Where the fees go
All politics aside, Donald Trump has discovered America's favorite magic trick: make a promise about credit cards and watch everyone in the value chain pretend to be shocked that credit cards cost money.
He is coming in hot from two angles at once. On interest rates, he is calling for a 10% cap on credit card APR for one year, starting January 20, 2026, packaged like a consumer rescue mission. On swipe fees, he is throwing his weight behind the Credit Card Competition Act (CCCA), a routing-competition bill aimed at Visa and Mastercard's dominance that would force large banks to enable at least two unaffiliated networks on their credit cards.
If you're a merchant, you're probably thinking: finally, someone is saying the quiet part out loud. And yes, swipe fees have become so large they have basically achieved tax status without the decency of a public hearing.
But here's my take, and I'm going to be blunt. This isn't a war on fees. It's a war over who gets to collect them.
Because the credit card economy has one sacred rule. When someone squeezes one revenue stream, the ecosystem doesn't reduce costs, it relocates them. It starts charging somewhere else. It adds a new program. It invents a compliance ladder. It quietly edits the rewards math. It "innovates" a fee you can't explain to your controller without a whiteboard and a sedative.
The headlines will say Trump battles swipe fees. Reality will be everyone else battles the consequences.
A policy, not a post
There's an important difference between a policy and a post. Even the fact-checkers are saying the obvious out loud. When Trump says companies would be "in violation of the law" if they don't comply, there is no such law without Congress.
So if you're expecting Visa, Mastercard, Amex, the banks and the entire issuing universe to see a social media post and respond with "yes sir, we will now accept less profit," I have a bridge to sell you. Financing available at 10% APR for one year, then 34.74% after the promo ends.
Bilt turns policy into PR
Bilt just launched a new suite of cards with a 10% APR for the first 12 months. If you're reading this thinking "wow, that's fast," yes, because it's not compliance. And I'm not pulling punches here, but it is really great marketing. Great job, Ankur.
Bilt's move is the perfect preview of how this entire market will respond if politicians keep swinging at APR economics. Offer a feel-good cap, temporarily, then revert to normal APR reality once the cameras move on. That's not cynicism. That's the model.
Bilt is doing something else that should make every merchant and consumer pay attention: it is leaning into a rewards structure so complicated it feels like it was designed by an escape room company. (In full transparency, I am a cardholder.) Complexity is not an accident in rewards, it's a control system. It's how you reduce cost without calling it a cut. It's how you devalue points while smiling and saying you're welcome.
So let's say, hypothetically, that the pressure campaign actually starts to bite. Let's say banks and issuers start to feel political heat on APR and routing. What happens? They don't just earn less. That's not in the credit card machine's playbook. They retaliate, in policy-neutral ways, by reshaping credit access and rewards. Mark my words.
What an APR cap really does
I'm going to say something both sides of this debate usually avoid: APR caps are emotionally satisfying and mechanically brutal.
House Speaker Mike Johnson, no one's idea of a progressive activist, warned the cap could create "negative secondary effects," including lenders who "stop lending money" or cap borrowing at "a very low amount." That's not dramatic. That's how risk pricing works.
And the banking executive quotes are already lining up in formation. Citigroup CFO Mark Mason said an interest rate cap "is not something that we would, or could, support," warning it could restrict access to credit and have "deleterious" impacts. JPMorgan's CFO Jeremy Barnum has warned the cap could severely restrict access to credit and harm the broader economy.
Do I believe the banks are saying this out of pure concern for America's working families? Of course not. I'm not new here. But do I believe the mechanism is real? Yes.
If you cap risk-based pricing on unsecured revolving credit, you don't eliminate risk. You reassign it. You shove it into underwriting, into limits, into fees, into exclusions. You also push consumers, especially near-prime and subprime, toward other products that are often worse. The Washington Post didn't mince words on feasibility, calling the 10% cap political theater and pointing out that practical consumer outcomes are more likely to come from negotiating rates than from social media edicts.
So if the cap stays rhetorical, the market shrugs. If it becomes real policy, the market tightens. And when the market tightens, merchants don't magically get relief. Merchants get the next wave of downstream behavior:
- consumers leaning harder on limited credit
- consumers getting denied and shifting to BNPL
- average ticket softness
- higher dispute volume
- more chargeback stress
- and less tolerance for surcharging
But the bigger punch is still ahead, because Trump didn't just pick a fight with APR. He also picked a fight with the swipe-fee machine.
The $187 billion argument
Let's use real numbers. The Nilson Report says U.S. merchants paid $187.20 billion in processing fees in 2024 to accept credit and debit cards, up 8.7% from 2023. That's not a cost of doing business. That's a second rent payment for the entire U.S. economy.
And here's the part people don't fully internalize: these fees are so embedded in pricing that they become invisible. Everyone is paying them, whether they pay with card or not, because the merchant has to cover the cost somehow. This is why merchant groups keep calling it a hidden tax, and why this fight keeps coming back every election cycle like a sequel nobody asked for.
So Trump endorses the CCCA and calls swipe fees an "out of control... ripoff." Merchants cheer. Banks and acquirers panic. Networks pretend it's all about security. processors brace for impact. And then the policy mechanics kick in.
The CCCA aims to force large issuers to enable at least two unaffiliated networks, so merchants can route transactions away from Visa and Mastercard rails when possible. On paper, it's competition. In practice, it's a reshuffling of toll booths.
Because Visa and Mastercard don't just lose. They innovate a response. And banks don't just accept less. They reprice the customer relationship. And this is where the public narrative starts to break.
Rewards are the collateral
The average consumer thinks swipe fees are paid by merchants. True, except when you see a 3% fee on your bill. But it's also true that interchange economics help fund rewards.
So when politicians squeeze swipe fees, the public thinks "less expensive." The card machine thinks "fewer rewards... and we're definitely not reducing shareholder expectations." That gap between what consumers expect and how the system behaves is where things get ugly. If you're a high-spending rewards customer, you might be in denial right now. You shouldn't be. Even opponents of the bill are already messaging that consumers will see fewer rewards if swipe-fee economics change.
You don't win because interchange nudges down. You win if your effective rate drops in your actual statement.
Which is why I started VeriFee to begin with. Because the industry has an incredible talent for announcing reductions that somehow never arrive at the bottom line. Want proof the ecosystem is already shifting tactics? Let's talk about new fees.
The shell game
Here's the part politicians and press releases never quite say out loud: networks don't need to call it interchange to keep collecting money.
If pressure builds on the headline number, the system simply moves the economics. Value gets captured through rule structures, assessments, "programs," enhanced data requirements, compliance ladders, anything that sounds technical enough to bore a reporter and plausible enough to survive a footnote.
Take the much-touted Visa and Mastercard settlement announced in November 2025. On paper, it promised to lower interchange by an average of one-tenth of a percentage point over five years and loosen certain acceptance rules, pending court approval, of course. A victory lap followed. Then reality set in.
Major retailers weren't impressed. Walmart and others urged a federal judge to reject the deal, arguing the savings were marginal and the core structural rules that give the networks pricing power were left intact.
Then, in October of 2025, almost poetically, Visa rolled out its Commercial Enhanced Data Program (CEDP). CEDP quietly replaced the old Level 2 and Level 3 programs and introduced a new compliance framework layered with fresh requirements and fees rolling through 2025 and 2026. Same transactions. Same cards. New acronym. New rulebook. CEDP could easily wipe out the savings promised just one month before the settlement announcement. Funny timing?
The industry framed it as "modernization." Merchants experienced it as something else entirely: economics that moved sideways instead of down, right as the class-action chapter was supposedly closing.
This is the pattern merchants need to recognize. When pressure mounts on interchange, networks don't capitulate. They re-architect. They lean harder on program gates, data standards, qualification thresholds and fee structures that are harder to see, harder to audit and much harder to explain to a CFO who just wants to know why costs didn't actually fall.
So yes, you can win a political soundbite. You can even win a settlement headline and somehow still lose margin. If that sounds cynical, consider the coincidence: the moment merchants were told the fee war was "over," the battlefield simply changed shape.
Who is positioned to benefit
Trump nominated Fiserv CEO Frank Bisignano to lead the Social Security Administration, subject to confirmation. That's not a random corporate executive. That's someone who ran a major payments infrastructure company, deep in the plumbing.
And Fiserv isn't a spectator in routing transactions. Fiserv operates payment networks, including STAR and Accel. Now, let me be legally careful and responsible here: I'm not claiming some cartoon conspiracy where everyone is in a room twirling mustaches around a routing whiteboard. I am just noting that it is extremely coincidental.
Because what does the CCCA do? It pushes routing choice away from Visa and Mastercard-only dominance and toward alternative networks, exactly the kind of environment where network operators and processors with established rails have more opportunity to capture volume. Durbin already showed what happens when routing policy moves: the money finds a new lane.
So when Trump frames the CCCA as saving Main Street from the swipe-fee ripoff, the merchant hears "relief," but the payments infrastructure class hears "fee migration." The question that should be asked is: who is structurally positioned to benefit if routing power shifts? And the answer is not merchants and certainly not consumers.
No investment advice here. The ticker is FISV and I'll let you decide what to make of the coincidence.
The Europe test
Here's how this plays out if Washington actually keeps pushing both levers, APR caps and swipe-fee competition. Consumers will be told they're being protected. Merchants will be told they're being helped. And the credit card machine will do what it always does: protect itself by shifting pressure downstream. Credit tightens. Rewards get thinner or disappear. Fees come from a different toll booth. surcharging becomes more common.
And if you think I'm exaggerating about rewards disappearing, take a look across the pond. Europe already ran this experiment.
In 2015 the EU capped interchange at 0.3% on credit cards and 0.2% on debit. Not "guidance." Not "pressure." A hard ceiling. The result wasn't lower prices and happier consumers, it was the quiet death of rewards cards. Points, miles, cash back, signup bonuses, lounge access: gone. Not trimmed. Not reworked. Economically impossible.
You don't see Europeans debating whether 2x points on groceries beats 3x on travel, because those conversations don't exist. At 0.3% there's no money to fund them. Banks didn't get altruistic and eat the cost. They stopped offering the product.
That's the part no one puts in the press release. When you cap the revenue that pays for rewards, rewards don't evolve, they vanish. And what replaces them isn't some consumer utopia. It's higher annual fees, tighter underwriting, fewer card options and a shift toward debit and cash. The system doesn't collapse. It just gets smaller, colder and less generous.
When Washington says there are no consequences, Europe is the guy who already touched the fire, quietly saying good luck with that.
And I'll make a prediction that will annoy everyone equally. If this continues, merchants will become the villain. Because when issuers and networks get squeezed, merchants get pushed toward coping strategies that consumers hate. Surcharges. Minimums. "Cash discount" signs that confuse everyone. Two prices. Weird checkout friction that makes customers feel punished for using the payment method they were trained to use for 25 years.
So you and I end up with the worst of both worlds: fewer rewards, less credit availability and more fees at the register to help merchants cope with the retaliation.
Trump wants an affordability win. Merchants want relief. Banks want profit stability. Networks want control. processors want to stay invisible. And the consumer wants their rewards, their credit line and their dignity at checkout. The system can't give everyone everything. So who wins here? My bet is not on consumers or companies.
What merchants should do
That's why this moment, however chaotic, is also a window of opportunity. If the ecosystem is going to reshuffle toll booths, then merchants have to stop pretending the toll is fixed and start treating it like what it is: a negotiable, auditable, attackable cost structure.
Most merchants don't know their effective rate. They signed years ago, haven't opened their statements since and have no idea their costs drifted while the headlines changed. A fee fight in Washington won't fix that. Reading what you actually pay will.
And if Washington accidentally kneecaps my rewards while trying to "help," don't be surprised when consumers come for merchants with pitchforks the second they see a surcharge line. Because in America, nothing says "affordability" like paying extra to pay extra.
Send us a statement and you will know what accepting cards actually costs your business, whoever ends up winning in Washington.
