Visa and Mastercard have reached a revised settlement with merchants in an antitrust case that has been ongoing for almost 20 years over “swipe” (interchange) fees.
The proposed deal could allow some merchants to refuse to process select Visa and Mastercard products or even add a surcharge when you choose to pay with them at checkout.
Here's what you need to know about this new development and how it might impact earning credit card rewards in the future.
Related: Credit card economics: A look at the fees that you rarely see
What is the Visa and Mastercard agreement, and what could change?
Currently, in the U.S., merchants (like shop owners) pay interchange fees to card-issuing banks every time a customer uses a credit card for the convenience of processing card payments. These fees, typically averaging about 2% of each transaction, are shared between the bank and the payment networks (like Visa or Mastercard) to cover processing and fraud prevention costs.
Card issuers often use part of the fees they collect to fund your favorite rewards programs.
Fees set by the card-issuing bank may vary depending on the type of credit card being used, with higher fees being charged for more premium cards. These cards can then offer you higher rewards, such as more than 1 point or mile per dollar spent.
To prevent merchants from refusing to accept premium cards that charge higher interchange fees, a long-standing "honor all cards" rule has been in place. This rule requires that if a merchant accepts one type of Visa or Mastercard, they must accept all types, regardless of the interchange fee they are charged. This benefits the consumer, as they can choose whichever card they wish (such as the one that earns the most rewards) wherever they see the Visa or Mastercard symbols.
If approved by a federal court, this new settlement between Visa and Mastercard will lower average credit card interchange fees by approximately 0.1 percentage points for five years and cap “standard” consumer card rates at 1.25% for eight years. This would mean collecting lower interchange fees for card issuers to fund rewards programs.
What could be more significant for consumers from this settlement is that it would modify the "honor all cards" rule, with merchants potentially having the ability to choose to only accept certain Visa and Mastercard products based on the interchange fees they must pay. In other words, they might choose not to accept premium cards, such as Visa Infinite and World Elite Mastercard.
Additionally, they could opt to add a surcharge (subject to state law and network rules) of up to 3% to cover the cost of processing premium credit cards, which would be added to the amount payable and payable by the consumer.
American Express cards are not affected by this news.
Is this different from the Credit Card Competition Act?
Yes. The Credit Card Competition Act is separate proposed legislation that would require major issuers to enable at least two unaffiliated networks on most credit cards (a “dual‑routing” mandate), letting merchants route transactions over a network that may not be Visa or Mastercard.
By contrast, this settlement is a private legal agreement concerning fees, acceptance by card category and surcharging within the Visa and Mastercard networks; it doesn’t involve Congress.
If passed, the CCCA would likely reduce the ability of card issuers to offer generous rewards, potentially more so than this court settlement.
Related: Consumer alert: Senators trying to cram anti-points and miles legislation into pending bill
What does this mean for my rewards-earning credit cards?
We don’t know yet. However, there are no immediate changes.
If the court approves this settlement, you might occasionally see a checkout message that a particular premium Visa or Mastercard isn’t accepted or that using it incurs an extra fee, especially at small businesses with thin margins, which may make you rethink your credit card strategy in the future.
The responsibility will fall on merchants, such as your local cafe owner, to choose which cards they accept and any surcharges they impose, as you can always take your business elsewhere if a merchant suddenly decides to stop accepting your preferred rewards credit card.
Whether this becomes widespread behavior or remains limited to certain sectors is impossible to predict at this time.
What is the timeline?
Nothing has changed at the register or with your favorite rewards credit card or loyalty program. This is a proposed settlement that requires judicial review and approval; even then, implementation could take months (or possibly longer) before any new acceptance or pricing rules are implemented where you use your credit cards.
Bottom line
If this settlement is approved, some stores may refuse to accept premium Visa and Mastercard products (typically those that earn you the most rewards) or add an additional processing surcharge.
Amex isn’t part of this potential change, and no changes are expected in the immediate term or this year. TPG will continue to monitor the court process and keep you updated as developments happen.
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