Senate Passes Housing Bill Without CCCA Amendment

The U.S. Senate has passed its $200 billion housing affordability package — but without the Credit Card Competition Act amendment that merchant groups had fought to include. The CCCA, which would have required banks to enable credit card routing through competing networks (breaking Visa and Mastercard's exclusive routing control), was stripped during floor negotiations after intense lobbying from card networks and issuing banks. The removal preserves the current interchange system that costs U.S. merchants approximately $160 billion annually — the merchants' single largest operating expense after labor and rent.

For the payments industry, the CCCA's failure represents a strategic victory for Visa and Mastercard that ensures their pricing power remains unchallenged legislatively for at least 2 more years — but the vote margin (the amendment attracted 52 supporters in a test vote, shy of the 60 needed) suggests the issue isn't dead, just delayed.

What the CCCA Would Have Done

Current system: When a consumer swipes a Visa credit card, the transaction MUST route through Visa's network. The merchant pays: issuer interchange (1.5-3.5%) + Visa network fee (0.13-0.15%) + acquirer fee (0.1-0.5%). Total: approximately 2.2% average. The merchant has no choice — Visa mandates exclusive routing through its network, preventing competition that could lower fees.

Under CCCA: Banks with >$100B in assets would be required to enable their credit cards for routing through at least TWO unaffiliated networks. A Visa-branded card could also be routed through: a competing network (Star, NYCE, Pulse) or a new network (potentially blockchain-based). Merchants would choose the cheapest route for each transaction.

Projected impact:

• Interchange reduction: 25-40% on affected transactions (from average 2.2% to 1.3-1.7%)
• Annual merchant savings: $25-40 billion
• Visa/Mastercard revenue impact: -$8-12 billion annually (reduced network fees)
• Bank revenue impact: -$15-25 billion annually (reduced interchange income)
• Consumer impact: disputed (banks argue reduced rewards; merchants argue lower prices)

Why It Failed (This Time)

The $180 million lobbying campaign:

• Visa: $62M in lobbying and campaign contributions (2025-2026 cycle)
• Mastercard: $48M
• American Bankers Association: $38M
• Major issuing banks (JPMorgan, BofA, Citi): $32M combined
• Total anti-CCCA spending: ~$180M

The arguments that swayed senators:

1. "It will kill credit card rewards." Banks argue interchange funds rewards programs. Less interchange = fewer miles/points. This resonates with affluent voters (who benefit most from rewards) and the senators they elect.
2. "Small banks will be harmed." Despite the CCCA exempting banks under $100B, opponents argued that network effects would reduce interchange for all issuers — including community banks. This convinced rural-state senators whose banking constituents are primarily small institutions.
3. "Payment security risks." Routing through multiple networks introduces additional security complexity. Opponents framed this as: "Do you want your credit card data flowing through less-secure competing networks?" — a technically questionable argument but emotionally effective.
4. "It doesn't belong on a housing bill." Procedural argument: the CCCA has nothing to do with housing affordability. Some senators who support interchange reform voted against the amendment on germaneness grounds while supporting the underlying CCCA as standalone legislation.

The vote math: 52 senators supported the amendment in a test vote (48 opposed). The 60-vote cloture threshold was not met. Notable: the amendment had bipartisan support (28 Republicans + 24 Democrats) but couldn't overcome the 48-senator opposition funded by $180M in lobbying.

What Happens Next

Short-term (2026-2027): The CCCA as standalone legislation has limited path forward (not enough votes to overcome filibuster). Merchant groups will seek other "must-pass" legislative vehicles to attach the amendment (defense authorization, appropriations bills, tax legislation).

Medium-term (2027-2028): Election cycle may change Senate composition. If 4+ CCCA opponents are replaced by supporters, standalone passage becomes possible. Merchant trade groups (NRF, NACS, FMI) will target campaign contributions toward these specific races.

Alternative paths:

• Federal Reserve rulemaking: The Fed could potentially cap interchange without legislation (similar to the Durbin Amendment for debit cards). However, the current Fed chair has shown no inclination to act unilaterally.
• DOJ antitrust action: The Justice Department could challenge Visa/Mastercard's routing restrictions as anticompetitive under Sherman Act. This is under active consideration but would take 3-5 years through litigation.
• State-level action: Some states are considering state-level interchange regulation — though federal preemption questions make this legally uncertain.

Why This Matters

For merchants: The $160B annual interchange bill continues without legislative relief. In the near term: negotiate harder with payment processors for lower markups (the acquirer portion is negotiable even if interchange isn't), implement surcharging where permitted (passing interchange cost to card users), and evaluate alternative payment methods (ACH, FedNow, stablecoins) that bypass card networks entirely.

For Visa and Mastercard investors: The CCCA's failure preserves the pricing power that drives your investment thesis. However, the 52-vote support (up from 48 in the 2023 attempt) shows growing momentum. The moat isn't permanent — it's a temporary reprieve that could end with one election cycle.

For payment fintechs: The interchange system's preservation means: continued high fees that fund fintech business models built on interchange sharing (neobank cards, BNPL), maintained demand for cost-reduction alternatives (account-to-account payments, stablecoin commerce), and sustained merchant frustration that drives adoption of network-bypassing solutions.

For accounting firms serving retailers: Client advisory on interchange optimization remains valuable: ensure proper MCC classification (incorrect codes trigger higher rates), implement Level 2/3 data submission (reduces rates for B2B transactions), and evaluate the cost-benefit of surcharging programs that shift interchange cost to consumers.

For consumers: The immediate impact is: your credit card rewards continue unchanged (funded by the merchants you shop at). The long-term question: are you paying 2-3% more for everything you buy because merchants build interchange into retail prices? Economists estimate "yes" — meaning non-card-users (cash, debit, ACH) subsidize card users' rewards through higher prices.

The key takeaway: The CCCA's removal from the housing bill preserves Visa/Mastercard's $160B interchange system for at least 2 more years — but 52 Senate votes (up from 48 previously) signals growing momentum that one election cycle could convert into passage, making interchange reform a 'when not if' proposition that card networks and merchants should both plan for.