Credit Card Competition Act of 2026
- Sponsor
- Sen. Marshall, Roger [R-KS]
- Committees
- Banking, Housing, and Urban Affairs Committee (primary)
- Last action
- Jan 13, 2026
Bottom line
The bill aims to increase competition in the credit card processing market by giving merchants more options for routing transactions, potentially reducing interchange fees but raising concerns about security and consumer rewards.
What it actually does
This bill amends the Electronic Fund Transfer Act to mandate that the Federal Reserve Board prescribe regulations requiring large credit card issuers to enable at least two unaffiliated payment networks for electronic credit transactions. It prohibits these issuers and payment networks from restricting merchants' ability to choose which network processes a transaction and from imposing penalties for routing choices. The bill also requires the Board to identify payment networks that pose national security risks, which would then be excluded from processing transactions.
Proponents argue
Proponents argue that the bill will foster competition among credit card networks, which is currently lacking, leading to a reduction in the 'exorbitant' swipe fees paid by merchants. They contend that these savings will ultimately be passed on to consumers through lower prices for goods and services, benefiting the broader economy.
Opponents contend
Opponents argue that the bill could compromise the security of credit card transactions by forcing issuers to use less secure networks, potentially increasing fraud. They also contend that reduced interchange fee revenue would lead to a significant cut in funding for popular credit card rewards programs, harming consumers and potentially limiting access to credit.
The bill is concise and its core provisions are clearly articulated, allowing an informed reader to quickly grasp its main objectives and mechanisms.
Section 2(a)(1)(B), new Section 921(b)(2)(A) of the Electronic Fund Transfer Act
Mandate for Multiple Unaffiliated Payment Networks
This provision requires the Federal Reserve Board to issue regulations within one year to prevent large credit card issuers (those with over $100 billion in assets) from restricting credit card transactions to a single payment network or to networks affiliated with the issuer. It also prevents limiting transactions to the two largest market share networks, unless the Board determines these networks have changed, in which case the restriction on the two largest networks would cease to apply.
Supporters argue
Supporters argue this provision will break the effective duopoly of major payment networks, fostering genuine competition and driving down the high interchange fees that merchants currently pay for processing credit card transactions.
Critics contend
Critics contend that forcing issuers to use multiple networks, some potentially less secure, could increase fraud risks and undermine the significant investments made by leading networks in security and fraud prevention technologies.
Tradeoffs
This provision balances the goal of increasing competition and reducing merchant costs against potential concerns regarding transaction security, network reliability, and the viability of existing network business models.
Section 2(a)(1)(B), new Section 921(b)(2)(B) of the Electronic Fund Transfer Act
Prohibiting Merchant Routing Inhibition
This section requires the Federal Reserve Board to issue regulations within one year to prevent credit card issuers or payment networks from inhibiting merchants' ability to choose which payment network processes an electronic credit transaction. It also prohibits requiring exclusive use of specific authentication or security technologies that are not compatible with all available networks, and from imposing penalties on merchants for their routing choices or for failing to meet specific transaction volume targets with a particular network.
Section 2(a)(1)(B), new Section 921(b)(2)(C) of the Electronic Fund Transfer Act
Exemption for Integrated 3-Party Payment Systems
This provision specifies that the new regulations regarding network competition and routing restrictions do not apply to credit cards issued in a '3-party payment system model.' This model is defined as one where the card issuer is also the payment card network or is under common ownership with the payment card network (e.g., American Express, Discover). This exemption means these integrated systems are not required to offer multiple unaffiliated routing options.
Section 2(a)(1)(B), new Section 921(b)(2)(D) of the Electronic Fund Transfer Act
Identification of National Security Risk Networks
This provision requires the Federal Reserve Board, in consultation with the Secretary of the Treasury, to establish and periodically update a public list of payment card networks. This list will include any network whose processing of electronic credit transactions is determined to pose a risk to the national security of the United States, or any network that is owned, operated, or sponsored by a foreign state entity. Transactions cannot be routed over networks on this list.
This subsection defines 'covered card issuer' as a card issuer that, together with its affiliates, has assets of more than $100,000,000,000. This threshold means that the bill's core requirements for network competition and routing flexibility only apply to the largest financial institutions.
Section 2(a)(1)(B), new Section 921(b)(2)(E)(ii) of the Electronic Fund Transfer Act
Why it matters:While defining terms is standard legislative practice, the specific asset threshold has significant policy implications by limiting the scope of the bill's impact to only a subset of credit card issuers.
Case for: Proponents argue this threshold appropriately focuses the regulations on the largest players who dominate the credit card market, where competition is most lacking, while exempting smaller institutions from potentially burdensome compliance costs that could disproportionately affect them.
Case against: Critics might argue that exempting smaller issuers, even if they collectively hold a smaller market share, could still leave a significant portion of the credit card market without the benefits of increased competition, or that it creates an uneven regulatory burden that favors smaller banks.
Estimated impact: This provision significantly limits the number of financial institutions directly impacted by the new routing requirements, focusing the regulatory burden and competitive changes on the largest banks that issue the vast majority of credit cards in the United States.
This clause mandates that the Federal Reserve Board periodically (every 3 years after initial regulations take effect) determine if the two largest market share networks have changed. If the Board determines they have changed, the initial restriction (which prevents limiting transactions to the two largest networks) 'shall no longer have any force or effect.'
Section 2(a)(1)(B), new Section 921(b)(2)(A)(ii) of the Electronic Fund Transfer Act
Why it matters:It's a mechanism for regulatory adaptability rather than a core policy change, but it's crucial for understanding the long-term evolution and potential instability of the regulatory framework.
Case for: Proponents might argue this ensures the regulations remain relevant and responsive to market dynamics, preventing the rules from becoming outdated and inadvertently stifling new competition or entrenching new dominant players as the market evolves.
Case against: Critics might argue that this introduces an element of uncertainty into the regulatory framework, as the rules governing network choice could change based on periodic market share shifts, making long-term strategic planning difficult for networks and issuers.
Estimated impact: Could lead to future changes in which networks are subject to specific restrictions, depending on market evolution, potentially altering the competitive landscape every few years.