Credit Card Competition Act of 2026
- Sponsor
- Rep. Gooden, Lance [R-TX-5]
- Committees
- Financial Services Committee (primary)
- Last action
- Jan 13, 2026
Bottom line
The bill aims to increase competition in the credit card processing market by allowing merchants to choose from multiple, unaffiliated networks for transaction routing, potentially lowering processing fees.
What it actually does
This bill amends the Electronic Fund Transfer Act to mandate that the Federal Reserve Board issue regulations promoting competition in credit card transactions. Specifically, it prohibits large credit card issuers and payment networks from restricting transactions to a single network or to networks affiliated with the issuer. It also prevents networks from inhibiting a merchant's ability to choose the routing network for electronic credit transactions and requires the Board to identify networks posing national security risks.
Proponents argue
Proponents argue that the bill will foster genuine competition among credit card networks, leading to lower interchange fees for merchants, which could then translate into lower prices for consumers. They contend that the current system allows dominant networks to charge excessive fees, stifling innovation and harming small businesses.
Opponents contend
Opponents typically argue that the bill could compromise the security and reliability of credit card transactions by forcing issuers to use less secure networks. They also suggest that it might reduce funding for card rewards programs, which benefit consumers, and could disproportionately harm smaller banks and credit unions.
The bill is concise and can be read and understood in a short amount of time, making it accessible for informed evaluation.
Section 2(a)(1)(B), new 921(b)(2)(A) of the Electronic Fund Transfer Act
Prohibition on Exclusive Credit Card Networks
This provision mandates the Federal Reserve Board to issue regulations within one year to prevent credit card issuers and networks from limiting the processing of electronic credit transactions to a single network, or to multiple networks that are all affiliated with each other or the issuer. It also prevents limiting to the two largest market share networks, subject to Board review. The goal is to ensure that each credit card can be processed over at least two unaffiliated networks.
Supporters argue
Supporters argue this provision will break up the duopoly of major credit card networks, fostering genuine competition and driving down interchange fees for merchants. This increased competition is expected to benefit businesses and ultimately consumers through lower prices.
Critics contend
Opponents contend that this mandate could force transactions onto less secure or less reliable networks, increasing fraud risks and operational complexities for both issuers and merchants. They also argue it interferes with private contractual agreements.
Tradeoffs
Balances the desire for increased competition and lower fees against potential concerns about transaction security, reliability, and the operational burden of integrating multiple networks.
Section 2(a)(1)(B), new 921(b)(2)(B) of the Electronic Fund Transfer Act
Prohibition on Credit Card Transaction Routing Restrictions
This provision requires the Federal Reserve Board to issue regulations within one year to prevent card issuers and networks from inhibiting a merchant's ability to choose which payment card network processes an electronic credit transaction. It also prohibits requiring exclusive use of specific authentication or security technologies that are not compatible across all available networks for a given card, and prevents imposing penalties on merchants for routing transactions or failing to meet volume targets on a particular network.
Section 2(a)(1)(B), new 921(b)(2)(D) of the Electronic Fund Transfer Act
Designation of National Security Risk Payment Card Networks
This provision requires the Federal Reserve Board, in consultation with the Secretary of the Treasury, to establish and regularly update a public list of payment card networks that pose a risk to U.S. national security or are owned, operated, or sponsored by a foreign state entity. Transactions processed by networks on this list would be exempt from the 'no exclusive network' and 'no routing restrictions' rules, meaning issuers could restrict routing to avoid these networks.
Section 2(a)(1)(B), new 921(b)(2)(C) of the Electronic Fund Transfer Act
Exemption for 3-Party Payment Systems
The regulations promoting competition and routing choice will not apply to credit cards issued under a '3-party payment system model.' This model typically involves a card issuer that is also the payment card network, or is under common ownership with the network (e.g., American Express, Discover). This means these networks are not required to offer routing choice to other unaffiliated networks.
The competition requirements only apply to 'covered card issuers,' defined as card issuers that, together with their affiliates, have assets of more than $100,000,000,000.
Section 2(a)(1)(B), new 921(b)(2)(E)(ii) of the Electronic Fund Transfer Act
Why it matters:This is standard legislative practice to define terms at the end of a section. However, its placement means a casual reader might miss that the bill's scope is limited to very large financial institutions.
Case for: Supporters argue that targeting only the largest issuers focuses the regulatory burden where the market power is most concentrated, avoiding undue impact on smaller banks and credit unions.
Case against: Critics might argue that this threshold allows a significant portion of the market, including many regional banks, to remain outside the competitive requirements, thus limiting the overall impact of the bill.
Estimated impact: Limits the direct applicability of the bill to the largest banks and their affiliated networks, which collectively issue the vast majority of credit cards.
This amendment explicitly states that the Bureau of Consumer Financial Protection (CFPB) shall not have authority to enforce the requirements of this section or any regulations prescribed by the Board under this section.
Section 2(a)(2), amending 15 U.S.C. 1693o-2(d)(1)
Why it matters:This is a substantive change in enforcement authority, potentially placed here to avoid drawing immediate attention to the shift in regulatory power. It's a common legislative technique to modify existing statutes.
Case for: Proponents might argue that the Federal Reserve Board, as the prescribing agency, is the most appropriate body to enforce these specific regulations, given its expertise in payment systems and financial markets. It avoids overlapping jurisdiction.
Case against: Critics might contend that removing CFPB enforcement reduces consumer protection oversight, as the CFPB is specifically tasked with protecting consumers in financial markets. This could be seen as weakening enforcement mechanisms.
Estimated impact: Shifts enforcement responsibility entirely to the Federal Reserve Board for this specific section, potentially impacting the rigor and focus of enforcement.