Key Points
- Visa and Mastercard reached a settlement that lowers interchange fees by 0.1% for five years and allows merchants to refuse premium rewards cards.
- Merchants can now reject cards like Visa Infinite and World Elite Mastercard products or charge surcharges up to 3% for using them.
- Lower interchange fees could reduce rewards earnings since about 86% of these fees fund credit card rewards programs.
Introduction
Visa and Mastercard just announced a settlement that could reshape how you earn and use credit card rewards. After 20 years of litigation with merchants over interchange fees, the two payment networks have agreed to reduce fees and give stores more control over which cards they accept. While the immediate changes are modest, this settlement opens the door for merchants to refuse premium rewards cards or charge you extra for using them. Here's what you need to know and how to protect your points strategy.
What Happened
On November 10, 2025, Visa and Mastercard announced a revised settlement with U.S. merchants that aims to end two decades of legal battles over credit card processing fees. The previous settlement proposal, valued at $30 billion, was rejected by U.S. District Judge Margo K. Brodie in June 2024 for not providing meaningful relief to merchants.
The core issue has been interchange fees (commonly called swipe fees), which merchants pay every time a customer uses a credit card. These fees typically range from 2% to 2.5% of each transaction and are shared between the card-issuing bank and the payment networks. Merchants have long argued these fees are too high and result from anticompetitive practices by Visa and Mastercard, which control about 80% of the credit card market.
Under the new settlement, which still requires court approval, Visa and Mastercard will reduce interchange fees by approximately 0.1 percentage points for five years. More significantly, the "honor all cards" rule will be modified, allowing merchants to choose which types of cards they accept based on the fees charged.
Why This Matters for Your Rewards
The settlement could impact your rewards strategy in three main ways: reduced earning rates, merchant surcharges, and card acceptance restrictions.
Lower Rewards Earning Potential
Interchange fees are the primary funding source for credit card rewards programs. According to industry experts, approximately 86% of interchange fees go directly to card issuers to fund rewards and loyalty programs. When interchange fees decrease, banks have less revenue to support generous rewards structures.
The 0.1% reduction might sound small, but it could translate to meaningful changes over time. For example, a card that currently earns 3% back on dining might drop to 2.85% if issuers decide to pass the reduced interchange revenue directly to consumers. More likely, we'll see issuers adjust rewards programs through increased annual fees, tightened bonus categories, or reduced transfer partner values rather than explicit earning rate cuts.
Merchant Surcharges
The settlement expands merchants' ability to add surcharges when customers pay with credit cards. Stores can now charge up to 3% extra depending on which card you use, with premium rewards cards potentially facing higher surcharges than basic no-rewards cards.
Gas stations and convenience stores have already embraced surcharging in many states, often charging different prices for cash versus credit purchases. This settlement could expand that practice to grocery stores, restaurants, and online retailers. If paying with your Chase Sapphire Reserve suddenly costs 3% more than using a debit card, that premium card's value proposition changes dramatically.
Card Acceptance Restrictions
Perhaps the most significant change is the modification of the "honor all cards" rule. Previously, if a merchant accepted one Visa card, they had to accept all Visa cards regardless of the interchange fees. Now, merchants can categorize acceptance into three tiers: standard consumer cards, premium consumer rewards cards, and commercial cards.
This means stores could theoretically refuse to accept premium products like Visa Infinite cards (Chase Sapphire Reserve, United Club Infinite) or World Elite Mastercard products (Citi AAdvantage Executive, U.S. Bank Altitude Reserve) while still accepting basic Visa and Mastercard products.
For travelers who've built entire strategies around premium cards, this could create real friction. Imagine arriving at a hotel or restaurant only to discover they don't accept your go-to rewards card.
What You Should Do Now
Despite these potential changes, you don't need to panic or dramatically alter your strategy immediately. The settlement still requires court approval, and even if approved, implementation will take time. Here's how to adapt your approach.
Maintain a Balanced Card Portfolio
Don't put all your points in one basket. Keep at least one no-annual-fee card with solid flat-rate earning in your wallet alongside your premium rewards cards. Cards like the Citi Double Cash (2% back on everything) or Chase Freedom Unlimited (1.5% back) provide solid backup options if merchants start refusing premium cards.
If you're primarily focused on travel rewards, consider having both a premium card for major purchases and travel bookings, plus a more basic rewards card for everyday spending. The Capital One Venture Rewards (no annual fee version) or Citi Custom Cash can serve as excellent secondary cards that won't face acceptance issues.
Maximize Current Opportunities
If anything, this settlement is a reminder to take advantage of today's generous rewards structures while they last. The current landscape of welcome bonuses, high earning rates, and valuable transfer partners may represent a golden era for points enthusiasts. Don't wait to book that dream redemption or to apply for cards with exceptional signup bonuses.
Focus on cards with strong welcome offers like the Chase Sapphire Preferred (60,000 points after $4,000 spend), Capital One Venture X (currently offering elevated bonuses), or American Express Gold (with its generous dining and grocery multipliers).
Stay Informed and Flexible
This settlement is just the beginning of a longer conversation about credit card economics. Additional regulatory changes could follow, particularly if Congress revisits proposals like the Credit Card Competition Act, which would require different routing options for transactions.
Subscribe to updates from trusted points and miles resources (like The Points Party) to stay ahead of any program changes. When issuers announce devaluations or modifications to rewards programs, understand your options and be ready to pivot your strategy.
Diversify Your Rewards Currency
Don't concentrate all your earning in a single rewards ecosystem. Instead of focusing exclusively on Chase Ultimate Rewards or Amex Membership Rewards, consider earning across multiple programs. This diversification protects you if any single program faces devaluation.
For instance, you might earn Chase points for their transfer partners, Capital One miles for their flexible redemption options, and cash back from cards like the Citi Double Cash for purchases where points don't make sense. If one ecosystem becomes less valuable, you'll have alternatives ready.
The Bigger Picture
This settlement reflects broader tensions in the credit card industry. On one side, merchants argue they pay too much in fees that ultimately get passed to all consumers through higher retail prices, whether they use credit cards or not. On the other side, banks and payment networks point out that these fees fund the zero-fraud-liability protections, purchase insurance, and rewards programs that consumers love.
The reality is that premium rewards cards come with high interchange fees because they provide premium benefits. Your Chase Sapphire Reserve earns 10x points on hotels booked through Chase Travel and includes $300 in annual travel credits partially because merchants pay higher fees when you use it.
If interchange fees drop significantly or if merchants widely adopt surcharging and selective acceptance, the economics of premium rewards cards could fundamentally change. However, history suggests that issuers will find creative ways to maintain profitable programs, even if they need to adjust their value propositions.
What About American Express?
One interesting footnote to this settlement is that it doesn't directly affect American Express. While Visa and Mastercard are payment networks that process transactions for cards issued by various banks, American Express operates as both the network and the issuer for most of its cards.
Amex already faces selective acceptance from some merchants due to its historically higher fees. Many small businesses and discount retailers don't accept Amex cards, so Amex cardholders are already accustomed to having backup options. This settlement could level the playing field slightly if other premium cards start facing similar acceptance challenges.
That said, Amex has proven remarkably resilient at maintaining premium positioning despite acceptance limitations. Cards like The Platinum Card and American Express Gold continue to thrive by focusing on benefits and rewards that justify their annual fees, even if they can't be used everywhere.
Looking Ahead
The settlement will likely take months to finalize through court approval, and actual implementation could extend well into 2026 or 2027. During this time, watch for several indicators of how seriously this might impact your rewards:
First, pay attention to whether major national retailers begin exercising their new rights to surcharge or restrict card acceptance. If Walmart, Target, or Amazon start rejecting premium cards or adding fees, that signals a significant shift. If only small merchants make changes, the impact will be minimal.
Second, monitor bank communications about rewards program changes. Banks typically announce major modifications months in advance. If you see your favorite card's earning rates dropping or annual fees increasing without corresponding benefit enhancements, that could be the settlement's impact materializing.
Third, watch for legislative responses. This settlement doesn't preclude Congress from passing additional credit card regulation. The Credit Card Competition Act or similar proposals could create more dramatic changes to how credit cards work.
Frequently Asked Questions
Will my current credit card rewards be taken away?
No. Your existing rewards are safe, and your cards will continue working as they do now. Any changes to rewards programs would be announced well in advance and would typically apply to new spending rather than existing points balances.
Should I stop using premium rewards cards?
Not yet. The settlement still needs court approval, and even then, it will take time for merchants to implement changes. Premium rewards cards still offer the best earning rates and benefits for most travel enthusiasts. Keep using them while monitoring the situation.
Which merchants are most likely to stop accepting my premium cards?
Small businesses with tight profit margins, such as independent gas stations, convenience stores, and local restaurants, are most likely to exercise new rights to reject premium cards or add surcharges. Large national retailers will probably continue accepting all cards to avoid frustrating customers.
What cards should I get now to protect myself?
Keep a simple, no-annual-fee card with flat-rate earning as a backup. The Citi Double Cash (2% on everything) or Chase Freedom Unlimited (1.5% on everything) are excellent options that won't face acceptance issues.
Are cash back cards safer than travel rewards cards?
Potentially, yes. Simple cash back cards typically have lower interchange fees than premium travel cards. However, cash back cards can also be premium products with high fees. The key distinction is more about card tier (standard versus premium) than reward type (cash versus points).
Conclusion
The Visa and Mastercard settlement introduces uncertainty into the credit card rewards landscape, but it's not time to abandon your points strategy. Lower interchange fees and merchant flexibility could eventually reduce rewards value, but significant changes will take time to materialize. For now, focus on maintaining a balanced card portfolio with both premium rewards cards and solid backup options, maximize current generous offers while they last, and stay informed about industry developments. The golden age of credit card rewards might be evolving, but strategic cardholders who adapt their approach will continue finding excellent value.
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