ICBA Warns Against Senate Credit Card Proposal

- The proposed legislation, known as the Credit Card Competition Act (CCCA), was reintroduced in January 2026 by Senators Dick Durbin (D-IL) and Roger Marshall (R-KS). It would mandate that large card-issuing banks (those with over $100 billion in assets) enable at least two unaffiliated payment networks on their credit cards, with at least one being a network other than Visa or Mastercard. This would give merchants the choice of which network to use for processing transactions. - A central point of contention is the impact on interchange fees, which are the fees merchants pay to the cardholder's bank for each transaction. These fees, which currently average over 2.25%, are set by card networks like Visa and Mastercard and have more than doubled in the past decade, reaching a record $172 billion in 2023. Proponents of the bill argue that introducing network competition could save businesses and consumers over $15 billion annually. - Opponents, including banking and credit union groups, argue that a reduction in interchange fee revenue would negatively impact popular credit card rewards programs and cashback options, which returned an estimated $68 billion to consumers in 2022. They also raise concerns that reduced revenue could lead to decreased investment in payment security and fraud prevention technologies. - The debate around the CCCA mirrors the one that surrounded the 2010 "Durbin Amendment," which imposed similar routing requirements and fee caps on debit card transactions. While proponents point to the debit card regulations as a successful example of introducing competition, opponents argue that the promised savings for consumers never materialized and that it disproportionately harmed smaller financial institutions. - From a payments infrastructure perspective, the CCCA would force a significant shift in the current four-party model (cardholder, merchant, issuer, acquirer/processor) by giving merchants more control over transaction routing. This could create opportunities for alternative networks like NYCE, Star, and Shazam to gain market share in the credit card space, a market currently dominated by Visa and Mastercard, who control over 80% of U.S. credit card transactions. - For product leaders, the legislative battle highlights the complex interplay between regulation, issuer economics, and product value proposition. A forced reduction in interchange could fundamentally alter the profitability of credit card programs, requiring a strategic pivot in how issuers fund rewards, manage fraud prevention, and partner with fintechs for embedded finance solutions. - The security debate surrounding the CCCA intersects with the broader industry push for digital identity and advanced fraud prevention. While opponents of the bill claim that routing transactions over smaller, potentially less secure networks could increase fraud, this highlights the growing importance of network-agnostic security solutions and innovations in biometric authentication and tokenization to protect consumer data regardless of the payment rail used. - The push for the CCCA is happening amidst the ongoing expansion of real-time payment networks like FedNow and the RTP network. While distinct from credit card rails, the growth of instant payments puts additional pressure on the card ecosystem to justify its fee structure and value proposition, making the debate over interchange fees even more critical for the future of card payments.