Visa and Mastercard shareholders are learning what happens when the world's most powerful office declares war on an industry's business model. Shares of both payment giants plunged more than 5% on Tuesday—their worst single-day performance in months—after President Donald Trump announced support for not one, but two initiatives that threaten the foundations of the credit card industry.

The double whammy caught Wall Street off guard. While Trump's proposal for a 10% interest rate cap on credit cards had been telegraphed during his 2024 campaign, his simultaneous endorsement of the bipartisan Credit Card Competition Act—which targets the lucrative swipe fees that Visa and Mastercard collect on every transaction—represents a far more direct threat to the payment networks' profit engines.

The Two-Front War

President Trump took to Truth Social on Monday evening to announce his policy positions, setting up what could become the most significant challenge to the payments industry since the Durbin Amendment capped debit card interchange fees in 2011.

The 10% Interest Rate Cap

"Effective January 20, 2026, I, as President of the United States, am calling for a one year cap on Credit Card Interest Rates of 10%," Trump wrote. The proposal would slash rates from the current average of 20-22% to a level not seen since the early 1990s.

While the rate cap primarily affects card-issuing banks like JPMorgan, Capital One, and Synchrony, it has secondary implications for Visa and Mastercard. If banks drastically reduce credit card lending in response to compressed margins, overall transaction volumes could decline—hitting the payment networks' revenue.

The Swipe Fee Attack

More concerning for Visa and Mastercard is Trump's endorsement of the Credit Card Competition Act, which he described as necessary to "stop the out of control Swipe Fee ripoff." The bipartisan legislation, sponsored by Senators Dick Durbin (D-IL) and Roger Marshall (R-KS), would require banks to offer merchants a choice of at least two credit card networks for processing transactions.

Currently, most credit cards are locked into either the Visa or Mastercard network, giving those companies effective duopoly pricing power. The Competition Act would force banks to add alternative networks—potentially from smaller players or new entrants—creating price competition that could dramatically reduce interchange fees.

"The swipe fee legislation is an existential threat to the Visa/Mastercard business model. Their entire value proposition is based on network effects and merchant acceptance—introduce competition, and the economics change completely."

— Financial sector analyst, January 2026

The Market Carnage

Tuesday's trading session illustrated the severity of investor concern:

  • Visa (V): Fell 5.1% to $325.85, erasing approximately $25 billion in market capitalization.
  • Mastercard (MA): Dropped 5.5%, matching its largest single-day decline since the pandemic selloff of 2020.
  • American Express (AXP): Declined 4.3%, though its closed-loop network model provides some insulation from interchange competition.
  • Capital One (COF): Plunged 6.4% on the combined impact of rate cap and competition concerns.

The S&P 500 Financials sector was the worst performer on the day, dragged down by the payments and banking names most exposed to Trump's proposals.

Industry Response

JPMorgan Chase CFO Jeremy Barnum, speaking on the bank's earnings call Tuesday morning, offered a pointed rebuttal to the rate cap proposal. "If it were to happen, it would be very bad for consumers, very bad for the economy," Barnum said, arguing that JPMorgan would be "forced to significantly scale back its credit card business" under a 10% rate cap.

The banking industry's argument centers on credit availability: if lenders can't price risk appropriately, they'll simply stop lending to riskier borrowers. The result, banks contend, would be reduced credit access for the consumers Trump claims to be protecting.

Legislative Reality Check

Wall Street analysts note that both proposals face significant legislative hurdles. The interest rate cap would require Congressional action—a president cannot unilaterally cap rates charged by private businesses. The Credit Card Competition Act, while bipartisan, has failed to advance in previous Congressional sessions despite support from retail industry lobbyists.

TD Cowen's payments analyst wrote that the proposals "face long odds of implementation" but acknowledged that "the headline risk alone is sufficient to justify a lower multiple" for payment network stocks.

What This Means for Investors

For Visa and Mastercard shareholders, Tuesday's selloff represents a repricing of political risk that had been largely ignored since the payment networks' post-pandemic recovery. Even if neither proposal becomes law, the overhang of potential regulation could cap valuation multiples for the foreseeable future.

Both stocks trade at roughly 30 times forward earnings—premiums that assume continued high-teens profit growth. If that growth is threatened by regulation, the multiple compression could be substantial.

The silver lining, if there is one, is that Visa and Mastercard have navigated regulatory challenges before. The Durbin Amendment's impact on debit interchange was absorbed through volume growth and new product development. The payment networks' global scale and technological moats provide resilience that smaller competitors cannot match.

But for now, investors are voting with their feet—and the message is clear: when the President of the United States targets your industry from multiple directions simultaneously, it's time to reassess the risk premium.