What happened

Credit card giant Mastercard (MA -0.07%) saw its stock price sink on Thursday, falling 2.7% at the closing bell to roughly $317 per share.

The major indexes were all down in mid-afternoon trading as the Dow Jones Industrial Average was down 173 points, or 0.6%, while the S&P 500 was down 45 points, or 1.1%, and the Nasdaq fell by 167 points, or 1.4%.

So what

Mastercard saw a bit of volatility on Thursday, up slightly in the morning after the Commerce Department reported that retail sales were up 0.3% in August when they were expected to be flat. That is good news for payment processors like Mastercard, which rely on consumer spending to generate revenue.

However, the stock may have moved downward upon the release of a study by the federal watchdog group the Consumer Financial Protection Bureau (CFPB), on "buy now, pay later" (BNPL) companies. BNPL companies allow consumers to pay in installments at the point of sale, often interest-free, and are seen as an alternative to credit cards.

The CFPB report looked at the industry and trends and raised three primary concerns -- they have inconsistent consumer protections; engage in data harvesting and monetization; and may encourage debt accumulation or overextension. The upshot is, the CFPB said the industry needs to be monitored and subject to supervisory oversight and examinations, like credit card companies are. It will begin the process soon of identifying potential guidance or rules.

This might be considered good news for credit card companies, as BNPL is seen as a rival. However, Mastercard has its own BNPL business, Mastercard Installments, so it remains to be seen if, or how much, it would be impacted by new rules.

Now what

Mastercard is also looking at another potential federal action, a bill introduced in Congress in July, the Credit Card Competition Act, that would direct credit card-issuing banks to offer a choice of at least two networks over which an electronic credit transaction may be processed. If approved, this measure would impact the duopoly that Mastercard and Visa enjoy as the two primary networks.

The bill hasn't gone to a vote yet in the U.S. Senate, but on Wednesday, some 1,600 retailers, including Walmart and Target, sent a letter to all members of Congress urging them to pass it, reported The Wall Street Journal. This legislation is worth watching for Mastercard investors and the industry as a whole.