Key Takeaways:
A consortium of the largest U.S. banks is exploring a joint card network to challenge Visa and Mastercard's decades-long duopoly.
JPMorgan Chase, Bank of America and several other major U.S. lenders are in early-stage talks to create or acquire a competing card network, a move that could redirect billions in annual transaction fees and reshape the trillion-dollar U.S. payments industry.
"Banks have long chafed at the fees they pay to Visa and Mastercard, and this represents the most serious attempt yet to reclaim that revenue," said a person familiar with the discussions, who asked not to be named because the talks are private.
The consortium, which also includes Wells Fargo and several regional lenders, is evaluating both an acquisition of an existing payments infrastructure provider and a ground-up build, according to people familiar with the matter. Visa and Mastercard together process the majority of U.S. card transactions, generating tens of billions in annual network fees.
If the banks proceed, they would need to invest billions upfront in technology, merchant relationships and consumer adoption. A successful network could compress Visa and Mastercard's margins while giving banks a larger share of the roughly $100 billion in annual swipe fees that merchants pay, according to industry estimates.
The talks come as the payments industry faces mounting regulatory and competitive pressure. The Consumer Financial Protection Bureau has pushed for greater transparency in interchange fees, while the Durbin Amendment's debit card caps have already limited revenue from that channel. Separately, Elon Musk's X Money platform launched this year with features including 6 percent APY on deposits and unlimited 3 percent cash back, adding a fintech threat to the traditional bank-card model.
Visa and Mastercard operate as duopolists in the U.S. credit card market, setting interchange fees that averaged more than 2 percent of transaction value, according to the Nilson Report. For a bank like JPMorgan, which reported more than $170 billion in annual revenue, capturing even a fraction of the network fees paid by its own cardholders would meaningfully boost earnings. A proprietary network would also give banks direct control over fraud prevention, data analytics and merchant incentives — functions currently outsourced to the card networks.
Building a network from scratch would require agreements with millions of merchants, integration with point-of-sale systems and consumer adoption incentives — a multiyear effort that could cost billions, according to payments consultants. An acquisition of an existing network, such as a regional card scheme or a fintech processor, would be faster but carries integration risk. Any deal would also face antitrust scrutiny from the Department of Justice, which has signaled increased skepticism of coordinated industry action.
The banks are expected to reach a preliminary decision within six months, the people said. If they proceed, a pilot program could launch in select U.S. markets by late 2027. For Visa and Mastercard, the emergence of a bank-backed rival would represent the most significant competitive threat in their five-decade history.
This article is for informational purposes only and does not constitute investment advice.
