Visa and Mastercard reached a revised settlement in November 2025 that lowers interchange fees and gives merchants new rights to refuse or surcharge premium rewards cards. As of April 2026, the settlement remains pending final court approval, with preliminary approval granted and a fairness hearing expected later this year. Even before implementation, the agreement signals a structural shift in how rewards programs are funded. Here's what it does, what changes for merchants, and what it means for the cards in your wallet.

What the Settlement Does

On November 10, 2025, Visa and Mastercard announced a revised settlement with U.S. merchants, ending a dispute that has now run more than 20 years. The earlier $30 billion proposal was rejected by U.S. District Judge Margo K. Brodie in June 2024 for failing to deliver meaningful relief. The new agreement targets the two complaints merchants have pressed hardest: the size of interchange fees and the rules that force merchants to accept every card a network issues.

Two changes matter. First, interchange fees drop by roughly 0.1 percentage points for five years. Interchange fees, also called swipe fees, are what merchants pay each time a customer uses a credit card. They typically run 2% to 2.5% per transaction and are split between the card-issuing bank and the network. A 0.1-point cut is small in isolation, but it applies across roughly 80% of U.S. credit card volume.

Second, the "honor all cards" rule is loosened. Previously, accepting one Visa product meant accepting every Visa product. Under the new terms, merchants can split acceptance into tiers (standard consumer cards, premium consumer rewards cards, and commercial cards) and decline tiers selectively or apply different surcharges.

Final court approval is still required, and past settlements in this case have been rejected, so the terms aren't locked in until the court signs off.

Interchange Fee Mechanics

Interchange fees fund rewards. Industry estimates put roughly 86% of interchange revenue toward issuer programs: welcome bonuses, points multipliers, lounges, travel credits, transfer partnerships. Premium cards carry higher interchange rates because they offer richer benefits; standard cards carry lower rates.

The 0.1-point reduction sounds modest, but it works at scale. On a card category that earns the issuer 2.4% in interchange, dropping to 2.3% is a 4% revenue cut on every transaction. Issuers can absorb that in three ways: trim earning rates, raise annual fees, or tighten the value of transfer partners and category bonuses. The most likely outcome is a mix. Visible cuts in earning rates draw bad press, so expect more changes to fee structures and partner ratios than to headline points multipliers.

There's a behavioral angle too. If merchants refuse premium cards or surcharge them, fewer transactions run on those cards, which reduces issuer revenue further. That feedback loop, more than the 0.1% cut, is what could squeeze rewards budgets over time.

What Changed for Merchants

Three new tools sit on the merchant side of the counter:

  • Selective acceptance. A merchant can accept basic Visa or Mastercard products while refusing premium products like Visa Infinite (Chase Sapphire Reserve, United Club Infinite Card) or World Elite Mastercard products (Citi AAdvantage Executive, U.S. Bank Altitude Reserve). They have to be transparent about which tiers they accept, but they're no longer required to take everything.
  • Surcharging up to 3%. Merchants can add a surcharge of up to 3% on credit transactions, and they can vary the surcharge by card tier. A coffee shop could pass through a 1% surcharge on standard cards and 3% on premium ones.
  • Discounting for cheaper payment methods. Merchants can offer discounts for cash, debit, or lower-fee networks. This already happens at gas stations in many states. The settlement clears the legal path for it to spread to grocery, dining, and online checkout.

Whether merchants actually use these tools is the open question. Large retailers have a strong incentive to keep accepting every card, since frustrating customers at checkout costs more than it saves. Visible changes will likely come from small businesses and low-margin categories first.

What It Means for Cardholders

The short version: nothing breaks immediately, and your existing points are safe. Issuers don't claw back balances when programs change, and any rewards program adjustment gets announced months in advance. But three things are worth planning for over the next 12 to 24 months.

First, surcharges. If a merchant adds 3% to swipe a Chase Sapphire Reserve, a card earning 3x on dining suddenly nets out closer to break-even on that transaction. The math on premium cards depends on merchants treating the swipe as free. Once it isn't, the value calculation shifts. Watch for surcharging to spread beyond gas stations into restaurants and small retail.

Second, acceptance gaps. The Sapphire Reserve carries a $795 annual fee as of April 2026, and that fee is justified by category bonuses and travel credits that assume you can use the card everywhere. If a meaningful slice of merchants stops accepting premium products, the value math weakens, not because the card got worse, but because the use cases narrowed.

Third, slower-burn rewards changes. Issuers won't announce "we're cutting earning rates because of the settlement." Changes will show up as adjusted transfer ratios, narrower bonus categories, or higher annual fees with thinner credit packages. The Sapphire Reserve refresh that pushed the fee to $795 in 2025 already moved that way.

A note on American Express: Amex isn't directly affected here because it's both the network and the issuer for most of its cards. Amex has always faced selective acceptance, so its product strategy is already built around that reality. If Visa and Mastercard premium products start hitting friction, the gap between Amex and the major networks narrows rather than widens. Broader regulatory pressure (the Credit Card Competition Act keeps surfacing in Congress) is a separate question.

Practical Steps

Don't restructure your wallet around a settlement that hasn't fully cleared the courts. Do a few small things:

  • Keep at least one no-annual-fee flat-rate card in rotation. The Citi Double Cash (2% on everything) or the Chase Freedom Unlimited (1.5% flat) work as backup if a merchant refuses your premium card.
  • Hold redemptions you've been planning. If you have points sitting in a flexible currency, book the trip rather than waiting another year for a possibly-worse transfer ratio.
  • Watch for issuer announcements. Major program changes get telegraphed months ahead. When you see them, decide whether to accelerate redemptions or shift earning to a different ecosystem.
  • Diversify across two or three points currencies rather than concentrating in one. If Chase, Amex, and Capital One each face different economic pressure over the next few years, having earning across all three protects you from a single bad announcement.

The settlement isn't a reason to abandon premium cards. It is a reason to stop assuming the current rewards landscape is permanent. Issuers will adapt, merchants will experiment, and the cards that look strongest in 2026 may look different by 2028.

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