GENIUS Act Clears Senate Without Credit Card Competition or Rate Cap Amendments

The GENIUS Act, the bill on the regulation of stablecoins in banking, was passed by the Senate this week by a vote of 68-30.

The bill is a significant step in the future of digital payments. In addition to its primary focus, the final version of the bill omitted two key credit card reform proposals: The Credit Card Competition Act and an amendment proposing a 10% interest rate cap on credit card APRs.

The two amendments under consideration, one mandating credit card issuers to accommodate at least two rival networks on every card and the proposed rate cap, did not survive into the bill’s final version. Banking groups threatened the provisions would be detrimental to financial institutions and consumers.

The amendments championed by Sen. Dick Durbin (D-Ill.), who announced in April he will retire and not seek reelection in 2026, and Sen. Roger Marshall (R-Kan.) would have ended the Visa-Mastercard duopoly and potentially resulted in the reduction of the interchange fees paid by merchants.

Senators Josh Hawley (R-Mo.) and Bernie Sanders (I-Vt.) had suggested a 10% interest rate cap on credit cards, much lower than that charged by credit card companies today where the average interest rate is over 20%.

Advocates of the Credit Card Competition Act argue that the existing interchange model is opaque and generates fees passed on to the customer.

The law was intended to give the customer increased selection and negotiation power through the ability to challenge the big networks and small debit-routing networks. The proposal was attacked as having the potential to weaken security and decrease cardholder rewards paid out from these fees.

According to Jim Nussle, President and CEO of credit union trade association America’s Credit Unions, the omission of the amendments in the GENIUS Act was integral to protecting the consumer and small financial institutions.

Nussle expressed appreciation of the passage of the clean bill by the Senate but was concerned that the amendments would bypass normal legislative scrutiny.

Nussle said the elimination of such provisions benefits the consumer as well as the small business and financial institutions.

Supporters of the amendment are not throwing in the towel. The card networks’ interchange fees decrease the thin profit margins at the retail level and add to the costs paid by the end consumers, says the National Association of Convenience Stores and the Merchants Payments Coalition.

Network competition supporters say the status quo helps big businesses, and network choice would enhance competition.

Durbin and Marshall did not react after the vote within the Senate, but sources confirm that both lawmakers are considering opportunities of attaching the Credit Card Competition Act to existing legislation.

NACS General Counsel Doug Kantor explained to Payments Dive why Marshall became resolved to fight this bill ever since the banks had started actively campaigning against him in Kansas and doing whatever else made the effort a top priority for him. “They made him angry.”

Against this broader context of debate, the question is clearly far from being settled in the immediate future. The arrival of Apple Pay and Google Pay has not displaced Visa and Mastercard from their dominance of the backend of the bulk of card transactions.

The market influence of these companies allows them to establish the interchange fees from which the merchants cannot break away easily.

Representatives of the banking industry interchange fee say the fees enable prime fraud protection programs and customer rewards initiatives on behalf of end-use payers. The representatives say stablecoins and future fintech infrastructure already create enough market competition.

For Richard Hunt, the executive chair of the Electronic Payments Coalition, the development of new credit card competition through the enactment of stablecoin laws is the ultimate contradiction.

“It smacks of double-speak when the merchant camp suggests stablecoins are a new payment possibility but still contend cards need more competition,” Hunt said.

In their critique of the Credit Card Competition Act, stablecoin proponents admit that digital coins have failed to find their niche as reliable alternatives when it comes to payment.

Consultant Peter Tapling said alternative payment instruments tend to rely on the credit card rails while not achieving popularity because the merchants and end-consumers fail to take them on at adequate scales.

“It’s always the chicken-egg problem,” Tapling said. “Will consumers demand to use it enough for merchants to adopt it, or will merchants make it available enough that consumers gravitate to it?”

The passage of the GENIUS Act without the Credit Card Competition Act was a temporary blow to supporters, but their crusade remains intact.

The House and the political process remain pending renewed support from Sen. Durbin and Sen. Marshall as they plan to continue their efforts. Credit cards are as they stand, but the industry has lingering problems to grapple with.