Credit Card Competition Act: Will It Reduce Dependence on Visa and Mastercard?

The U.S. payments industry is dominated by two giants—Visa and Mastercard—which together control over 80% of the credit card market. This duopoly has long been a point of contention among merchants, lawmakers, and even competing payment networks. Enter the Credit Card Competition Act (CCCA), a proposed legislation aimed at breaking the stranglehold of these two payment processors by introducing more competition. But will it actually work?

The Current State of Credit Card Dominance

Why Visa and Mastercard Rule the Market

Visa and Mastercard’s dominance isn’t accidental. Their networks are deeply entrenched in the financial ecosystem, offering:

• Global acceptance – Nearly every merchant that takes cards accepts Visa and Mastercard.
• Strong security features – Tokenization, fraud detection, and chargeback protections make them reliable.
• Rewards programs – Co-branded cards with airlines, hotels, and cashback incentives keep consumers loyal.

However, this dominance comes at a cost—literally. Merchants pay interchange fees (typically 1.5%–3.5% per transaction), which are among the highest in the world. These fees are a major pain point for small businesses, especially as digital payments surge post-pandemic.

The Role of Durbin Amendment 2.0

The CCCA is often seen as a spiritual successor to the Durbin Amendment (2010), which capped debit card interchange fees. While that law reduced costs for merchants, critics argue it also led to:

• Fewer free checking accounts (banks offset lost revenue with fees).
• No significant consumer savings (merchants didn’t always pass on lower fees).

Now, lawmakers are trying again—this time targeting credit cards.

How the Credit Card Competition Act Works

Breaking the Visa-Mastercard Duopoly

The CCCA would require banks with over $100 billion in assets to offer at least two competing networks on their credit cards—one of which cannot be Visa or Mastercard. Potential alternatives include:

• American Express (though it has its own fee structure).
• Discover (smaller network but growing).
• Newer fintech players (e.g., blockchain-based networks).

The idea is that merchants could then choose the cheaper network, theoretically driving down fees.

Potential Impact on Consumers

Proponents argue that lower merchant fees could lead to:

• Lower prices (if businesses pass savings to customers).
• More innovation (smaller networks might invest in better tech).

But skeptics warn of unintended consequences:

• Rewards cuts – Banks may slash cashback and travel perks to offset lost revenue.
• Confusion at checkout – Multiple network options could slow transactions.

Will the CCCA Actually Reduce Dependence on Visa and Mastercard?

The Merchant Perspective

Small businesses are strongly in favor of the bill. The National Retail Federation estimates that the CCCA could save merchants $11 billion annually. For a local coffee shop processing thousands of transactions, even a 0.5% fee reduction could mean thousands in savings.

But large retailers like Walmart and Amazon already negotiate lower fees privately. The real winners would be smaller merchants who lack bargaining power.

The Banking Industry’s Pushback

Unsurprisingly, banks and card issuers hate this bill. Their arguments:

• “This is government overreach” – Forcing network options interferes with free-market competition.
• “Rewards will disappear” – Banks fund perks using interchange revenue; cuts are inevitable.
• “Security risks” – Smaller networks may not match Visa/Mastercard’s fraud protections.

JPMorgan Chase CEO Jamie Dimon has called the bill “a huge mistake,” while Visa and Mastercard are lobbying aggressively against it.

The Global Context

The U.S. is unusual in its reliance on just two networks. Other markets have more diversity:

• EU/UK – Interchange fees are capped at 0.3% (credit) and 0.2% (debit).
• China – UnionPay dominates, but Alipay/WeChat Pay are major alternatives.
• India – RuPay (homegrown network) competes with Visa/Mastercard.

If the CCCA passes, the U.S. could see a similar shift—but only if alternatives can scale quickly.

The Road Ahead: Political and Practical Challenges

Will the Bill Pass?

The CCCA has bipartisan support (Senators Dick Durbin and Roger Marshall lead the charge). But:

• Banking lobbyists are powerful – They’ve killed similar efforts before.
• Midterm elections complicate timing – Lawmakers may prioritize other issues.

Even if it passes, implementation could take years.

The Rise of Alternative Payment Methods

Regardless of the CCCA’s fate, Visa and Mastercard face other threats:

• Digital wallets (Apple Pay, Google Pay) are reducing card dependency.
• Buy Now, Pay Later (BNPL) services bypass traditional credit networks.
• Cryptocurrency and CBDCs could disrupt the entire system long-term.

The payments landscape is evolving—with or without government intervention.

Final Thoughts

The Credit Card Competition Act is a bold attempt to reshape an industry long controlled by two players. Whether it succeeds depends on:

• Merchant adoption – Will businesses actually switch networks?
• Consumer reaction – Will they accept fewer rewards for lower costs?
• Political will – Can lawmakers withstand banking industry pressure?

One thing is clear: The fight over who controls the future of payments is just heating up.