Proposed Credit Card Competition Act Could Have Major Implications for Industry Stakeholders

The Credit Card Competition Act (CCCA) may be back in front of Congress soon, according to the office of Senator Dick Durbin (D-IL). The act — previously introduced in 2023 by Durbin and a group of colleagues, including then-Ohio Senator J.D. Vance, after failing to gain traction in 2022 — aims to increase competition on the processing side of a credit card transaction.

The 2023 version of the act sought to require credit card issuers with more than $100 billion in assets to allow for at least two credit card networks to process their card transactions. And, perhaps more importantly, the act stipulated that at least one of those networks be a company other than Mastercard or Visa. 

Merchants would then be able to select the network through which to process a transaction. A summary of the act posted on Durbin’s website reasons that the “competition and choice between networks would incentivize better service and lower cost.” Increased competition among networks may allow merchants to realize cost savings that they can then extend to consumers.

And those cost savings could be significant, in aggregate.

The purchase volume of transactions completed with cards in the U.S. card network topped $10.7 trillion in 2024, an increase of nearly 6% over card spend in 2023.

Though networks charge processing fees that represent only a fraction of a purchase’s total cost, those fees can quickly add up to noteworthy sums when the base figure is in the trillions.

Mastercard and Visa are among the largest credit card networks in the world. Together, the two networks have approximately 2.4 billion credit cards in circulation, representing 69% of all credit cards in circulation worldwide. If history is any indication, the two networks don’t figure to allow the CCCA to pass without a fight.

Mastercard, Visa, and trade groups from the credit card industry have spent more than $50 million lobbying against the Credit Card Competition Act. The U.S. isn’t the only country where Mastercard and Visa are facing increased scrutiny that could take a bite out of their profits.

In the U.K., watchdog agency Payment Systems Regulator (PSR) is considering proposing solutions that could increase competition for Mastercard and Visa. David Geale, PSR’s Managing Director, issued comments in a press release that — save for the mention of the U.K. and its currency — sound reminiscent of the issues legislators such as Durbin seek to remedy in the U.S.

“Cards are a popular and convenient way to make payments in the UK, so any issues in the card market can have a negative impact on both businesses, and ultimately consumers,” Geale said. “We have found that there is a lack of competition in the market, and evidence that Mastercard and Visa might have been able to charge UK businesses millions of pounds more than they would in a properly competitive market, impacting on their ability to invest and grow.”

2025 is shaping up to be a challenging year for credit card networks as lawmakers propose legislation to cap interest rates on credit cards. But measures intended to ramp up competition among networks will have implications for the other parties involved in card transactions: issuers, merchants, and consumers. 

• Credit card issuers with more than $100 billion in assets could face substantial changes to their operating procedures should the Credit Card Competition Act pass. Adding another credit card network may necessitate overhauls to existing technologies prompting compliance and other costs that come with partnering with a new network.

Most credit card issuers have less than $100 billion in assets, so they won’t be directly affected by the passage of the Credit Card Competition Act. But they may incur additional expenses if they’re forced to make adjustments to their payment systems in response to any technological changes that take place should the CCCA move forward.

• Merchants stand to be the big winners should the CCCA pass. They may have increased up-front costs to adapt their systems or practices to engage with a new network. But the increased competition of another network may allow them to access reduced fees in comparison to what they’re charged today.

• For consumers, the jury is still out as to whether they’ll benefit from the Credit Card Competition Act. Merchants may pass on cost savings they realize from the CCCA to consumers, but skeptics aren’t so sure those savings will outweigh potential drawbacks. 

The Electronic Payment Coalition proposes that card issuers, faced with losses to their bottom line, will pare down the rewards they offer consumers. And reduced rewards could have a domino effect on the economy. Consumers who earn fewer rewards may spend less overall, which could adversely impact businesses that rely on discretionary spending, such as those in the entertainment and travel industries.

The Credit Card Competition Act targets two of the biggest names in the card arena, but the card ecosystem isn’t just made up of siloed stakeholders. It’s an interconnected organism, from the biggest card networks and issuers to the college freshman  starting with his or her first credit card. If the CCCA passes, all participants in the credit card ecosystem will feel its impact, though just exactly how remains to be seen.