A new proposal for regulating credit cards could shake up the payments industry with the new proposal focusing on credit cards and is aimed at enabling more competition among card networks with the intention of lowering fees for merchants and, hopefully, ultimately benefiting consumers. Whatever the future for credit cards might look like under a different system, the transition isn’t going to be straightforward
However, there are many complexities in how credit-card networks work, such as with fraud prevention and security, so it is unclear how quickly that might happen. Analyst Ken Suchoski at Autonomous Research wrote in a note that it could be an “arduous effort…to create a functioning replica of the currently existing credit networks.” The law would mandate that banks above a certain size must allow merchants to choose at least one competing network that banks’ Visa or Mastercard credit cards can also run on. Intense competition would be vital to the bill’s aims if it doesn’t put any caps on credit interchange fees, like the 2010 measure did for many debit cards. Smaller networks might try to compete by offering merchants lower fees, but this would also mean paying less interchange fees to card-issuing partner banks.