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The proposed Mastercard–Visa settlement, two decades in the making, could reverberate through the foundations of the US card market.
Settlement will reshape card economics in the US
While the legal process may yet stretch into 2027, the framework now on the table strikes at the mechanics that have underpinned credit card economics for half a century: interchange income, universal acceptance and the rewards ecosystem that has become a defining feature of American consumer finance.
The settlement introduces four card categories—debit, standard credit, premium credit and commercial—and gives merchants unprecedented latitude in how they treat them.
That simple structural change opens the door to sharper cost discrimination, targeted acceptance strategies and widespread surcharging. For an industry where 85% of active cards generate rewards, and only 7% of consumers hold non-rewards products, the implications are profound.
Rewards at Risk as Fee Caps Narrow Issuer Margins
The headline measures—an average interchange reduction, a cap on standard consumer credit card fees, and a five-year freeze on effective rates—represent a clear revenue squeeze for issuers.
Although premium and rewards products escape the cap, they remain exposed: merchants will be able to reject entire categories, including high-cost premium cards, or impose surcharges of up to 3%.
It is this potential for category-based discrimination that alarms card marketers and loyalty strategists.
If expensive rewards cards become less welcome at checkout, even sporadically, the business case for ultra-premium products such as Amex Platinum, Chase Sapphire Reserve or Citi Strata Elite starts to fray.
As Andrew Davidson of Comperemedia puts it, aspirational cards that signal status could rapidly turn into liabilities if acceptance becomes uncertain.
Yet not all analysts agree that merchants will wield their new powers aggressively.
Many have co-branded relationships to protect, and as Tony DeSanctis of Cornerstone Advisors notes, most retailers obsess over reducing checkout friction, not adding new layers of it.
A blanket rejection of rewards cards would alienate too many customers to be commercially rational.
Surcharging: A Quiet Force That Could Accelerate Change
The bigger behavioural catalyst may instead be surcharging.
Even under today’s rules, J.D. Power finds that 65% of consumers have encountered a surcharge, and four in five of those have switched payment methods to avoid it.
For merchants, the settlement’s more granular surcharge permissions—by brand and category—represent a newly legitimised “tender-steering” toolkit.
Some consultants see this as a merchant coup.
Richard Crone argues that the settlement empowers retailers to nudge customers towards lower-cost payment types, reshaping economics without ever refusing a card outright. Surcharging, in this view, becomes a precision lever rather than a blunt instrument.
Should surcharges proliferate, card hierarchies may shift. Analysts expect issuers to promote simpler, non-rewards cards as “surcharge-safe” products, or even issue dual card sets—one premium, one no-frills—to retain customer spend across contexts.
Consumers, meanwhile, may adjust more slowly: as Bankrate’s Ted Rossman observes, many shoppers barely register surcharges, grumble when they do, and pay them anyway for convenience.
A Market Braced for Uncertainty
Merchant groups have dismissed the settlement as insufficient and are still pushing for legislative intervention through the Credit Card Competition Act.
Nonetheless, if approved, the settlement would inject competitive dynamics unseen since the modern card networks took shape.
The US credit card model—long anchored in interchange-funded generosity—may be approaching a structural reset.
Whether this leads to a leaner, less rewards-obsessed landscape or simply a more complex and uneven one now depends on how merchants, issuers and consumers respond to the new freedoms at checkout.
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