Visa and Mastercard: Why the Card Duopoly Still Shapes United States Payments

The Nilson Report, a payments industry research firm, has observed the global payments market from a United States vantage point for more than half a century. In a wide-ranging discussion, Publisher David Robertson explained why Visa and Mastercard are positioned to continue leading domestically, even as other regions evolve along different tracks.

In the March interview, Robertson, who owns the firm, described how the card networks countered digital challengers and adopted elements from fintech rivals. He also outlined possible shifts ahead as merchants intensify pressure to reduce interchange fees.

In practice, Visa is generally the larger network by payment volume and cards in circulation, with Mastercard close behind; on merchant acceptance, both are broadly “everywhere you want to be” in the United States, and the differences most consumers feel tend to come from the issuing bank and the card product rather than the network logo.

Visa and Mastercard also have more in common than not: they operate global networks that set rules, provide routing and authorization messaging, and sell value-added services such as fraud tools and data products. They do not typically earn the interchange fee that merchants pay on each transaction; interchange is largely paid to the issuing bank, while the networks earn processing and other network fees (often paid by acquirers and issuers) plus revenue from services.

Issuers can shift portfolios or launch programs on either network, and many do both. Capital One, for example, continues to issue Mastercard-branded cards on many of its products, even as network choices can vary by program economics, co-brand arrangements, and strategic priorities.

He said the networks have already begun to lose some pricing leverage. A pending federal decision on a proposed settlement in litigation waged for over 20 years between merchants and the networks could ultimately bring materially lower fees. If the court rejects the deal, he expects negotiations to push toward more comprehensive changes.

Editor’s note: This interview has been edited for clarity and brevity.

Digital Rivals vs. Incumbent Card Networks: Who Keeps the Upper Hand?

David Robertson: Visa and Mastercard built their lead over decades by recruiting banks to issue cards, signing merchants to near-universal acceptance, and standardizing the operating rules and fraud controls that make payments predictable at scale. For card-free, fully digital transactions, think:

• Apple Pay
• Samsung Pay
• Google Pay

Those wallet payments are authorized and carried over Visa or Mastercard rails, so the duopoly retains the activity rather than losing it.

Even when the checkout experience changes, networks that provide global acceptance, risk controls, and settlement tend to stay embedded behind the scenes.

Looking ahead in the United States, direct account-to-account transfers could bypass both networks by moving over the Automated Clearing House. That payment system is not yet broadly adopted domestically.

Given today’s economics, routing a transaction over the card networks is already inexpensive, so the Automated Clearing House provides limited additional savings. The effect would matter most for mega-merchants with heavy debit card volume, while midsize and small merchants would see little change from account-to-account transfers.

So are forecasts that digital upstarts would cut out the card networks proving wrong?

It is premature in the United States. Similar shifts are underway in parts of Asia, Europe, and Latin America, but here the machine runs efficiently. Credit is bank-issued money, so the credit card side is unlikely to be displaced; any disintermediation will largely touch debit, enabling bank-to-bank payments using our own funds.

In Europe, policymakers are motivated to build a region-first payment system. Across Asia, fragmentation meant those brands never became the universal foundation for payments.

Retail Power Plays: Walmart’s Push and Merchant Leverage

How far along is Walmart in building an alternative to the card networks?

Walmart can reach consumers directly and offer incentives that nudge behavior. Once its United States technology stack is fully in place, it will be able to educate shoppers efficiently about bank-account-to-bank-account payments.

Are large retailers gaining or losing bargaining power with the card networks and issuing banks?

Incrementally more. For the biggest sellers, scale can translate into better economics.

Policy and Courts: Credit Card Competition Act and the Settlement Outlook

Is passage of the Credit Card Competition Act realistic?

Unlikely, though not impossible. Congress could cap interchange fees again—it happened on debit after the banking crisis—but retailers do not have the same pull in Washington they once did. Both financial institutions and merchants are mounting major lobbying efforts, and the eventual outcome is likely hammered out by the titans outside Congress and beyond the courtroom.

What about the pending settlement between the networks and merchants in federal court?

If the judge rejects it again, Visa and Mastercard may need to cut prices more aggressively than they have proposed so far. The current offer sketches a framework for fee relief, but as Walmart argues, it is not a truly comprehensive reduction.

Longer term, the biggest threats to the duopoly are less about a single new “card killer” and more about a bundle of pressures: account-to-account options that get easier to use, real-time payment systems that improve consumer expectations, new front ends such as embedded finance and buy now, pay later, and regulatory or antitrust actions that could reshape routing choices and fee economics.

Over the next five to 10 years, the most likely path is continued adaptation rather than sudden displacement: more volume initiated through digital wallets and app-based checkout, more merchant and regulatory pressure on fees, and more network revenue tied to services that sit alongside payments (risk management, tokenization, authentication, and data-driven tools). For consumers deciding “which is better,” acceptance is usually close, so the practical decision tends to come down to the specific card’s pricing and benefits—and, for frequent international travel, which network is more consistently accepted in the places you go.