President Donald Trump has turned his attention to the fees retailers pay every time a shopper taps or swipes a credit card, throwing his support behind legislation that would reshape how those charges are set and who collects them. The move intensifies a long-running battle between large merchants and the dominant payment networks, according to Bloomberg.
In a social media post early Tuesday, Trump urged lawmakers to back the Credit Card Competition Act, a bipartisan proposal aimed at increasing competition in the processing of credit card transactions. The bill would require large banks to enable merchants to route payments over alternative networks instead of relying almost exclusively on Visa Inc. and Mastercard Inc., per Bloomberg. Supporters say that change could lower the so-called interchange, or swipe, fees that retailers pay at checkout.
Trump said the legislation would “stop the out of control Swipe Fee ripoff,” framing the issue as part of a broader effort to address costs faced by businesses and consumers. The endorsement sent ripples through financial markets. Shares of Visa and Mastercard fell by at least 4% in New York trading by early afternoon Tuesday, while American Express Co. shares slipped about 0.7%, according to Bloomberg.
The Credit Card Competition Act was reintroduced on Tuesday by Republican Senator Roger Marshall and Democratic Senator Dick Durbin. Large retailers have backed the measure for years, arguing that U.S. swipe fees are significantly higher than those charged in other countries and ultimately contribute to higher prices for consumers, per Bloomberg. Banks and card networks, however, have lobbied heavily against the proposal, warning that it could undermine fraud protection and rewards programs.
Analysts remain skeptical that the bill will become law. TD Cowen analyst Jaret Seiberg wrote in a note that “we still view passage as unlikely though we will be watching in the next few days to see if the measure picks up GOP support.” He added, “To us, this is political as it is another way for the president to blame the banks for high prices,” according to Bloomberg.
The renewed focus on swipe fees comes as Trump emphasizes affordability issues ahead of the U.S. midterm elections in November. That broader push has put Wall Street firms under increased scrutiny, including over credit card interest rates. Banks have pushed back strongly against calls to cap those rates, a proposal that has drawn support from progressive Democrats and some Republicans, per Bloomberg.
J.P. Morgan Chase & Co. Chief Financial Officer Jeremy Barnum warned Tuesday that an interest-rate cap would “significantly change” the bank’s business model and harm customers. He said “everything is on the table” when it comes to fighting such a measure, according to Bloomberg.
Read more: Retailers Urge Judge to Block Visa, Mastercard Fee Settlement
Industry groups argue that aggressive regulation of fees and rates could reduce access to credit, especially for riskier borrowers. The Bank Policy Institute has said banks might respond by cutting credit lines, increasing minimum payments, or adding new fees. Senate Majority Leader John Thune echoed those concerns, saying Tuesday that the credit card competition proposal “would probably deprive an awful lot of people of access to credit around the country,” per Bloomberg.
House Speaker Mike Johnson also expressed reservations. He said he had discussed the issue with Trump and other lawmakers and concluded it would take “work” to resolve outstanding disagreements. Thune nevertheless indicated that the bill could still receive a Senate vote, noting that lawmakers in both parties are divided on the issue, according to Bloomberg.
From an investment perspective, some analysts see the current uncertainty as temporary. William Blair analyst Andrew Jeffrey advised long-term investors to accumulate shares of Visa, Mastercard, and American Express “amid uncertainty-driven weakness caused by shifting political sentiment seemingly intent on regulating the bank card industry,” per Bloomberg. He added that while the impact of the Credit Card Competition Act is difficult to predict, it “could be a positive for Amex given it is the third-most scaled credit network.”
Jeffrey also pointed to potential beneficiaries beyond the major card brands. Third-party debit networks owned by Fidelity National Information Services Inc. and Fiserv Inc. could gain if they expand into credit routing, according to Bloomberg.
For now, Trump’s endorsement has revived a debate that has simmered on Capitol Hill for years. Whether lawmakers ultimately move to curb swipe fees or leave the current system intact, the issue has once again placed the powerful payment networks — and the costs built into everyday transactions — squarely in the political spotlight.
Source: Bloomberg
