The Credit Card Competition Act would let stores choose which payment network processes their credit card sales
The Credit Card Competition Act is a proposed federal law that would change how credit card transactions work at checkout. Right now, when you swipe a Visa or Mastercard, the store has no choice about which network processes that payment — Visa handles Visa cards, Mastercard handles Mastercard cards. The law would let stores pick a different network to process the transaction, even if your card says Visa or Mastercard on the front.
The goal is to reduce the fees stores pay when you use a credit card. Those fees — called interchange fees — currently go to your card issuer (usually a bank) and the payment network. Stores say these fees are too high and get passed along to all customers through higher prices. By letting stores route your card through a cheaper network, the law's supporters believe stores would lower prices and banks would compete harder to offer better rewards and benefits.
The law has not passed yet. It has been introduced in Congress multiple times but has not become law as of now. Understanding what it proposes helps you see why credit card companies, banks, and retailers are all fighting over it.
Key Takeaways
- The act would let stores choose which payment network processes your credit card, instead of the network printed on your card deciding automatically.
- Stores want this power because they say interchange fees are too high and get passed to customers as higher prices.
- Banks and card networks oppose the law because lower fees would mean less revenue from credit card programs.
- If the law passes, you might see lower prices at stores, but your credit card rewards and benefits could shrink.
- The law has been proposed multiple times but has not passed Congress yet.
How credit card fees work now
When you pay with a credit card, three parties take a cut: your bank (the card issuer), the store's bank (the acquiring bank), and the payment network (Visa, Mastercard, American Express, or Discover). The network's cut is called the interchange fee, and it typically ranges from about 1.5% to 3% of the transaction amount, though the exact rate depends on the card type and the merchant category.
A store selling a $100 item might pay $2 to $3 just to accept your credit card. That fee comes out of the store's revenue. Stores argue that these fees are built into their prices, so customers who pay with cash or debit cards end up subsidizing rewards and benefits for credit card users. A grocery store, for example, might raise prices 2% across the board to cover credit card fees, even though only some customers use credit cards.
The payment networks (Visa and Mastercard) set the interchange rates, and individual banks cannot negotiate them down much. This is why stores feel they have no leverage — they cannot shop around for a better rate the way you can shop around for a better credit card offer.
What the act would change
Under the Credit Card Competition Act, stores would be allowed to route your credit card transaction through a different payment network than the one on your card. If you hand over a Visa card, the store could choose to process it through Mastercard's network, or through a smaller network like Discover or American Express, if those networks agreed to a lower fee.
This is already possible for debit cards. When you use a debit card, the store's payment terminal often asks which network you want to use — Visa Debit, Mastercard Debit, or sometimes a regional network. The Credit Card Competition Act would extend that choice to credit cards.
The law would also require payment networks to be more transparent about their fees and would prevent them from punishing stores that route transactions to cheaper networks. Currently, networks can impose higher fees on stores that use competing networks, which discourages the practice.
Who supports the act and why
Retailers — especially large grocery chains, pharmacies, and big-box stores — are the main supporters. They argue that interchange fees have grown too high and that they have no way to negotiate. The National Retail Federation, which represents thousands of stores, has pushed for this law for years. Smaller merchants support it too, because high fees eat into their already thin profit margins.
Some consumer advocates support the act because they believe lower store costs would lead to lower prices for everyone. They also point out that the current system is unfair to customers who cannot or do not use credit cards — those customers pay higher prices to subsidize rewards for credit card users.
Some lawmakers support the act as a competition issue. They argue that Visa and Mastercard have too much power and that letting stores choose networks would introduce real competition and drive fees down.
Who opposes the act and why
Banks and credit card networks are the main opponents. Visa and Mastercard argue that lower interchange fees would force them to invest less in fraud prevention, security, and the technology that makes card payments fast and reliable. They also say that banks would have less revenue to offer rewards programs, travel insurance, and other cardholder benefits.
Banks that issue credit cards would lose revenue too. That revenue currently funds rewards points, cash back, airline miles, and other perks. If interchange fees drop, banks would have to cut those programs or raise annual fees to make up the difference. This is why you might see fewer 2% cash back cards or premium travel rewards cards if the act passes.
Some consumer groups worry that the act would hurt consumers who rely on rewards. They argue that the current system, while expensive for stores, has made credit cards more valuable for cardholders who can take advantage of rewards and benefits.
What might happen to your credit card if the act passes
If the Credit Card Competition Act becomes law, the most likely outcome is that rewards programs would shrink. Banks would have less revenue from interchange fees, so they would offer fewer points per dollar spent, lower cash back rates, or higher annual fees on premium cards. A card that currently offers 2% cash back might drop to 1%, or a card with no annual fee might start charging $95 per year.
Cards aimed at people with lower credit scores might disappear entirely, because banks would have less revenue to offset the risk of lending to those customers. On the other hand, if stores do pass savings along to customers, you might pay less at checkout — though there is no may provide stores would lower prices rather than keep the savings as profit.
The act would not change how you use your card or how you pay. You would still swipe or tap your card the same way. The difference would happen behind the scenes, at the payment network level, and you would mainly notice it through smaller rewards or higher fees.
The current status of the act
The Credit Card Competition Act has been introduced in Congress several times, most recently in 2023 and 2024, but it has not passed. The bill faces strong opposition from banks and payment networks, which have significant lobbying power. Retailers continue to push for it, and the debate remains active in Congress.
Even if the act does not pass in its current form, Congress may pass a modified version that addresses some of the concerns raised by both sides. Some proposals would limit the act to very large retailers, or would allow smaller networks to opt out, or would include transition periods to let banks adjust their business models.
Monitoring news from Congress or from retail and banking industry groups will tell you if the act moves closer to becoming law. For now, it remains a proposal rather than a rule that affects how you use credit cards.
Frequently Asked Questions
Would the act let stores refuse my credit card?
No. The act would only change which network processes the transaction, not whether stores can accept credit cards. Stores that accept credit cards today would still have to accept them. The change happens at the payment network level, not at the checkout counter.
Would my credit card rewards disappear if this act passes?
Not when ready, but they would likely shrink over time. Banks would have less revenue from interchange fees, so they would probably reduce cash back rates, points per dollar, or sign-up bonuses. Premium cards with annual fees might become more common.
Would I pay less at stores if the act passes?
Possibly, but not may provide. Stores would save money on interchange fees, but they are not required to pass those savings to customers. Some stores might lower prices, while others might keep the savings as profit. It depends on how competitive the market is in your area.
How would this affect debit cards?
Debit cards would not change much, because stores already have the power to choose which network processes debit transactions. The act is focused on credit cards, where stores currently have no choice.
When will this act become law?
It is unclear. The act has been proposed multiple times but has not passed Congress yet. The timeline depends on whether Congress prioritizes it and whether supporters and opponents reach a compromise. You can check Congress.gov to see the current status of any bill.