Credit Card Competition Act Gains Republican Support to Lower Swipe Fees

The bill seeks to curb swipe fees charged by dominant payment networks, though financial institutions warn the changes could disrupt rewards programs and credit access.

Legislative Background and Political Momentum

Originally proposed in prior congressional sessions, the Credit Card Competition Act was reintroduced in January 2026 with bipartisan support from Senators Durbin and Roger Marshall, alongside a House version sponsored by Representatives Lofgren and Lance Gooden. The legislative framework models itself after the 2010 Durbin Amendment to the Dodd-Frank Wall Street Reform and Consumer Protection Act, which targeted debit cards by requiring multiple unaffiliated routing options and capping fees.

The current iteration of the bill has gained significant political momentum. President Trump publicly endorsed the legislation on social media, characterizing swipe fees as an “out of control ripoff” and cementing the issue as a priority within the administration’s economic agenda.

Key Provisions and Routing Mandates

The core mechanism of the Credit Card Competition Act targets payment network exclusivity among large financial institutions. Under the proposed legislation, covered card issuers holding assets exceeding $100 billion would be prohibited from restricting credit card transactions to a single payment network. Instead, issuers must enable each card with at least two unaffiliated payment card networks.

Crucially, the legislation prevents issuers from satisfying this requirement by pairing the two largest networks by market share together. If a card runs on the Visa or Mastercard network, the secondary network must be an alternative such as NYCE, Star, Shazam, or Discover. The Federal Reserve Board would reassess network market shares every three years.

Economic Arguments and Retailer Impact

Proponents argue that the current market structure is anti-competitive and imposes excessive costs on merchants and consumers. Merchants pay 2 to 3 percent per transaction to networks like Visa and Mastercard, generating over $137 billion yearly in swipe fees that represent a retailer’s highest expense after wages.

Visa and Mastercard operate a duopoly, reporting net profit margins of 51 percent and 46 percent respectively in 2022. By comparison, international fees remain lower, with European fees averaging 0.2 percent for debit and 0.3 percent for credit transactions.

Industry Opposition and Consumer Risks

Financial institutions, banking entities, and payments trade groups strongly oppose the legislation. Opponents warn that mandatory routing competition could result in the reduction or elimination of credit card rewards programs, restrict access to consumer credit, and jeopardize the overall security of the payments ecosystem. While the industry suggests high fees are invested in improved security, critics of the current system contend that the United States maintains the highest rates of credit card fraud in the world despite holding the highest swipe fee rates in the world.