Leading US financial institutions are reportedly in discussions to create a new payments network aimed at circumventing proposed federal caps on credit card interchange fees, according to a July 7, 2026, report. The initiative, driven by concerns over the potential erosion of a significant revenue source, would establish a competing system to dominant networks like Visa and Mastercard. The proposed regulatory changes threaten a key income stream estimated at over $90 billion annually for the US banking sector.
Context — [why this matters now]
The discussions gain urgency from the Credit Card Competition Act, reintroduced in Congress with bipartisan support. The legislation aims to mandate that merchants have a choice of at least two unaffiliated networks for processing credit card transactions, with at least one being outside the Visa-Mastercard duopoly. This regulatory pressure follows a multi-year trend of increasing merchant frustration with rising swipe fees, which have more than doubled over the past decade. The current economic environment, characterized by heightened scrutiny of consumer costs and corporate profits, provides fertile ground for such legislative efforts.
A historical parallel exists in the Durbin Amendment of 2010, which capped interchange fees on debit card transactions for large banks. That regulation resulted in an estimated $8 billion annual revenue loss for affected banks, leading institutions to recoup losses through other means such as higher account fees and reduced reward programs. The current proposal for credit cards poses a substantially larger financial threat, given the higher fees and transaction volumes involved. The banks' exploration of a proprietary network signifies a shift from defensive lobbying to proactive commercial strategy.
Data — [what the numbers show]
Interchange fees generated approximately $93.2 billion for US card issuers in 2025. Visa and Mastercard's combined market share for credit card network volume in the US stands at over 80%. The average credit card interchange fee ranges from 1.5% to 3.5% of the transaction value, significantly higher than the sub-0.5% cap proposed for debit transactions under the Durbin Amendment. For large issuers like JPMorgan Chase and Bank of America, card income represents a substantial portion of revenue, often exceeding 15%.
A comparison of network pricing shows the banks' motivation. A hypothetical $100 transaction processed on a typical rewards credit card incurs an interchange fee of roughly $2.20, with the issuer receiving the bulk. Creating a proprietary network could allow banks to retain a similar fee structure while routing transactions outside the Visa/Mastercard systems targeted by the legislation. The potential revenue at stake for the top five US banks alone is estimated to be in the tens of billions of dollars annually.
| Metric | Current System (Visa/MC) | Proposed Bank Network (Potential) |
|---|
| Avg. Interchange Fee | ~2.20% | Could remain near 2.00-2.25% |
| Network Fee to Issuer | ~0.14% | Potentially lower or eliminated |
| Control over Routing | Limited by network rules | Determined by issuing banks |
Analysis — [what it means for markets / sectors / tickers]
The direct beneficiaries of a successful new network would be the large money-center banks with substantial card portfolios, such as JPMorgan Chase (JPM), Bank of America (BAC), and Citigroup (C). These institutions could preserve a higher portion of interchange revenue. Payment processors like Fiserv (FI) and Fidelity National Information Services (FIS) could see increased demand for their backend technology services to power the new network. The move is unequivocally negative for Visa (V) and Mastercard (MA), whose valuations are heavily dependent on US credit card volume. A material shift in routing could impair their transaction growth and pricing power.
A significant risk to the banks' strategy is execution. Building a secure, ubiquitous, and reliable payment network from scratch requires massive capital investment and faces immense technological and operational hurdles. merchant adoption is not guaranteed; retailers may still choose the lowest-cost network, which could be an existing player like NYCE or Star if they undercut the banks' proposed system. Market positioning shows institutional investors are already underweight payment networks versus large-cap banks on regulatory concerns. The reported talks have likely accelerated this trend.
Outlook — [what to watch next]
The primary catalyst is the progression of the Credit Card Competition Act through congressional committees. Key votes in the Senate Banking Committee and House Financial Services Committee before the August recess will signal the legislation's viability. Markets will monitor quarterly earnings calls from JPM, BAC, V, and MA for executive commentary on network strategies and regulatory risk assessments. The next Federal Reserve payments study, due in Q4 2026, will provide updated data on fee volumes that could influence the debate.
Technical levels for Visa and Mastercard shares are critical. A sustained break below the 200-day moving average for either stock on heavy volume would indicate deepening investor pessimism. For bank stocks, relative strength against the S&P 500 financial sector index will measure investor perception of the strategic upside. The 10-year Treasury yield, currently around 4.2%, will also influence the net present value calculations of the banks' potential investment in new network infrastructure.
Frequently Asked Questions
How would a new bank-run payments network work?
The network would likely function similarly to existing debit networks like Pulse or Accel, but for credit transactions. When a consumer uses a credit card from a participating bank, the transaction authorization and settlement would be routed through the consortium's own platform instead of Visa or Mastercard's networks. This would require the banks to develop or license the core processing technology and establish connectivity with merchants' point-of-sale systems, a complex and costly undertaking that could take several years.
What does this mean for credit card rewards programs?
Rewards programs are funded almost entirely by interchange fee revenue. If regulatory caps severely reduce this income, banks would be forced to scale back rewards, increase annual fees, or reduce other cardholder benefits. The creation of a new, uncapped network is explicitly designed to avoid this outcome. If successful, the banks' initiative could help preserve the current rewards ecosystem, though some dilution is possible if the new network's fees are slightly lower than today's levels.
