists on the debit side. The Durbin Amendment to the Dodd-Frank Act has required debit cards to support at least two unaffiliated routing options since 2011. The Credit Card Competition Act extends the same routing-choice concept to credit cards, where interchange fees run higher and the total dollars in play are far larger.
The bill does not cap fees. Its sponsors argue that giving merchants a real choice between networks will push interchange rates down through competition rather than through a government-set price. Supporters estimate the change could save merchants and consumers roughly $17 billion a year.
Which Banks and Cards Are Covered
The $100 billion asset threshold limits the direct reach of the bill to the largest U.S. banks. Community banks and virtually all credit unions fall below that line and would not be required to change how their cards are routed.
The exemption is less clean in practice than on paper. After the Durbin Amendment exempted small banks from debit interchange caps, interchange revenue at those exempt institutions reportedly still declined, because merchants and processors gravitated toward the lower rates available from covered banks. Whether the same drift would happen on the credit card side is one of the sharpest disputes between the bill’s supporters and opponents.
How Swipe Fees Work Today
Every time a credit card is used, the merchant pays a fee, usually called interchange, to the bank that issued the card. Rates typically run around 1.5 to 2.5 percent of the transaction plus a small flat fee. On a $100 sale, the merchant may lose $2 or more before the money hits the account. U.S. credit card interchange averages roughly 1.8 percent per transaction.
Individual banks do not negotiate these rates with individual merchants. Visa and Mastercard each publish interchange schedules that apply across every bank issuing cards under their brand, and together those two networks handle about three-quarters of U.S. credit card purchase volume. Because a Visa-branded card cannot currently be routed over a competing network, there is little price pressure on the schedules. That bottleneck is what the bill targets.
What It Would Mean for Merchants
Merchants are the group most likely to benefit. Under the current system, a retailer accepting a Visa credit card pays whatever the Visa schedule says and has no ability to move the transaction elsewhere. Under the Credit Card Competition Act, the merchant would pick between at least two competing networks for each swipe, creating downward pressure on fees for the first time since credit cards became the default way Americans pay.
Small businesses would feel any fee reduction most acutely. A restaurant paying two to three percent on every card sale operates on margins where even modest processing savings change the profit math. Whether those savings would reach customers through lower shelf prices is a separate question, and a less certain one.
What It Would Mean for Cardholders
For consumers, the bill creates a genuine tension between two things people care about: retail prices and credit card rewards.
The Case for Lower Prices
Swipe fees are built into the price of nearly everything sold in the United States, whether the customer pays with a card or cash. Merchant groups estimate the average household pays more than $1,000 a year in higher prices tied to interchange. If competition brought those fees down, at least some of the reduction could flow to shoppers through slower price growth. Cash customers, who currently help fund card rewards without earning any, would benefit alongside cardholders.
The Risk to Rewards
Interchange revenue is what pays for credit card rewards. Cash back, airline miles, and sign-up bonuses all come out of the fees merchants pay. If those fees fall, banks have less money to fund rewards programs, and the likely response is to scale them back.
This is not hypothetical. After the Durbin Amendment cut debit interchange, many large banks eliminated debit rewards programs entirely. Credit card rewards are more valuable and more central to how banks compete for customers, so the industry would fight harder to preserve them, but the economic pressure would still be real. Holders of premium rewards cards would likely feel it most.
What the Durbin Amendment Precedent Shows
The Durbin Amendment is the closest real-world analog, and its record is mixed. A Congressional Research Service analysis found that the debit routing requirements had “a limited and unequal impact” on merchant costs, with outcomes varying by business size and industry, and concluded that any consumer price effect was “likely to be indeterminate.”1Congress.gov. Regulation of Debit Interchange Fees
The consumer side effects were easier to measure. Free checking accounts at large banks dropped from roughly 60 percent to 20 percent after the amendment took effect, and monthly maintenance fees on basic checking accounts roughly doubled. Banks recouped lost interchange by charging depositors in other ways. Sponsors of the Credit Card Competition Act argue it works differently because it introduces routing competition rather than capping fees; critics see a pattern likely to repeat.
Security Questions
A more technical objection involves fraud prevention. Visa and Mastercard have invested heavily in tokenization, which replaces a real card number with a one-time code during a transaction, and in real-time fraud monitoring built on very large transaction datasets. Credit unions and banking trade groups have argued that merchant-controlled routing could send transactions over smaller networks with less developed security, weakening the systems that interchange currently funds.
Supporters counter that networks would have to compete on security as well as price, and that tokenization can be implemented consistently across multiple networks. The realistic answer is that the outcome would depend heavily on how the Federal Reserve wrote the implementing regulations.
Where the Bill Stands
The Credit Card Competition Act has been introduced in three consecutive sessions of Congress without reaching a floor vote in either chamber. In the current 119th Congress, it was reintroduced on January 13, 2026, as S. 3623 in the Senate and H.R. 7035 in the House.2Congress.gov. S.3623 – 119th Congress (2025-2026): Credit Card Competition Act of 20263Congress.gov. H.R.7035 – 119th Congress (2025-2026): Credit Card Competition Act of 2026 The Senate version is sponsored by Roger Marshall and Dick Durbin; Representative Lance Gooden reintroduced the House version. Both bills sit in committee and neither has advanced.
Even if Congress passed the bill, nothing would change immediately. The Federal Reserve would have to write implementing rules through the standard notice-and-comment process, and after a final rule was published, banks and networks would need time to make the technical changes.4Board of Governors of the Federal Reserve System. What Specific Steps Does the Board Take to Issue a Regulation? When the Durbin Amendment passed, rulemaking and implementation took more than a year. A similar timeline would be expected here, so any real-world effect on swipe fees or rewards would come well after any signing date.