A federal judge has given preliminary approval to a massive, $38 billion settlement between merchants and credit card giants Visa and Mastercard. This marks a turning point in a fierce, 20-year legal battle over “swipe fees”—the 3% to 4% processing cuts merchants pay every time you use a card.
Thank you for reading this post, don't forget to subscribe!While the deal aims to lower costs for businesses, the impact on everyday consumers is a mixed bag. Here is what you need to know.
More Checkout Surcharges (and Potential Cash Discounts)
Under the new rules, merchants will have more freedom to pass processing costs directly to you.
- The Catch: Stores can add extra checkout fees (surcharges) if you choose to pay with high-fee credit cards.
- The Silver Lining: Stores are also encouraged to offer discounts if you opt for lower-fee cards, debit cards, or cash.
“Premium” Rewards Cards Might Get Rejected
Currently, the “Honor All Cards” rule forces stores to accept every Visa or Mastercard if they accept the brand at all. This rule is being scrapped.
- Small businesses, hit hardest by fees, may start refusing high-end premium cards (like those offering heavy travel perks or cash back) to protect their profit margins.
- Major retailers, however, will likely continue accepting them to avoid alienating big spenders.
Lower Fees, But Don’t Expect Price Drops
Visa and Mastercard have agreed to trim swipe fees by 0.1 percentage point for five years and cap standard consumer fees at 1.25% for eight years. While this saves businesses billions, there is no guarantee merchants will pass those savings down to you in the form of lower prices.
The Hidden Threat to Credit Card Rewards
While not directly mandated by the court, this settlement could quietly dilute your points and miles. Banks fund generous credit card sign-up bonuses and cash-back rewards using the very swipe fees that are now being capped. With less fee revenue coming in, banks may eventually scale back their rewards programs.
The Bottom Line
If finalized, this deal means more calculation at the register. Consumers will have to decide if the rewards points earned on a purchase are worth risking an extra credit card surcharge from the merchant.
Editing by-katie Willimas
