Peter Welch Wants to Lower Credit Card Costs; JP Morgan Says ‘Try It in Vermont First’

JP Morgan's CEO, Jamie Dimon, called a nationwide interest rate cap an “economic disaster” that would result in “a drastic reduction of the credit card business” for 80 percent of Americans.

Senator Peter Welch has joined a bipartisan effort to reshape America’s credit card market, co-sponsoring legislation that would force competition among payment networks to lower the fees merchants pay on every transaction. But as the bill gains momentum with President Donald Trump’s endorsement, the head of the nation’s largest bank has issued a pointed challenge: test the related interest rate cap proposal in Vermont first.

The competing proposals have thrust Vermont into the center of a national debate over credit card costs, consumer rewards programs, and who ultimately pays the price for America’s card-based economy.

The Credit Card Competition Act Returns

The Credit Card Competition Act was reintroduced in January 2026 by Senators Roger Marshall (R-KS) and Dick Durbin (D-IL), with Welch joining as a co-sponsor alongside Senators Josh Hawley (R-MO) and Jack Reed (D-RI). The bill has been designated as S. 3623 in the Senate and H.R. 7035 in the House.

The legislation targets what proponents describe as a duopoly between Visa and Mastercard, which together control approximately 76-85 percent of the U.S. credit card market by purchase volume. Under current arrangements, when a customer uses a credit card, the merchant pays a “swipe fee” or interchange fee—typically 2-3 percent of the transaction—that is largely set by these two networks and collected by the banks that issue the cards.

How the System Currently Works

The U.S. credit card system operates on what industry experts call a four-party model. When a customer makes a purchase, four entities are involved: the cardholder’s bank (issuer), the merchant’s bank (acquirer), the payment network (Visa or Mastercard), and the merchant. The issuing bank receives the bulk of the interchange fee, the network takes a smaller cut, and the merchant pays the total cost as part of their overall transaction fees.

Because Visa and Mastercard set these interchange fee schedules centrally, merchants cannot negotiate lower rates or choose which network processes a transaction—the card determines that. The legislation would require banks with more than $100 billion in assets to enable at least one additional payment network on each credit card, allowing merchants to choose which network to route the transaction through, theoretically introducing price competition.

The $1,200 Question

The Merchants Payments Coalition estimates that credit and debit card swipe fees totaled $236 billion in 2024, based on data from payments consultancy CMSPI. Divided across approximately 130 million American households, proponents calculate this represents roughly $1,200 to $1,800 per family annually.

Supporters of the legislation argue that merchants pass these costs to consumers through higher retail prices, effectively making swipe fees an invisible tax on everyday purchases. Critics counter that there’s no guarantee merchants would lower prices if fees decreased, and point to mixed results following similar debit card fee reforms in 2010.

Vermont Businesses Weigh In

Senator Welch has emphasized the impact on Vermont’s retail sector, specifically citing Burlington businesses that operate on thin margins.

Homeport, a four-floor home goods retailer at 52 Church Street in Burlington, represents the type of high-volume, low-margin business that supporters say would benefit most from fee reductions. The store offers furniture, kitchenware, and linens in a competitive market where profit margins are often measured in single-digit percentages.

Wilder Wines, a woman-owned natural wine shop and bar at 210 College Street in Burlington, exemplifies the small business case. Owner Sipha Lam recently expanded the business, which faces the challenge of high inventory costs combined with percentage-based transaction fees on every sale.

The Vermont Retail & Grocers Association has also endorsed the legislation, noting that independent grocers—who often operate on margins below 2 percent—are particularly vulnerable to high processing fees.

Trump’s Unexpected Alliance

The legislation received a significant boost when President Trump posted his support on Truth Social on January 13, 2026, calling for action to “stop the out of control Swipe Fee ripoff.” The endorsement represents an unusual departure from traditional Republican economic policy, which has historically favored market autonomy over government intervention in private contracts.

Trump has simultaneously proposed a separate but related measure: a 10 percent cap on credit card interest rates for one year, asking banks to adopt it voluntarily. Major credit card issuers have not implemented the voluntary cap.

Dimon’s Challenge

JPMorgan Chase CEO Jamie Dimon addressed both proposals at the World Economic Forum in Davos, Switzerland on January 21, calling a nationwide interest rate cap an “economic disaster” that would result in “a drastic reduction of the credit card business” for 80 percent of Americans.

Dimon then suggested what he called a “great idea”: the U.S. government should “force all the banks to do it in two states, Vermont and Massachusetts, and see what happens.” The suggestion targeted Vermont as Senator Bernie Sanders’ home state and Massachusetts as Senator Elizabeth Warren’s home state—both senators have supported legislation capping card rates at 10 percent for five years.

“The people crying the most won’t be the credit card companies,” Dimon said. “It’ll be the restaurants, the retailers, the travel companies, the schools, the municipalities, because people miss their water payments.”

Senator Warren responded that “It’s time to pass a law and get this done,” noting that major banks had not voluntarily adopted the interest rate cap Trump requested.

The Rewards Program Debate

A central point of contention centers on credit card rewards programs. The Electronic Payments Coalition and consumer advocacy sites argue that routing mandates would devastate airline miles, cash back programs, and points systems that millions of Americans use.

These rewards programs are funded by the interchange fees that issuing banks collect. If competition drives these fees down, opponents argue, banks will reduce or eliminate rewards to maintain profitability. They cite the 2010 Durbin Amendment, which capped debit card fees and led most banks to eliminate debit card rewards and free checking accounts.

The legislation’s sponsors have not directly addressed the rewards question in their public statements, focusing instead on the burden on merchants and, by extension, all consumers through higher retail prices.

Security and Small Bank Concerns

Banking industry groups have raised additional objections. The American Bankers Association argues that forcing transactions through smaller, alternative payment networks could compromise fraud detection systems that currently analyze billions of transactions globally.

The legislation attempts to address foreign security concerns by explicitly prohibiting networks controlled by foreign adversaries, but banking groups contend that even domestic alternative networks lack the technological infrastructure of Visa and Mastercard.

Community banks and credit unions, though nominally exempted by the bill’s $100 billion asset threshold, have also opposed the legislation. They argue that market forces would still pressure them to lower fees to remain competitive, potentially forcing consolidation in the banking sector or reduced credit availability for riskier borrowers.

What Happens Next

The Credit Card Competition Act has been introduced in both chambers and sponsors have attempted to attach it as an amendment to other legislation, including the GENIUS Act focused on stablecoin regulation. With Trump’s endorsement fracturing traditional Republican opposition, the bill faces better prospects than in previous congressional sessions.

However, the legislation would need to pass both the House and Senate and survive what is likely to be intense lobbying from the financial services industry. Banking trade groups have mobilized opposition campaigns, while merchant coalitions and consumer advocates push for passage.

Dimon’s challenge to test policies in Vermont and Massachusetts first appears largely rhetorical—neither the interest rate cap nor the routing mandates have been proposed as state-level experiments. Federal law governs credit card interest rates and interstate banking, making state-by-state implementation legally complex.

For Vermont merchants like Homeport and Wilder Wines, the debate continues between competing visions: one where lower processing fees translate to lower consumer prices, and another where reduced interchange revenue leads to the elimination of rewards programs and tighter credit availability. The outcome will determine not just what Vermonters pay at the register, but how they pay—and what benefits they receive for doing so.