Deal Could Have Merchants Rejecting Your Credit Card

A landmark settlement proposal could shake up the credit card industry, giving merchants new authority to reject certain high-fee rewards cards. For consumers, that could mean seeing a favorite credit card declined at the checkout counter.

The agreement—stemming from a 20-year legal battle between Visa, Mastercard, and merchants—would dismantle the long-standing “honor all cards” rule, which has required retailers to accept every card from a brand if they accepted any at all, according to The Wall Street Journal. Under the proposed terms, merchants could now refuse premium credit cards that carry steep interchange fees, often between 2% and 2.5% per transaction. Merchants paid an estimated $83 billion in such fees last year, a 71% jump since 2019, as consumers increasingly favored plastic over cash.

Retailers have fought for years to break the “honor all cards” rule in an effort to contain these escalating costs, especially as rewards programs have expanded. The settlement marks a symbolic victory for them, though its real-world impact remains uncertain. Under the new framework, businesses would be allowed to choose whether to accept or reject one of three types of credit cards—standard, commercial, and premium—according to CNBC. However, since the popular rewards cards fall into the premium category, merchants risk angering customers if they choose to block them. Some retailers may instead opt to impose surcharges on transactions made with those higher-fee cards.

The settlement still requires judicial approval, CNN reports, and several merchant groups continue to argue that it doesn’t go far enough. Visa and Mastercard would be required to reduce interchange fees by 0.1% over the next five years—a change merchant advocates say merely offsets typical annual increases.

“The reduction in swipe fees doesn’t begin to go far enough, and the change in the honor-all-cards rule would accomplish nothing,” said Stephanie Martz, Chief Administrative Officer and General Counsel of the National Retail Federation. “It’s time for Congress to take action.”

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