Dec 8, 2025
If you have tapped to pay with a credit card, you’ve likely noticed that some merchants add a small fee for paying with credit instead of debit or cash. But what if the fee you paid depended on exactly what brand of credit card you had in your wallet?
That’s a scenario consumers may face after a settlement between credit giants Visa and Mastercard and U.S. merchants was recently announced. The settlement has not been approved by the courts, and according to a Wall Street Journal report, it will likely be contested by some retail industry groups (1).
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The settlement is the result of a two-decade legal dispute over interchange fees, which are the charges banks apply to merchants when customers pay with credit cards.
The agreement would give merchants the power to charge different fees for different tiers of credit cards (1).
Premium cards charge a premium to retailers
A previous settlement last year was rejected by a judge, the Los Angeles Times reports. This new settlement includes a focus on the “honor all cards” rule, which is a key part of how credit and debit cards work in the U.S. This rule says that if a merchant takes Visa or Mastercard, they must accept all versions of those cards. For example, Costco only accepts Visa for in-store purchases, but under this role, the store must accept any Visa card.
The higher interchange rate for high-rewards credit cards has been a sticking point for merchants. The Visa Infinite card, a premium product, can be 15 basis points (0.15%) more expensive for a merchant to accept than a Visa Signature, which is a mid-tier card. According to the LA Times report, the popularity of high-reward cards — such as the Chase Sapphire Reserve card and Citi Strata Elite card — has increased dramatically in the last decade.
Thanks to this ruling, merchants could “discriminate” against cards in higher tiers that cost them more to process. However, if merchants choose to opt out of accepting higher-tier cards instead of charging a higher fee for processing them, they could risk losing customers who are used to earning points on their routine purchases (2).
Under the settlement, different classes of cards would need to have “clear visual markers” so that both merchants and consumers can identify what class of card they have, according to the WSJ. These changes for physical credit cards could “take years to update” the report says.
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The settlement includes a reduction in interchange fees that merchants have to pay of an average 0.1 percentage points for five years. While the banking industry has argued this will impact rewards for consumers, the report notes that analysts say the reductions outlined in the settlement aren’t enough to have major impacts on consumers and their treasured rewards (1).
The proposed settlement doesn’t apply to debit card purchases. American Express is also not part of the settlement, as it uses a different system and isn’t involved in the litigation (2).
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What this means for consumers
For now, consumers don’t have to worry about any changes. Major merchant groups are opposing the settlement, and lobbyists and the industry have been pushing for Congress to step in and pass regulations on interchange fees (2).
While nothing will change if the settlement is not finalized, consumers who rely on more expensive credit cards to earn rewards should consider how any changes in the future could impact them. They might decide they need to carry a lower-tier card in case retailers don’t accept their rewards card. And of course, there are always the options to pay with debit or cash.
Paying with debit can mean avoiding fees from merchants in some cases, not to mention that using it won’t cause you to rack up debt — although you do miss out on credit-card rewards. And cash, for the budget-conscious, has the benefit of being a more tangible reminder that you’re spending your hard-earned dollars. That’s something the tap of a card just doesn’t capture.
Article Sources
We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines.
Wall Street Journal (1); Los Angeles Times (2)
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Rebecca Payne has more than a decade of experience editing and producing both local and national daily newspapers. She's worked on the Toronto Star, the Globe and Mail, Metro, Canada's National Observer, the Virginian-Pilot and Daily Press.
