Network Choice Is Coming for Credit Cards. The Fee Cut Isn't.

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Meta title: Network Choice Is Coming for Credit Cards. The Fee Cut Isn't Meta description: The Credit Card Competition Act creates routing choice, not an automatic fee cut. Australia’s LCR experience shows what merchants must operationalise. Suggested slug: credit-card-network-choice-merchant-routing-economics Suggested URL:https://www.quantumpayments.io/post/credit-card-network-choice-merchant-routing-economics Primary keyword: credit card competition act Secondary keywords: network choice, interchange fees, swipe fees, least cost routing, payment routing, cost of acceptance, payment orchestration, AI payment routing, payment success rate, merchant payment costs

The Credit Card Competition Act of 2026 is best understood as a routing mandate, not a fee cut. If enacted, it would give merchants access to more than one network on qualifying credit cards. It would not, by itself, guarantee that the cheaper route is enabled, supported across every channel, or selected at transaction level.

Australia provides the clearest live evidence. Least-cost routing has made network choice available at scale, but availability is not enablement, and enablement is not optimisation. With Australia’s card surcharge ban and new interchange settings now in force from 1 October 2026, merchants have fewer ways to recover acceptance costs. The commercial advantage will go to businesses that can measure, route and improve every payment path.

What the bill actually does

S.3623, the Credit Card Competition Act of 2026, was introduced on 13 January 2026 by Senators Roger Marshall, Dick Durbin and Peter Welch. It remains pending in the Senate Committee on Banking, Housing and Urban Affairs. President Donald Trump has endorsed the bill and pledged to pass it as soon as possible, while a Wall Street Journal report on 8 October described it as the bill banks fear most.

It is not law. It has not passed the Senate.

If enacted, the bill would require credit card issuers with more than US$100 billion in assets to enable at least two unaffiliated networks on each card. At least one network could not be Visa or Mastercard. The requirement would apply to both card-present and card-not-present transactions. The Federal Reserve would be required to prescribe implementing regulations within one year of enactment.

Operationally, that is a routing requirement. A merchant, acquirer, gateway or payment orchestration platform must identify which networks can process a transaction, compare economics and performance, and select a route without damaging authorisation, fraud controls or customer experience.

The bill creates optionality. It does not create savings until the payments stack can use that optionality.

The fee arithmetic merchants keep getting wrong

A card payment does not have one fee. Its cost of acceptance is a stack.

Interchange fees flow primarily to the issuing bank. Scheme fees fund network infrastructure, authorisation, security, dispute handling and other network services. The acquirer or processor then adds its own margin, alongside gateway, tokenisation, fraud, chargeback, foreign exchange and integration costs.

Network choice can compress interchange and potentially some scheme economics. It does not automatically remove the acquirer margin, gateway cost or operational cost of supporting multiple routes. Nor does a cheaper nominal route necessarily produce a cheaper completed payment.

The merchant’s real calculation is:

Total payment cost = acceptance fees + fraud and dispute losses + operational cost + lost sales from declines.

That is why payment success rate matters. A route that is 10 basis points cheaper but authorises materially fewer legitimate transactions may increase total cost. The right comparison is cost per successful, settled and reconciled transaction.

The Merchants Payments Coalition, citing Nilson Report data, puts total US credit and debit card swipe fees at a record US$198.25 billion in 2025, including US$118.8 billion from Visa and Mastercard credit cards alone. A US$38 billion Visa and Mastercard interchange settlement received court approval in June 2026, but the litigation and legislative fronts are running in parallel.

Neither changes the operating reality. Merchants need evidence of what each route costs and delivers.

What Australia already learned

Australia’s least-cost routing experience is the practical evidence base for network choice.

As at June 2026, 83 per cent of merchants had least-cost routing enabled for in-person transactions. Online least-cost routing was available to 98 per cent of merchants, but enablement varied significantly by provider. The RBA has retained an expectations-based approach rather than imposing formal regulation, with further consultation on online and mobile wallet routing.

The distinction matters:

Availability means a provider can technically support another network.

Enablement means the merchant has actually activated it.

Optimisation means the merchant is selecting routes based on current cost, authorisation, fraud, channel and customer data.

The RBA itself warns that providers with the highest enablement rates do not necessarily provide merchants with the lowest overall payment costs. That is the central lesson for the Credit Card Competition Act. A legal right to choose a network has limited value if a terminal, gateway, stored credential or wallet token cannot carry the choice through.

The 1 October changes reinforce the point. Australia’s card surcharge ban now covers eftpos, Visa, Mastercard, American Express, UnionPay and PayPal, meaning payment costs must sit inside advertised prices. At the same time, the RBA reduced the domestic debit and prepaid interchange cap to 8 cents or 0.16 per cent ad valorem, while maintaining an 8 cent weighted-average benchmark. Australia’s card surcharge ban has shifted the debate from who pays the fee to whether businesses can actually see it, as Quantum Payments examined in its analysis of payment-cost visibility after the surcharge ban.

A cap and a routing mandate are different levers. A cap changes the maximum price. Routing changes who gets the transaction. Neither replaces disciplined measurement.

Three conditions before network choice pays

For network choice to create a commercial benefit, three conditions must be true.

1. Commercial enablement across every relevant channel. The alternative network must work across terminals, ecommerce gateways, recurring billing, stored credentials, mobile wallets and tokenised transactions. Supporting it only at the point of sale will not help an omnichannel merchant.

2. Transaction-level visibility. Merchants need to see cost, route, authorisation result, fraud outcome, settlement status and reconciliation data at transaction level. Blended monthly pricing hides the decisions that matter.

3. Dynamic switching with measurement. The system must be able to change routes as economics and performance change, then test the result. Routing should be evaluated against approval rates, fraud, chargebacks, refunds, latency, settlement and net cost, not just an advertised interchange rate.

This is where payment orchestration becomes strategic in Europe’s multi-rail routing environment. The router is no longer plumbing. It becomes the control layer that decides which network receives volume and whether the merchant captures the benefit of competition.

Agentic commerce makes the decision machine-speed

The next stage is software selecting the route rather than a payments manager setting a rule once a quarter.

Federal Reserve Governor Christopher Waller, speaking at Sibos on 29 September 2026, identified authentication, liability and fraud as major barriers to payments in the age of AI agents. He also noted that fraud systems designed around human behaviour will not translate directly to software agents.

The US rulebook for digital assets is also unresolved at the same time as the card routing rulebook. The Digital Asset Market Clarity Act (H.R. 3633) failed a Senate cloture vote on 15 September 2026 and remains stalled, with Representative French Hill eyeing a lame-duck session for another attempt. ARMA (H.R. 8957, the American Reserve Modernization Act of 2026) cleared the House Financial Services Committee 28-21 on 16 September 2026 and still awaits a House floor vote, so the statutory Strategic Bitcoin Reserve remains discretionary under executive order for now. That uncertainty makes routing optionality and auditable decision records more valuable, not less.

In agent-led commerce, a system could evaluate cost, approval probability, token quality, fraud risk, customer permissions and rewards before selecting a route. In agentic payments, that makes every routing decision a machine decision that must be logged, explained and audited.

A credible payments foundation model therefore needs more than an authorisation endpoint. It needs route-level reason codes, versioned rules, delegated-consent records and evidence of what happened after the decision. Quantum Payments’ analysis of why the router owns the rail explores the conflict that emerges when the party controlling routing also benefits from the route selected.

The future is not simply cheaper networks. It is accountable, measurable and adaptive network choice, much as stablecoin settlement is moving into live infrastructure and increasing the importance of the decision layer.

A 12-point merchant checklist

Frequently asked questions

Is the Credit Card Competition Act of 2026 law?

No. S.3623 was introduced on 13 January 2026 and remains pending in the Senate Committee on Banking, Housing and Urban Affairs.

Does the bill directly reduce swipe fees?

No. It requires qualifying issuers to enable at least two unaffiliated networks. Any fee reduction would depend on merchants and their providers actually selecting and receiving the benefit of lower-cost routes.

Does network choice apply to online payments?

The bill would apply to both card-present and card-not-present transactions. In practice, online enablement depends heavily on gateways, tokenisation, stored credentials and acquirer support.

Is least-cost routing the same as an interchange cap?

No. Least-cost routing gives merchants a choice between networks. An interchange cap sets a limit on a fee component. Both can influence merchant payment costs, but they operate differently.

Why do AI agents make routing more important?

Agents can make route decisions at transaction speed and across many payment methods. Merchants will need auditable rules that balance cost, authorisation, fraud, liability, permissions and customer outcomes.

Conclusion

The Credit Card Competition Act may increase competitive pressure, but its commercial result will be determined inside the payments stack. Network choice on paper is not savings in practice.

Australia’s experience shows the sequence clearly: availability, enablement, measurement, optimisation. As surcharge recovery disappears and software begins selecting payment routes, merchants need infrastructure that can make the right decision for each transaction and prove why it made it.

Explore the Quantum Payments platform or read more analysis on the Quantum Payments blog.

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