Key Points

• Visa and Mastercard reached a revised $38 billion settlement over swipe fees that merchants pay on credit card transactions.
• Premium rewards cards could face merchant surcharges or acceptance restrictions as merchants gain more flexibility under the deal.
• Your earning strategy might need adjustments if more merchants start adding card surcharges or steering customers toward cheaper payment methods.

Introduction

Visa and Mastercard just announced a revised settlement that could reshape how you use your rewards cards. The $38 billion deal with U.S. merchants addresses years of litigation over the fees retailers pay every time you swipe your Chase Sapphire Preferred or American Express Gold Card. While the changes won't happen overnight, they could eventually affect how merchants accept premium rewards cards and whether they add surcharges when you pay with plastic instead of cash.

The settlement still needs court approval, with implementation expected in late 2026 or early 2027. Here's what you need to know about how this could impact your points earning strategy and what steps you should consider now.

What the Settlement Actually Does

The deal addresses interchange fees, commonly called swipe fees, which merchants pay to accept credit cards. These fees currently average around 2.35% of each transaction and generated over $111 billion for card networks and banks in 2024.

Under the settlement terms, Visa and Mastercard agreed to several major changes that could affect how you use rewards cards:

Fee Reductions: The card networks will reduce swipe fees by 0.1 percentage points for five years. That might not sound like much, but it represents billions in savings for merchants.

Category Flexibility: Merchants can now choose which types of cards they'll accept. This means stores could decide to accept standard consumer cards while declining premium rewards cards that carry higher interchange fees. Your Chase Sapphire Reserve or Capital One Venture X could theoretically be declined at merchants who opt to reject premium cards.

Standard Card Fee Cap: Regular consumer credit cards will have their rates capped at 1.25% for eight years, representing about a 25% reduction from current levels.

Surcharge Rights: Merchants gain expanded rights to add surcharges when customers pay with credit cards, including the ability to charge up to 3% on card transactions.

Two economists hired by the merchant plaintiffs, including Nobel Prize winner Joseph Stiglitz, estimate the changes could save merchants $38 billion by 2031. However, retail groups including the National Retail Federation argue the reductions don't go far enough.

Why This Matters for Rewards Card Holders

You might be wondering why merchant fees should concern someone focused on maximizing points and miles. The answer is that swipe fees essentially fund the rewards ecosystem you rely on.

Card issuers use interchange revenue to pay for sign-up bonuses, ongoing earning rates, and travel benefits. When merchants pay 2.35% on transactions, that money flows to banks, who then redistribute some of it to you as rewards. Premium cards like the American Express Platinum or Citi Premier typically carry higher interchange fees than no-annual-fee cards.

The settlement gives merchants more tools to push back against these fees:

Selective Acceptance: A business could theoretically accept your Capital One Quicksilver while declining your premium travel card. This is the most concerning potential change, though it remains to be seen how many merchants will actually use this option.

Surcharges: You might start seeing more merchants add 2-3% fees when you pay with credit cards. Some businesses already do this, but the settlement makes it easier and explicitly permits surcharges up to 3%.

Steering Tactics: Merchants can more aggressively direct you toward cheaper payment methods. Expect more signs at registers offering discounts for cash or debit cards.

None of this means your rewards cards will suddenly become worthless. But it does mean the landscape could shift in ways that make earning points slightly less convenient or valuable in certain situations.

What Changes You Might See

The settlement won't change anything immediately. Court approval is expected in late 2026 or early 2027, and even then, merchants will need time to adjust their payment systems and policies.

However, once the changes take effect, you could encounter several new scenarios:

More Credit Card Surcharges: Small businesses in particular might start adding 2-3% fees for card payments. This has been happening gradually anyway, but you'll likely see it accelerate. A $100 restaurant bill could cost $103 if you pay with your Chase Sapphire Preferred instead of cash.

Rewards Card Restrictions: Some merchants might decline to accept premium rewards cards while still taking standard credit cards. This seems unlikely for major retailers who want to accommodate all customers, but smaller businesses could use this option to reduce their costs.

Cash Back Incentives: More businesses might offer discounts for cash payments to steer you away from credit cards entirely. Gas stations already do this commonly, and the practice could spread to other retail categories.

Debit Card Preference: Merchants might more actively encourage debit card use, which carries much lower fees than credit cards. You might see signage or even cashier prompts suggesting debit as the preferred payment method.

The good news is that these changes will roll out gradually. You'll have time to adjust your strategy as you see how different merchants implement the new rules.

How This Could Affect Your Strategy

Your core points earning strategy probably doesn't need to change dramatically, but you should stay aware of a few potential adjustments:

Keep Backup Cards: Consider carrying a mix of premium and standard cards. If a merchant declines your Chase Sapphire Reserve, having a Chase Freedom Unlimited as backup means you can still earn Ultimate Rewards points, even if at a lower rate.

Factor in Surcharges: When merchants add 3% surcharges, you need to earn more than 3% back for your card to provide net value. A card earning 3x points on dining needs those points to be worth at least 1 cent each just to break even with a surcharge. This math still works for Chase Sapphire Preferred holders who transfer to partners, but it's tighter than before.

Stay Flexible: Don't assume all merchants will accept all your cards. Having accounts with multiple issuers (Chase, American Express, Capital One) means you'll always have options regardless of merchant policies.

Monitor Sign-Up Bonuses: If interchange fees drop significantly, issuers might eventually need to reduce sign-up bonuses or earning rates to maintain profitability. We're not there yet, but it's worth paying attention to how new credit card offers evolve over the next few years.

Focus on High-Value Redemptions: As earning becomes potentially more complex, maximizing redemption value becomes even more important. Make sure you're transferring Chase points or Amex points to partners for premium cabin flights rather than settling for lower-value redemptions.

Why There's Opposition From Both Sides

Interestingly, both merchants and the payments industry have mixed feelings about this settlement.

Many retail groups argue the fee reductions are too small. The National Retail Federation points out that a 0.1 percentage point reduction barely makes a dent in the 2.35% average fee merchants currently pay. They note that swipe fees have grown significantly since 2010, and this settlement only rolls them back by about one year.

Meanwhile, the Electronic Payments Coalition, which represents card networks and major issuers like Bank of America, Capital One, Chase, and Citibank, supports the deal. They argue it reduces fees below what proposed legislation would require while maintaining the rewards structure that consumers value.

This opposition from both sides suggests the settlement might not dramatically reshape the payments landscape. If merchants think the changes are too small and banks think they're substantial, the reality probably falls somewhere in between.

What You Should Do Now

The settlement won't affect your daily card use for at least another year, probably longer. But there are a few smart moves to make now:

Maximize Current Opportunities: Sign-up bonuses and earning rates are still strong. If you've been considering the Chase Sapphire Preferred or Capital One Venture X, there's no reason to wait. The best current offers are available now, and we don't know what the landscape will look like in 2027.

Build Your Points Balances: Transfer partner programs aren't changing based on this settlement. Focus on accumulating flexible points in Chase Ultimate Rewards, American Express Membership Rewards, or Capital One Miles.

Diversify Your Card Portfolio: Don't put all your earning in one ecosystem. Having cards from multiple issuers protects you if merchant acceptance becomes more fragmented.

Stay Informed: The settlement still needs court approval. Follow developments to understand how implementation actually plays out. Some provisions might change before final approval.

Understand Your Cards' Value: Make sure you can clearly articulate why each card in your wallet is worth keeping. If surcharges become common, you'll want to know exactly how much you need to earn back to justify using credit over cash.

The Bigger Picture for Rewards Programs

This settlement is part of a larger conversation about how credit card rewards are funded. Some politicians and consumer advocates argue that rewards programs effectively transfer wealth from people who pay cash or use debit cards to affluent credit card users who earn points and miles.

However, that's not really how the economics work. Interchange fees are business costs that merchants factor into their pricing for all customers. Whether those fees fund rewards programs or simply represent payment processing costs, they're built into retail prices.

The real question is whether giving merchants more control over payment acceptance and pricing will lead to lower consumer prices or simply higher merchant profits. History suggests retailers rarely pass savings directly to consumers, even when their costs decrease.

For now, rewards programs remain robust. Issuers like Chase, American Express, and Capital One continue offering competitive sign-up bonuses and earning rates. The settlement might eventually lead to some adjustments, but we're not facing an immediate crisis for points and miles enthusiasts.

Looking Ahead

The Visa and Mastercard settlement represents the most significant potential change to credit card economics in years, but the actual impact on your rewards strategy is likely to be gradual and manageable.

You'll probably see more merchants adding surcharges for card payments, which is already happening independent of this settlement. You might occasionally encounter businesses that decline premium rewards cards, though major retailers are unlikely to limit acceptance since they want to serve all customers.

The core fundamentals of points and miles haven't changed. Transfer partners still offer excellent value for premium cabin flights. Sign-up bonuses still represent some of the best opportunities in personal finance. Strategic card applications still unlock valuable benefits and rewards.

Stay flexible, keep earning, and focus on high-value redemptions. The rewards game isn't ending – it's just evolving, as it always has. The settlement might introduce some new variables, but the fundamentals of maximizing value from your spending remain the same.

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