Credit Card Fee Legislation in 2026: The Durbin-Marshall Act and What It Means for Your Business

Every time a customer swipes, taps, or dips a credit card at your business, you pay a fee. That fee is set by Visa and Mastercard through a process that most merchants have zero visibility into and zero ability to negotiate. The two networks control over 80% of all credit card transactions in the United States, and their interchange fee schedules determine what every business in America pays to accept credit cards.

In 2023, U.S. merchants paid an estimated $100.7 billion in credit and debit card processing fees, according to the Nilson Report. That number has been climbing every year. For context, it was $77.5 billion in 2019. Credit card fees are now the third or fourth largest operating expense for many small businesses, behind only labor and rent.

The Credit Card Competition Act, introduced by Senators Richard Durbin (D-IL) and Roger Marshall (R-KS), is the most significant piece of legislation aimed at addressing these fees. It has been introduced multiple times, and as of 2026, it remains one of the most-watched bills in the payments industry.

Here is what the bill would do, why it matters to your business, and what you can do right now to lower your processing costs without waiting for Congress to act.

What Is the Credit Card Competition Act?

The Credit Card Competition Act (also called the Durbin-Marshall Act) would require large banks that issue credit cards to enable at least two unaffiliated payment networks on every credit card they issue. Right now, most credit cards only route through one network - Visa or Mastercard. The cardholder's bank chooses which network to use, and the merchant has no say.

The bill's core mechanism is simple: competition. If a credit card must offer at least two network options, merchants could route transactions through the network that charges lower interchange fees. This competitive pressure would, in theory, drive fees down across all networks.

The bill was first introduced in 2022 as S.4674 in the 117th Congress. It was reintroduced in 2023 as S.1838 in the 118th Congress. It has been reintroduced again in subsequent sessions. You can track the latest version on congress.gov by searching for "Credit Card Competition Act."

How the Bill Would Work in Practice

Currently, when a customer pays with a Visa credit card, the transaction routes through the Visa network. Visa sets the interchange fee schedule, and your processor passes that cost through to you (along with their own markup). You cannot route that Visa card through a different network that might charge less.

This is different from debit cards. The original Durbin Amendment (part of the 2010 Dodd-Frank Act) already requires debit cards to offer at least two network routing options. That is why many debit transactions can route through networks like STAR, NYCE, or Pulse instead of Visa or Mastercard, and why debit interchange fees are significantly lower than credit card interchange fees.

The Credit Card Competition Act would extend this same principle to credit cards:

1. Banks with $100 billion+ in assets would be required to enable at least two unaffiliated networks on each credit card they issue.
2. Merchants would choose which network to route transactions through, typically selecting the lower-cost option.
3. Alternative networks like STAR, NYCE, or new entrants could compete for credit card transaction volume.
4. Security and fraud protection requirements would apply equally to all networks, so routing through an alternative network would not reduce consumer protections.

Current Interchange Fee Structure: What You Are Paying Now

To understand why this legislation matters, you need to understand what merchants currently pay and how those fees are set.

Visa Interchange Rates

Visa publishes their interchange fee schedule publicly. For a typical retail credit card transaction (card present, swiped or tapped), interchange rates range from approximately:

Visa CPS Retail Credit: 1.65% + $0.10 per transaction
Visa CPS Rewards 1: 1.95% + $0.10 per transaction
Visa CPS Rewards 2: 2.30% + $0.10 per transaction
Visa Signature/Infinite: 2.10% to 2.40% + $0.10 per transaction

Card-not-present transactions (online orders, phone orders) typically carry higher interchange rates, ranging from 1.80% to 2.50%+ depending on the card type.

You can view Visa's full interchange schedule at Visa's interchange page.

Mastercard Interchange Rates

Mastercard's interchange rates are structured similarly:

Mastercard Core: 1.58% + $0.10 per transaction
Mastercard Enhanced Value: 1.90% + $0.10 per transaction
Mastercard World: 2.05% + $0.10 per transaction
Mastercard World Elite: 2.30% + $0.10 per transaction

Mastercard publishes their rates at Mastercard's interchange page.

The Total Fee Stack

Interchange is only one component of what you pay. Your total processing cost includes:

Interchange fees (paid to the card-issuing bank via Visa/MC)
Network assessment fees (paid to Visa or Mastercard directly, typically 0.13-0.15%)
Processor markup (what your processor charges on top of interchange)

On a flat-rate plan with Square (2.6% + $0.10) or Stripe (2.9% + $0.30), all three components are bundled into one rate. You cannot see how much of your fee goes to interchange, how much goes to the network, and how much is the processor's profit.

On interchange-plus pricing, each component is broken out. A typical interchange-plus rate might look like: interchange + 0.25% + $0.10. This transparency is why interchange-plus pricing almost always costs less than flat-rate pricing for businesses processing more than a few thousand dollars per month.

See how much you could save by switching to interchange-plus pricing.

The Federal Reserve's Data

The Federal Reserve tracks and publishes data on interchange fees as part of its Regulation II (Debit Card Interchange Fees and Routing) responsibilities. Their most recent report shows that the average debit card interchange fee is approximately $0.24 per transaction, which is dramatically lower than credit card interchange.

This difference exists largely because of the original Durbin Amendment, which capped debit card interchange fees for large banks. The Credit Card Competition Act aims to create similar competitive dynamics for credit cards, though it takes a different approach - mandating network competition rather than setting fee caps.

Federal Reserve interchange data is available at the Federal Reserve's Regulation II page.

Not sure what you are actually paying in interchange fees? Most merchants on flat-rate processing have no idea. Get a free statement analysis from Sleft Payments and we will show you exactly where your money goes - interchange, network fees, and processor markup - line by line.

What the Legislation Would Mean for Small Businesses

If the Credit Card Competition Act passes, the impact on merchants would depend on several factors.

Potential Fee Reductions

Estimates from merchant advocacy groups suggest that credit card interchange fees could decrease by 25-40% if meaningful network competition is introduced. For a business processing $500,000 per year in credit card transactions at an average effective rate of 2.2%, that would represent annual savings of $2,750 to $4,400.

The Merchants Payments Coalition, which represents merchant trade groups, has been one of the strongest advocates for the bill, citing the success of the original Durbin Amendment in reducing debit card interchange fees.

What the Banking Industry Says

The banking industry, led by the American Bankers Association and individual card-issuing banks, opposes the bill. Their primary arguments are:

Rewards programs would be cut. Banks fund credit card rewards (cashback, points, miles) partly through interchange revenue. If interchange drops, banks may reduce or eliminate rewards programs.
Security concerns. Alternative networks may not have the same fraud prevention infrastructure as Visa and Mastercard.
Community banks could be harmed. While the bill targets banks with $100 billion+ in assets, smaller banks argue that competitive pressure would reduce interchange revenue across the industry.

The Reality

Both sides make valid points. The original Durbin Amendment did lead to reduced rewards on debit cards, and it is reasonable to expect some impact on credit card rewards if the Credit Card Competition Act passes. However, the debit card market did not collapse after the Durbin Amendment - banks adapted their products and continued to compete for customers.

The security argument is weaker. Alternative networks already process billions of debit transactions securely. Applying the same regulatory standards to credit card routing would address this concern.

Where the Bill Stands in 2026

The Credit Card Competition Act has bipartisan support but faces significant opposition from the financial services lobby. Credit card companies and large banks have spent hundreds of millions of dollars lobbying against the bill across multiple congressional sessions.

The bill has been introduced, reintroduced, and attached to various larger legislative packages. It has come close to advancing but has not yet passed through both chambers and been signed into law.

The political reality is that this bill, even with bipartisan sponsors, faces an uphill battle against one of the most powerful lobbying forces in Washington. Visa and Mastercard combined spent over $30 million on lobbying in 2023 alone, according to OpenSecrets.

The practical takeaway for merchants: Do not wait for this bill to save you money. It may pass eventually, but the timeline is uncertain. Everything you can do right now to lower your processing costs is worth doing regardless of what Congress does.

What You Can Do RIGHT NOW to Lower Your Processing Fees

You do not need legislation to reduce what you pay in credit card fees. Here are concrete steps you can take today.

1. Switch from Flat-Rate to Interchange-Plus Pricing

This is the single most impactful change most small businesses can make. If you are on Square (2.6% + $0.10), Stripe (2.9% + $0.30), or any flat-rate processor, you are paying a significant markup on every transaction.

Interchange-plus pricing passes through the actual interchange cost and adds a transparent, negotiable markup. For most businesses processing more than $10,000 per month, interchange-plus saves 0.3% to 0.8% compared to flat-rate pricing.

On $30,000 per month in processing, that is $90 to $240 per month in savings, or $1,080 to $2,880 per year.

Calculate your specific savings with our free tool.

2. Implement a Cash Discount Program

A cash discount program lets you post card prices and offer a discount to customers who pay with cash. This is legal in all 50 states when structured correctly.

For businesses where 20-40% of customers pay cash, this can effectively eliminate processing fees on those transactions. On $30,000 per month with 30% cash payments, that is $261 per month in fees you no longer pay (assuming a 2.9% rate on $9,000 in cash transactions that now cost you nothing).

3. Optimize Your Card-Present Rate

If you are processing transactions as card-not-present (keyed in) when they could be card-present (tapped, dipped, or swiped), you are paying higher interchange on every one of those transactions.

The difference between card-present and card-not-present interchange rates is typically 0.3% to 0.8% per transaction. Make sure you are using a terminal that supports tap-to-pay (NFC/contactless) and that your staff is tapping or dipping cards rather than keying in numbers.

4. Review Your Statement Monthly

Most merchants never read their processing statements. Those statements contain information about your effective rate (total fees divided by total volume), the interchange categories your transactions fall into, and any additional fees your processor is charging.

If you do not understand your statement, that is by design. Complex statements keep merchants from questioning their rates. Send your statement to Sleft Payments for a free analysis and we will translate it into plain English.

5. Negotiate Your Processor Markup

If you are on interchange-plus pricing, the markup portion (the percentage and per-transaction fee your processor adds on top of interchange) is negotiable. Processors compete for business, and if you have been with your current processor for over a year and have a good processing history, you have leverage to ask for a lower markup.

If your processor will not negotiate, that tells you something about how much they value your business.

6. Encourage Debit Over Credit

Debit card interchange fees are significantly lower than credit card interchange fees, thanks to the original Durbin Amendment. While you cannot tell customers which card to use, you can make it easier to choose debit:

Offer cash back at the register (encourages debit card use)
Make sure your terminal prompts for debit/credit selection
Train staff to ask "debit or credit?" when customers present their cards

Every month you wait to optimize your processing costs is money left on the table. The Durbin-Marshall Act might lower fees someday. Switching to transparent pricing lowers them today. Get your free savings analysis from Sleft Payments and see what you could save starting this month.

The Bigger Picture: Why Interchange Reform Matters

Credit card interchange fees in the United States are among the highest in the developed world. The European Union capped interchange fees at 0.3% for credit cards and 0.2% for debit cards in 2015. Australia has had interchange caps since 2003. Canada's interchange rates are lower than the U.S. by roughly 0.5-1.0 percentage points.

American merchants pay more to accept credit cards than merchants in virtually any other developed country. That cost is passed through to consumers in the form of higher prices. A 2023 Federal Reserve Bank of Boston study found that U.S. interchange fees effectively function as a regressive transfer - lower-income consumers who pay with cash or debit subsidize the rewards programs of higher-income credit card users through higher retail prices.

Whether the Credit Card Competition Act is the right solution is debatable. What is not debatable is that the current system, where two networks control the vast majority of credit card routing and set fees with no competitive pressure, results in merchants and consumers paying more than they would in a competitive market.

FAQ: Credit Card Fee Legislation

What is the Durbin-Marshall Act?

The Durbin-Marshall Act, formally called the Credit Card Competition Act, is bipartisan legislation sponsored by Senators Dick Durbin and Roger Marshall. It would require large banks to enable at least two unaffiliated payment networks on every credit card they issue, allowing merchants to route transactions through the lower-cost network. This competitive pressure is intended to reduce credit card interchange fees for merchants. You can read the bill text on congress.gov.

Will the Credit Card Competition Act pass in 2026?

The bill has bipartisan support but faces significant opposition from the banking and credit card industry lobby. It has been introduced multiple times and attached to various legislative packages. While passage is possible, no specific timeline is certain. Merchants should not delay cost-saving measures while waiting for legislation.

How would the bill affect credit card rewards?

Banks fund credit card rewards programs partly through interchange revenue. If interchange fees decrease due to network competition, some reduction in rewards programs is likely. However, the same concern was raised about the original Durbin Amendment's impact on debit cards, and debit card products continued to function. Banks would likely adapt their rewards strategies rather than eliminate programs entirely.

How much could merchants save if the bill passes?

Estimates vary, but merchant advocacy groups project interchange fee reductions of 25-40%. For a business processing $500,000 per year in credit card sales, this could mean annual savings of $2,750 to $4,400. The actual impact would depend on which alternative networks emerge and what rates they offer.

What can I do right now to lower credit card fees?

The most effective immediate actions are: switching from flat-rate to interchange-plus pricing (saves 0.3-0.8% per transaction), implementing a cash discount program, optimizing card-present transaction rates, reviewing your monthly statements, and negotiating your processor's markup. These steps can save $1,000 to $5,000 per year depending on your processing volume.

Does this legislation affect debit card fees?

No. Debit card interchange fees are already regulated under the original Durbin Amendment (2010), which capped debit interchange fees for large banks and required dual network routing. The Credit Card Competition Act would extend similar network competition requirements to credit cards, which are currently unregulated in this regard.

The Bottom Line

The Credit Card Competition Act represents the most significant potential change to credit card fee structures in over a decade. If it passes, merchants could see meaningful reductions in interchange costs. But legislative timelines are unpredictable, and the credit card industry's lobbying power should not be underestimated.

The smart move is to act now. Every month you spend on flat-rate processing or an overpriced interchange-plus plan is money you will never get back. Legislation might save you money in the future. Better processing saves you money today.

Get your free cost analysis from Sleft Payments and start saving now - no act of Congress required.