Credit Card Competition Act of 2026
- Bill Number
- H.R. 7035
- Origin Chamber
- House
- Congress
- 119th Congress, Session 2
- Policy Area
- Finance and Financial Sector
- Status
- Introduced
- Latest Action
- 2026-01-13: Referred to the House Committee on Financial Services.
- Last Updated
- 2026-06-30T08:06:30Z
AI-Generated Summary
Purpose of the Legislation
The Credit Card Competition Act of 2026 aims to increase competition among payment card networks for processing credit card transactions. It seeks to prevent large credit card issuers and networks from limiting options for routing transactions, which could lead to lower processing fees for merchants and potentially benefit consumers through reduced costs passed on in prices.
Key Provisions
- Regulations on Network Access: The Federal Reserve Board must issue rules within one year of enactment requiring large credit card issuers (those with over $100 billion in assets, including affiliates) and payment networks to allow transactions to be processed on multiple networks, not just one or affiliated ones. Limited exceptions include the two largest networks by market share (as determined by the Board), but this option expires if the Board finds changes in market leaders every three years.
- Routing Freedom for Merchants: Issuers and networks cannot restrict merchants' ability to choose how to route credit card payments or impose penalties for selecting alternative networks. They also cannot mandate security technologies (like authentication or tokenization—methods to verify and protect transaction data) that exclude other networks.
- Exemptions: These rules do not apply to "3-party payment systems" where the card issuer also operates the network (e.g., American Express model).
- National Security Safeguards: The Board, in consultation with the Treasury Secretary, must create and update every two years a public list of payment networks posing national security risks (e.g., those owned by foreign governments). Transactions cannot be routed through listed networks.
- Definitions: Key terms include "electronic credit transaction" (any use of a credit card, including online or app-based without physical card presentation) and "licensed member" (entities authorized to issue cards or process payments under a network's brand).
- Enforcement Limits: The Consumer Financial Protection Bureau (CFPB) cannot enforce these provisions; authority rests with the Federal Reserve.
- Implementation Timeline: Regulations take effect 180 days after final issuance.
Significant Changes to Existing Law
This bill amends Section 921(b) of the Electronic Fund Transfer Act (EFTA, a 1978 law regulating electronic payments) by adding a new paragraph on credit card competition. Previously, EFTA focused on consumer protections like error resolution but did not address network exclusivity or routing restrictions in credit card processing. It introduces mandatory Federal Reserve rulemaking to promote multi-network options, shifting oversight from voluntary industry practices to regulated requirements, while explicitly excluding CFPB enforcement for this section.
Potential Impacts
- Government Agencies: The Federal Reserve gains new regulatory duties, including periodic market assessments and list maintenance, potentially increasing workload and requiring coordination with Treasury. This could enhance federal oversight of payment systems without expanding CFPB's role.
- Citizens and Consumers: May indirectly lower costs for everyday purchases if merchants save on processing fees (typically 2-3% per transaction) and pass savings along, though direct consumer fees (e.g., annual card charges) might not change.
- Merchants and Businesses: Could reduce reliance on dominant networks like Visa or Mastercard, enabling fee negotiations and choice in routing, benefiting small retailers most.
- International Relations: The national security list could restrict networks tied to foreign entities, potentially straining ties with countries like China if their systems are flagged, while protecting U.S. financial infrastructure from risks.
Main Stakeholders Affected
- Large Credit Card Issuers: Banks and financial institutions with over $100 billion in assets (e.g., JPMorgan Chase, Bank of America) must adapt operations to allow multi-network processing.
- Payment Card Networks: Entities like Visa, Mastercard, and Discover face mandates to enable competition, potentially eroding market dominance.
- Merchants and Acquirers: Businesses accepting cards and payment processors gain routing flexibility, which could lower costs but require system updates.
- Consumers: Indirectly affected as end-users of cards, possibly seeing price benefits from merchant savings.
- Federal Agencies: Federal Reserve (rulemaking lead) and Treasury (security consultations).
Notable Legal, Constitutional, or Political Implications
- Legal: Introduces antitrust-like restrictions on private contracts and technologies in the payments industry under banking law, potentially inviting challenges over federal overreach into commerce (though aligned with Congress's commerce clause authority). The sunset provision for market leaders adds dynamism but requires ongoing Board discretion.
- Constitutional: No direct conflicts, but the national security list raises due process questions if networks are delisted without appeal mechanisms; it balances competition with security under executive-branch consultation.
- Political: Bipartisan sponsorship (Republican and Democratic representatives) signals broad support for curbing perceived monopolies in fintech, but could face industry lobbying against mandates. If enacted, it may set precedents for regulating digital payments amid rising e-commerce.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Cosponsors (7)
Rep. Lofgren, Zoe [D-CA-18], Rep. Tiffany, Thomas P. [R-WI-7], Rep. Van Drew, Jefferson [R-NJ-2], Rep. Tran, Derek [D-CA-45], Rep. Hamadeh, Abraham J. [R-AZ-8], Rep. DeSaulnier, Mark [D-CA-10], Rep. McGovern, James P. [D-MA-2]
Recent Actions
- 2026-01-13: Referred to the House Committee on Financial Services.
- 2026-01-13: Introduced in House
- 2026-01-13: Introduced in House
Bill Versions
- Credit Card Competition Act of 2026 — issued 2026-01-13 — PDF (10 pages)