Is the "Duo" of Visa and Mastercard Being Challenged? The True Nature of the "Swipe Fees" Targeted by the U.S. 'Credit Card Competition Act'

Is the "Duo" of Visa and Mastercard Being Challenged? The True Nature of the "Swipe Fees" Targeted by the U.S. 'Credit Card Competition Act'

2026年01月16日 16:16

1. Why the "Credit Card Reform" is Resurfacing in the U.S.

In the U.S., high prices and household burdens are once again at the forefront of political discussions. Amid this atmosphere, the "Credit Card Competition Act" is gaining renewed attention. The catalyst for this is the growing debate that, alongside the call to "reduce interest rates to help households," questions whether the fees associated with card payments are contributing to rising prices.


For general users, annual fees, interest rates, and point reward rates are what they see. However, from the perspective of stores, card payments are a cost where "a portion of sales is deducted as fees." In the U.S., the conflict over these fees has persisted for many years. This bill aims to directly address that structure.


2. What are "Swipe Fees": The Hidden Costs

When paying by card, merchants bear the "swipe fee (transaction fee)." This is not a single cost but is distributed among multiple players such as issuing banks, networks (like Visa/MasterCard), and payment processors, functioning like a "toll for transactions."


For merchants, the lower the profit margin of the industry, the heavier the burden. Consequently, criticism arises that "if fees are passed on to prices, everyone, including cash customers, is bearing the cost." Proponents emphasize this point, arguing that reducing fees will lead to "lower prices."


3. The Core of the Bill is to "Increase Routing Options"

The central idea of this bill is simple.


Require card issuers above a certain size to offer multiple payment networks that can process a single card transaction. Then,allow merchants to choose which network to process the transaction (routing).


The aim is to shake the "duopoly" where Visa and Mastercard hold strong influence. Supporters believe that if merchants have more routing options, competition among networks will drive down fees.


Opponents criticize this as "regulation by force, not free competition." They also highlight points like "there's no guarantee prices will ultimately fall" and "even if merchants benefit, it doesn't necessarily mean consumers will."


4. Who Will Be Affected: Visa, Mastercard, Banks, Merchants, and Consumers

Visa and Mastercard
If the bill passes, there will be more room for merchants to "route elsewhere." For the two companies, this will exert downward pressure on transaction volume (market share as a transaction pathway) and related revenues. As competition progresses, they may be forced to lower fees and potentially need to readjust their business models.


Card Issuing Banks (especially large ones)
The focus is mainly on large issuers, and the practical response (connecting to multiple networks, rule establishment, system changes) will become burdensome. It may also affect the distribution of fee revenue and the design of card benefits.


Merchants (retail, dining, etc.)
They are the core supporters of the bill. If fees can be reduced, it could lead to improved profit margins or room for price reductions. Especially low-margin businesses like supermarkets, gas stations, and convenience stores often argue that "fees are the second heaviest cost after labor."


Consumers
This is the biggest point of contention. Proponents say "if fees go down, prices will go down," while opponents counter with "price reductions won't happen/will be limited. Instead, points and miles will be cut." In other words, it tends to become a tug-of-war between"falling shelf prices" and "maintaining rewards."


5. The "End of Points?" Debate is Prone to Ignite

The U.S. credit card market is highly competitive in terms of benefits. Airline miles, cashback, hotel perks, etc., are the card's greatest weapons. Part of the funding for these benefits comes from revenue tied to transactions (including the ecosystem costs paid by merchants).


That's why whenever a bill is introduced, SNS quickly spreads warnings like "points will be devalued," "annual fees will rise," and "screening will become stricter." Meanwhile, another group strengthens their opposition, saying "points are like 'indirect taxes' created by fees," and "cash users are losing out."


This conflict arises from the very nature of payments, where "who bears the cost and who benefits" is not easily visible.


6. Will Security and Fraud Prevention Weaken?

Opponents emphasize "safety." Payment networks have systems for fraud detection, chargeback processing, and data protection. It's true that as routes increase, so do connection points, raising operational complexity.


However, proponents argue that "competition will occur not only in fees but also in service quality and security." This area strongly depends on "design and implementation," and the outcome will be influenced by the bill's text, operational rules, and the rigor of oversight.


7. SNS Reactions: Where Do Supporters and Opponents Diverge?

Reactions on SNS are broadly divided into three groups.

(1) Merchant/Small Business Leaning: "Fees are too high"

  • "Card fees are effectively a price increase factor. Introducing competition is only natural."

  • "The two companies are too strong to negotiate with. Just being able to choose routes is progress."

  • "For low-margin industries, 'a few percent' can mean life or death. It's abnormal to have left this unaddressed."


(2) Points/Miles Enthusiasts: "Will rewards be cut?"

  • "Ultimately, if the funding for benefits shrinks, devaluation is unavoidable."

  • "There's no guarantee prices will drop, but points disappearing is the worst-case scenario."

  • "While claiming 'competition,' it's essentially intervention. It's unclear who benefits behind the scenes."


(3) Investment/Finance Cluster: "Market reaction is excessive/the bill is unlikely to pass"

  • "It's a strong political theme, but practical resistance is significant, making passage difficult."

  • "Even if passed, the impact will be gradual and possibly overestimated."

  • "Networks will likely absorb the impact through means other than fees (value-added services, etc.)."


Interestingly, the support and opposition do not simply divide into "big companies vs. small businesses" or "consumers vs. merchants." For example, there are opponents who advocate for "protecting small merchants," while there are supporters who argue "competition is necessary for consumers." Ultimately, the debate converges on "how the reduced costs will be distributed and to whom."


8. Three Possible Scenarios That May Unfold

Scenario A: Fee Reduction → Partial Price Pass-Through → Gradual Household Improvement
Merchants' costs decrease, leading to price reductions in highly competitive industries. Points are partially reduced, but this is offset by price effects, creating a "moderate compromise."


Scenario B: Prices Remain Largely Unchanged → Rewards and Credit Adjust First
A development feared by opponents. Point devaluation, rising annual fees, and stricter screening appear first, amplifying consumer dissatisfaction. Political backlash is also likely.


Scenario C: Prolonged Due to Practical and Lobbying Efforts → "Even if Passed, It Becomes Toothless"
Even if the bill passes, exceptions increase in operational rules, limiting its effect. Alternatively, the passage itself is delayed, leaving the market and consumers in a "wait-and-see" mode.


9. Perspective for Japanese Readers: This is a "Design Theory of Payment Infrastructure"

This topic is not just "news about Visa and Mastercard." Payments are social infrastructure, and it is a design theory on how to balanceprice, convenience, safety, and competition.


The "benefit" of points is an easily understandable profit, but who bears the cost behind it is not visible. This is why the debate tends to become emotionally charged. Regardless of where this bill lands, it's certain that a massive adjustment of interests continues behind the everyday act of "paying with a card."


Reference URLs


Reference Articles

Explained: U.S. Credit Card Competition Bill and How It Can Impact Visa and Mastercard
Source: https://www.ndtvprofit.com/world/explained-us-credit-card-competition-bill-and-how-it-can-impact-visa-mastercard

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