Visa and Mastercard Settlement: What It Means for Your Credit Card Use and Rewards

After nearly 20 years of legal disputes, Visa and Mastercard are on the brink of a landmark settlement that could reshape how Americans use their credit cards. The proposed agreement, which addresses long-standing merchant complaints about swipe fees and card acceptance rules, could change both how businesses handle card transactions and how consumers earn rewards.

At the center of the issue are interchange fees—charges paid by merchants every time a credit or debit card transaction occurs. These fees, though small per transaction, add up to billions annually. With the new settlement, Visa and Mastercard aim to bring stability after decades of contention, but the deal could introduce new complexities for cardholders.

“This is one of the most significant settlements in U.S. payment history, with ripple effects for merchants, banks, and consumers alike,” notes financial analyst Jordan Myers.

Visa and Mastercard Settlement 2025

The legal conflict dates back to the early 2000s when merchants sued Visa and Mastercard, alleging that both companies conspired to fix interchange fees and restrict competition. The core of the dispute revolves around how merchants are required to accept payments through the networks.

The “Honor All Cards” Rule

A major focus of the case is the “honor all cards” rule. Under current policy, if a merchant accepts Visa or Mastercard, they must accept all variations of those cards, from standard versions to premium rewards cards. The problem? High-reward credit cards, such as Chase Sapphire Reserve (Visa Infinite) or Citi Strata Elite (Mastercard World Elite), often cost merchants more to process.

These costs stem from the higher interchange rates tied to premium benefits, such as travel points, cashback rewards, and airport lounge access. Merchants argue they’ve been forced to absorb these expenses, even when customers use the most expensive-to-process cards.

“Retailers shouldn’t be penalized for accepting high-tier cards that benefit the banks more than the businesses,” says Stephanie Martz, chief administrative officer for the National Retail Federation (NRF).

What the Settlement Proposes?

The proposed settlement seeks to address merchant concerns while preserving Visa and Mastercard’s market structure. Here are the key components:

Feature	Details
Merchant Choice	Merchants could choose which card tiers to accept (e.g., standard, signature, or premium).
Temporary Fee Reduction	A 10-basis-point reduction in swipe fees for five years.
Standard Rate Cap	1.25% fee cap for credit transactions for the following eight years.
Transparency Improvements	Card networks must disclose fee structures clearly to merchants.

This would be the first time merchants can legally reject certain premium cards based on their interchange costs. However, it also means some consumers might find their favorite high-reward cards declined at checkout.

“Consumers could see fewer acceptance options for their travel or premium cards — it’s a trade-off between cost savings for merchants and convenience for customers,” explains payments consultant Rachel Nguyen.

Potential Impact on Credit Card Rewards

The most direct impact could be felt in credit card rewards programs. Merchants avoiding high-tier cards could discourage banks from offering premium rewards, leading to:

• Reduced rewards or bonus points on select credit cards.
• Higher annual fees for cards maintaining rich benefit structures.
• More surcharges for consumers using premium cards at certain merchants.

If merchants begin passing transaction fees to customers, using high-reward cards for daily purchases could become more expensive.

“The golden age of credit card rewards may be nearing its end,” says consumer finance expert David Lin. “If merchants stop accepting premium cards, banks will rethink how they fund points and miles programs.”

How Merchants Could Respond?

For small businesses, the proposed settlement could finally offer relief from years of frustration. Many merchants have long argued that interchange fees cut into already slim profit margins.

Options for Merchants

• Limit card acceptance to lower-tier or debit cards.
• Introduce cash discounts to incentivize non-card payments.
• Add surcharges for high-fee card transactions.

However, refusing certain cards could alienate loyal customers who rely on rewards programs for everyday spending.

“The risk for merchants is losing customers who expect the convenience of paying with any card,” warns retail analyst Karen Lopez.

Reactions from Industry Stakeholders

Merchants and Retail Groups

Merchant groups remain skeptical. The National Retail Federation and Merchants Payments Coalition argue the proposal doesn’t go far enough to lower costs or increase competition.

“This settlement doesn’t fix the problem — it just patches it temporarily,” said the NRF’s Stephanie Martz, calling for Congressional intervention to regulate credit card fees similar to debit card rules.

Visa and Mastercard

Visa and Mastercard, however, frame the agreement as a positive compromise that provides certainty after years of litigation. Both companies emphasize that the deal balances merchant choice with consumer protection and network stability.

“This agreement provides a framework that benefits everyone in the payments ecosystem,” said a Visa spokesperson.

Consumer Advocates

Consumer groups are divided. While some welcome more transparency in merchant fees, others fear confusion at checkout and potential limits on reward cards.

Comparison Table: Before and After the Settlement

Aspect	Before Settlement	After Settlement (Proposed)
Merchant Acceptance	Must accept all card types	Can decline specific card tiers
Interchange Fees	1.35%–1.75% average	Temporary 10-point reduction; capped at 1.25%
Rewards Cards Impact	Widely accepted	Some may be declined or surcharged
Consumer Costs	Built into product prices	May shift to direct surcharges
Transparency	Limited disclosure	Clearer fee breakdown required

What About American Express and Debit Cards?

It’s important to note that American Express operates differently. Since Amex issues its own cards and manages its network, it’s not part of this settlement. Similarly, debit cards—which are regulated under the Durbin Amendment—are unaffected.

This means only Visa and Mastercard credit transactions are covered under the new terms.

Long-Term Outlook: What Comes Next?

If approved, the settlement could go into effect in mid-to-late 2025. Over time, the industry may see broader effects:

• Banks may redesign rewards programs to remain profitable under lower interchange caps.
• Merchants could pass cost transparency to consumers, sparking price differentiation based on payment type.
• Policymakers may introduce federal oversight if the current deal fails to satisfy merchant coalitions.

The court’s approval process is ongoing, and any objections from merchant groups or regulators could delay or modify the final terms.

“Regardless of the outcome, this marks a shift in how payments are negotiated in the U.S.,” concludes economist Laura Kim. “We’re seeing the first real challenge to the dominance of card networks.”

Conclusion: What It Means for Consumers?

For consumers, this settlement may bring both advantages and inconveniences. Merchants could benefit from fairer transaction costs, potentially reducing prices in the long term. But consumers might lose some of the seamless experience and generous rewards they’ve grown used to.

In short, the settlement underscores a key trade-off: lower costs for merchants versus convenience and rewards for consumers. While Visa and Mastercard promise that most cardholders will see minimal disruption, the way we use credit cards—and the value we get from them—may soon look very different.

FAQs