Trump's Credit Card Push Has Winners And Losers, Goldman Says

President Donald Trump just fired another shot across the bow of the U.S. payments industry — and Wall Street is paying close attention.

Late Tuesday, Trump signaled support for the long-debated Credit Card Competition Act, a proposal that would force large banks to allow credit cards to route transactions over at least two unaffiliated networks, potentially breaking the near-duopoly held by Visa Inc. (NYSE:V) and Mastercard Inc. (NYSE:MA).

Shares of Visa and Mastercard sunk 4.5% and 3.8% respectively on Tuesday, both notching their worst daily drop in over six months.

Currently, they account for 84% of U.S. credit card volume and power a payments ecosystem that generates an estimated $223 billion in annual revenue, according to Goldman Sachs.

The legislation aims to reduce swipe fees paid by merchants, which stood at 2.35% per credit card transaction in 2024, according to Nilson data.

The move also follows Trump's Jan. 10 Truth Social post calling for a one-year cap on credit card interest rates at 10%, framing the issue as one of affordability and consumer protection.

Goldman Flags Risk To Visa And Mastercard

"We believe the potential for significant market structure changes in the U.S. credit card market will be a continued overhang in the near term," said Goldman Sachs analyst Will Nance.

A 5% drop in credit card volumes routed through Visa and Mastercard could reduce their earnings by approximately 3% and 1%, respectively.

This estimate assumes a 20-basis-point take rate, which may overstate the impact, as cross-border transactions—Visa and Mastercard's most profitable segment—are out of scope.

Is This A Seismic Shift For Payments?

Goldman says no, at least not yet.

"While we see the potential earnings hit to the card networks as manageable, and are not expecting a seismic shift, we do see risk of share shifts to competing networks," Nance added.

Those competing networks include American Express Co. (NYSE:AXP) and Discover Financial Services, though Goldman says incentives may keep interchange rates anchored near current levels.

Where the risk becomes more asymmetric, Goldman says, is if political pressure ultimately pushes U.S. interchange fees closer to levels seen overseas.

That kind of outcome would ripple across the ecosystem — shrinking card rewards, pressuring banks, and potentially reshaping consumer spending behavior.

"The U.S. is one of the only major countries with unregulated interchange fees, sitting around 200 basis points," Nance said.

"Bringing that down to global norms would have broad consequences across rewards, bank revenues, and consumer spending behavior."

Buy now, pay later names also sit in focus.

Goldman highlighted Affirm Holdings Inc. (NASDAQ:AFRM), Klarna Group Plc (NYSE:KLAR) and PayPal Holdings Inc. (NASDAQ:PYPL) as exposed to lower swipe fees, since merchant pricing often anchors to credit interchange.

Goldman says Affirm appears least exposed because most of its business comes from interest-bearing loans rather than merchant fees.

Traditional issuer processors face their own risks.

Goldman says Fiserv Inc. (NYSE:FISV) and Fidelity National Information Services (NYSE:FIS) could see slower growth if credit usage weakens or shifts toward debit.

Who Benefits If Fees Fall?

Goldman says large merchants would likely gain from lower acceptance costs, though savings may not fully reach consumers.

Small merchants could see less benefit, depending on how processors pass through lower fees.

In addition, “merchant acquirers for small businesses would have the option of not passing on the full benefit of lower interchange fees to the merchant, resulting in an increase in their net take rates,” Nance said.

For now, the investment bank isn't changing its bullish long-term stance on Visa and Mastercard, reiterating Buy ratings on both.

But the firm is clear that Trump's aggressive moves into the credit card debate have reintroduced a policy overhang investors can't ignore.

Photo: Shutterstock