For the past two decades, rewards credit cards have relied on a delicate four-way balance: Issuers and their co-brand partners fund rich rewards with interchange economics; consumers “pay” through annual fees, interest and often higher prices passed through by merchants; and merchants swallow acceptance costs in exchange for conversion and ticket lift.
The November 2025 Visa-Mastercard settlement disrupts this equilibrium by giving merchants new tools to say “no” or “not without a fee” to consumers presenting specific card types. This settlement is unfolding alongside a broader set of legal and regulatory developments in Washington that could further reshape credit card economics, underscoring that the rewards model now faces multiple, overlapping sources of pressure.
Below is a breakdown of what’s in the settlement, why it matters, and the questions issuers and co-brand partners should be asking now.
What has been agreed: Headline features of the settlement
After nearly 20 years of litigation in “In re Payment Card Interchange Fee and Merchant Discount Antitrust Litigation,” Visa and Mastercard have agreed to a revised equitable relief settlement with U.S. merchants. Although it still requires court approval and could be appealed, L.E.K. Consulting has summarized some key provisions.
Modified “honor all cards” rule
Merchants can choose whether to differentially accept or decline Visa or Mastercard commercial credit cards, all standard consumer credit cards and/or all premium consumer credit cards (where most high-fee/high-rewards products sit). They can make different choices for Visa versus Mastercard, and there will be mandatory visual identifiers on commercial and premium cards to support selective acceptance at checkout.
Expanded surcharging flexibility on credit (not debit)
Merchants may surcharge consumers presenting Visa- or Mastercard-branded credit cards the lower rate of 3% or their cost of acceptance at the brand level or at the individual product level (for example, only premium rewards cards). They can surcharge one card scheme but not another or surcharge schemes differently, and they can surcharge Visa/Mastercard regardless of whether they surcharge American Express or Discover.
Rate cuts and caps for credit interchange
Visa and Mastercard commit to reduce the average effective credit interchange rate by at least 10 basis points (bp) for five years. Standard consumer credit cards are capped at 125 bp for eight years.
Broader steering and acceptance tools, including wallets
Merchants can decline premium or commercial cards, conduct A/B testing to gauge customer response by location (e.g., online/offline channel, urban/rural geo, standard/micro store type) and steer within digital wallets under the same rules that apply for plastic cards. They can accept some wallets and not others or enable certain wallets only online.
Merchant buying groups and education
The settlement explicitly enables merchant buying groups to negotiate interchange and rules collectively. A $21 million education fund will support merchant understanding of the new rule set.
Changes for merchants at checkout and customer response scenarios
In practical terms, the settlement gives merchants a more granular tool kit for influencing their payment acceptance economics.
Friction at the point of sale (POS), customer pushback and the cost of change mean that wide-scale hard declines of premium cards are unlikely outside a few high-margin or cost-sensitive sectors. More probable early moves are:
- Surcharges for the customer across all credit cards or at the premium tier
- Quiet pilots in specific categories such as fuel, small-ticket retail, and high-fee delivery or subscription verticals to test consumer response
- More aggressive acceptance strategies in ecommerce, where routing and tender steering are easier to control and A/B test via checkout flows
As merchants adjust their acceptance and pricing strategies, consumer behavior will play a critical role in determining the real impact — particularly in the current rising-cost environment, which is already trying consumer patience at checkout. Several plausible scenarios emerge.
Scenario A: Consumers absorb occasional surcharges but maintain primary card habits
Assuming surcharging is applied inconsistently and only at selected merchants:
- Many consumers may tolerate a 1%-3% fee at the POS when the convenience or rewards outweigh the cost
- Premium cards remain “top of wallet,” but frustration grows in categories with frequent surcharging
- Card issuers may respond with targeted statement credits to mitigate visible pain points
Scenario B: Consumers shift toward standard credit or debit cards to avoid fees
More widespread surcharging or selective declines could accelerate behavioral change:
- Consumers may begin carrying a “backup card” (standard credit) specifically to avoid surcharges
- Frequent travelers or high-spending households may continue to favor premium cards, but occasional cardholders may migrate to lower-fee tenders
- Debit rewards programs could become more attractive if they avoid surcharges and offer competitive earn rates, particularly for certain customer segments
Scenario C: Consumers become more tender-agnostic and more price-sensitive
If merchant communication at checkout normalizes discussions of payment cost:
- Awareness grows that paying with a premium card is “more expensive,” even if consumers do not fully understand interchange
- Some consumers may choose based on real-time price signals at the POS, not on habit
- A portion of consumers may shift toward merchant-preferred tenders, including instant bank pay, store cards or buy now, pay later (BNPL)
Scenario D: Consumers push back, creating reputational or operational risk for merchants
If surcharging or selective acceptance becomes too visible or inconsistent:
- High-value customers may take their business elsewhere when confronted with fees on premium cards
- Merchants could face backlash for “penalizing loyalty,” especially in categories with strong co-brand ecosystems (e.g., travel, luxury retail)
- Consumer dissatisfaction may moderate how aggressively merchants deploy the new tools
Strong customer research will be important for understanding customer behaviors across segments — though we do believe premium cards will always have an important role in the market.
Modest changes may have limited impact, while widespread surcharging or declines could quickly reshape top-of-wallet dynamics.
Where this leaves the rewards balance — and questions to ask now
This settlement does not immediately dismantle the U.S. rewards ecosystem. The fee reductions are modest on a systemwide basis, and the behavioral leap required for merchants to actively decline popular premium cards is significant.
However, it does these three important things:
- It breaks the illusion that merchants must accept every flavor of premium card if they accept the brand at all
- It normalizes explicit pricing of credit card usage, particularly for high-reward products
- It legitimizes merchant coalition-building and experimentation (buying groups, pilots, wallet steering) that could, over time, reshape volume flows
Given that, we suggest the following questions for senior teams.
The settlement is not the end of the story. It is a negotiated compromise in a world where merchant activism, regulatory scrutiny and new payment technologies are all moving in the same direction: more transparency on costs and more leverage for payers of those costs. Issuers and co-brands that start stress-testing their portfolios and customer experience now will be better positioned if and when merchants decide to use the new tools they have just been given.
For more information, please contact us.
L.E.K. Consulting is a registered trademark of L.E.K. Consulting LLC. All other products and brands mentioned in this document are properties of their respective owners. © 2026 L.E.K. Consulting LLC
01302026060137