New Credit Card Bill Forces Network Competition, Exempts Amex: Fed Gets Power Over Processing by 2027

Alright, let's talk plastic. You know, those little rectangles in your wallet that make the world go 'round? Well, there's a new bill, the Credit Card Competition Act of 2026, looking to shake up how those transactions actually get processed. Basically, it wants to force some competition where it feels like there isn't enough, which could mean some changes for your favorite local coffee shop, your online shopping, and maybe even your wallet.

The Fed Takes the Wheel on Transaction Routing

So, what's the big deal? This bill hands the Federal Reserve Board a big new job: within a year of this thing passing, they've got to cook up some regulations. The main goal is to stop the big credit card issuers—think banks with over $100 billion in assets—from limiting how many networks a credit card transaction can run on. Right now, it's often just one or two, and sometimes those are even owned by the same company. This new rule says, 'Nope, not anymore.' Merchants should get more choice in which network processes your payment, as long as it's not on a national security risk list (more on that in a sec). This means if you swipe your card, the store could choose to send that transaction through a different, potentially cheaper, network than they do today.

More Choices for Merchants, But Who Pays the Piper?

This is where it gets interesting for small business owners and even larger retailers. The Fed's new rules would prevent card issuers and networks from telling a merchant which network they have to use. Imagine running a small online shop; you want to keep costs down, right? This bill aims to give you the freedom to pick the most cost-effective network for each transaction, potentially saving you a few pennies on every sale. It also stops networks from forcing merchants to use specific security tech that isn't available everywhere or penalizing them for choosing a particular route. The idea is that more competition among these networks could drive down the 'interchange fees' that merchants pay, which could eventually lead to lower prices for you, the consumer. It's a big 'could,' though, because sometimes those savings don't always trickle down.

The 'National Security Risk' List and the Big Exemption

Now, for a couple of curveballs. First, the Fed, in cahoots with the Treasury Secretary, has to create and maintain a public list of payment networks deemed a 'national security risk.' If a network is owned or sponsored by a foreign government and poses a risk, it's on the list, and merchants can't use it. This adds a layer of geopolitical consideration to your everyday purchases. Second, and this is a pretty big one: the entire set of new rules doesn't apply to what they call '3-party payment system models.' Think American Express or Discover. These are companies that are both the card issuer and the network. So, while Visa and Mastercard might be feeling the heat of new competition, Amex and Discover are chilling on the sidelines, exempt from these new routing requirements. This carve-out means a big chunk of the market isn't affected, potentially creating an uneven playing field.

Who's Watching the Watchers? Enforcement Details

Here's a detail that might make you raise an eyebrow: the Consumer Financial Protection Bureau (CFPB), which usually has a hand in protecting consumers in financial matters, is explicitly barred from enforcing these new rules. Instead, all the enforcement power rests solely with the Federal Reserve Board. So, while the Fed is busy setting up the new rules and maintaining that national security list, they're also the only game in town for making sure everyone plays by them. Each set of regulations will kick in about six months after the Fed finalizes them, meaning we're looking at some real changes to how your credit card works by late 2027, assuming this bill gets through.