Credit Card Competition Act of 2026
- Bill Number
- S. 3623
- Origin Chamber
- Senate
- Congress
- 119th Congress, Session 2
- Policy Area
- Finance and Financial Sector
- Status
- Introduced
- Latest Action
- 2026-01-13: Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.
- Last Updated
- 2026-02-04T15:52:06Z
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 lower fees for merchants and, potentially, consumers by allowing more choices in how payments are processed.
Key Provisions
- Regulations on Network Exclusivity: The Federal Reserve Board must issue rules within one year of enactment prohibiting "covered card issuers" (those with over $100 billion in assets, including affiliates) and payment card networks from restricting credit card transactions to:
- Only one network.
- Two or more networks if they are owned, controlled, or affiliated with the issuer.
- The two largest networks by market share (based on U.S. credit cards issued), but the Board must review this every three years and remove this option if the top networks change.
- Routing Freedom for Merchants: Rules must prevent issuers or networks from blocking merchants' ability to choose how to route credit card payments through any eligible network (not on a national security risk list). This includes bans on:
- Requiring exclusive use of specific security technologies (like authentication or tokenization, which are methods to verify and secure transactions) that don't work across networks.
- Penalizing merchants for routing choices or failing to meet volume targets on specific networks.
- Exemptions: These rules do not apply to "3-party payment systems" (e.g., where the issuer also operates the network, like some store cards or American Express models).
- National Security List: The Board, with input from the Treasury Secretary, must create and update (every two years) a public list of payment networks posing risks to U.S. national security or owned/operated by foreign government entities. Transactions cannot be routed through these.
- Definitions: Key terms include "electronic credit transaction" (any credit card use, including online or app-based without physical card presentation) and "licensed member" (issuers, acquirers—merchants' banks that process payments—and others authorized by the network).
- Enforcement Limits: The Consumer Financial Protection Bureau (CFPB) cannot enforce these new rules; enforcement falls to the Federal Reserve.
- Implementation Timeline: Regulations take effect 180 days after final issuance.
Significant Changes to Existing Law
This bill amends Section 921 of the Electronic Fund Transfer Act (EFTA, a 1978 law governing electronic payments). It adds a new subsection focused on credit card network competition, which did not previously exist in EFTA. Prior to this, EFTA addressed debit card routing (via the 2011 Durbin Amendment) but not credit cards. It also explicitly strips CFPB enforcement authority over this section, shifting it solely to the Federal Reserve—unlike other EFTA provisions where CFPB has a role.
Potential Impacts
- Government Agencies: The Federal Reserve gains new regulatory duties, including ongoing market share reviews and list maintenance, increasing its workload. The Treasury provides consultation but no direct enforcement. This could lead to more inter-agency coordination on financial security.
- Citizens and Consumers: May indirectly benefit from lower merchant fees passed on as reduced prices, but could face minimal direct changes unless issuers adjust rewards or rates in response to competition.
- Merchants and Businesses: Enables more routing options, potentially cutting "interchange fees" (charges networks levy on merchants per transaction), which total hundreds of billions annually. Small businesses might save more proportionally.
- International Relations: The national security list could restrict networks tied to foreign governments (e.g., from China), affecting global payment flows and U.S. firms' international operations, possibly straining ties with those countries.
Main Stakeholders Affected
- Large Financial Institutions: Covered issuers (e.g., major banks like JPMorgan Chase, Bank of America) and networks (e.g., Visa, Mastercard) face restrictions on controlling transaction routing, potentially eroding their market power.
- Merchants and Acquirers: Retailers, e-commerce platforms, and payment processors gain flexibility to choose lower-cost networks, reducing expenses.
- Smaller Issuers and Networks: Could see opportunities to compete with dominant players, fostering market entry.
- Consumers: Indirectly affected through potential price changes, though credit card rewards programs might be impacted if issuer revenues decline.
- Regulators: Federal Reserve and Treasury handle implementation; merchants and issuers may lobby or challenge rules.
Notable Legal, Constitutional, or Political Implications
- Legal: Introduces antitrust-like oversight to payment systems without new laws, relying on Federal Reserve rulemaking. Exemptions for 3-party models avoid disrupting integrated systems, but the national security provision could invite legal challenges over due process or free speech if listings seem arbitrary. Limits CFPB enforcement may face scrutiny for uneven regulatory power.
- Constitutional: No direct challenges apparent, but routing mandates could be tested under commerce clause authority (Congress regulating interstate payments). The security list raises Fifth Amendment concerns if it affects property interests without fair process.
- Political: Bipartisan support (introduced by Sens. Marshall, Durbin, Welch) reflects merchant advocacy against high fees, but opposition from banks/networks could spark debates on innovation vs. competition. Builds on debit reforms, signaling broader payment system scrutiny amid inflation and small business concerns.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Cosponsors (2)
Sen. Durbin, Richard J. [D-IL], Sen. Welch, Peter [D-VT]
Recent Actions
- 2026-01-13: Read twice and referred to the Committee on Banking, Housing, and Urban Affairs.
- 2026-01-13: Introduced in Senate
Bill Versions
- Credit Card Competition Act of 2026 — issued 2026-01-13 — PDF (10 pages)