H.R. 7035: Credit Card Competition Act of 2026

The Credit Card Competition Act of 2026 aims to enhance competition among credit card networks, which could affect how credit card transactions are processed in the United States. Here are the key points of the bill:

1. Regulatory Changes for Credit Card Networks

The bill directs the Board of Governors of the Federal Reserve System to establish regulations that will:

• Prevent Exclusive Networks: Covered card issuers, or those with significant assets (over $100 billion), will be prohibited from restricting the number of payment card networks that can process transactions for their credit cards. Specifically, they cannot limit their cards to one network or only affiliated networks.
• Allow Routing Flexibility: Merchants will be enabled to direct the routing of electronic credit transactions across various networks without facing penalties or restrictions. This means that merchants can choose the network that is cost-effective for processing their credit card transactions.

2. Implementation Timeline

The Federal Reserve is required to impose these regulations within one year following the bill's enactment. Once these regulations are established, they will take effect 180 days after being finalized.

3. National Security Considerations

The bill instructs the Federal Reserve, in consultation with the Secretary of the Treasury, to create and maintain a public list of payment card networks that may pose national security risks. This list will include networks operated by foreign state entities or deemed to pose a threat. The list will be updated at least every two years.

4. Exemptions

There are specific exemptions outlined in the bill. The new regulations will not apply to credit cards issued within a three-party payment system, where the issuer is also the network processor.

5. Enforcement Authority

The bill specifies that while the Bureau of Consumer Financial Protection generally has enforcement authority, it will not have the authority to enforce the new provisions related to credit card networks as specified in this legislation.

6. Definitions of Key Terms

The bill provides definitions for several relevant terms, including:

• Covered Card Issuer: A card issuer with assets exceeding $100 billion.
• Electronic Credit Transaction: A transaction where a credit card is used, including online or app-based transactions.
• Licensed Members: Entities authorized to issue credit cards under a payment network.

Relevant Companies

• V - Visa Inc.: As one of the largest payment networks, Visa may experience changes in how transactions are processed, potentially impacting fees and competition.
• MA - Mastercard Incorporated: Similarly, Mastercard could be affected by increased competition and the requirement to allow multiple networks for transaction processing.
• AXP - American Express Company: As it operates its own network, American Express could see operational and competitive shifts in response to new routing rules.