For nearly fifty years, American merchants lived by a simple rule: if you accepted one Visa or Mastercard, you had to accept them all. That changed in November 2025, when a historic settlement between retailers and the credit card giants ended the “honor-all-cards” mandate. The agreement, the result of two decades of legal wrangling, gives merchants new power to reject premium rewards cards—a move that could reshape how Americans pay and how retailers do business.
A Legal Battle Decades in the Making
The roots of this shift trace back to 2005, when a coalition of merchants sued Visa and Mastercard, alleging that the networks’ rules and high interchange fees violated antitrust laws. Interchange fees—charges paid by merchants to banks and card networks for processing credit card transactions—had become a major source of frustration. Over the years, these fees ballooned, reaching $83 billion in 2024, with premium rewards cards carrying the highest costs.
Despite several attempts at resolution, including a $30 billion settlement proposal rejected in 2024 for failing to address core merchant concerns, the dispute dragged on. It wasn’t until both sides returned to the negotiating table with a mediator that a new framework emerged, one that directly tackled the controversial honor-all-cards rule.
The Cost of Rewards: Why Premium Cards Became Flashpoints
At the heart of the conflict are premium rewards cards, such as the Chase Sapphire Reserve and American Express Platinum. These cards, favored by affluent consumers, offer generous perks funded by higher interchange fees—sometimes as much as 4% per transaction. For merchants, the proliferation of such cards meant rising costs, as they were required to accept every card in a network, regardless of the associated fees.
The new settlement introduces a three-tier system: standard consumer cards, rewards cards, and commercial cards. Merchants can now choose which categories to accept, or even impose surcharges on higher-fee cards. This marks the first time since the 1970s that retailers have had such flexibility, breaking the uniform acceptance model that has long defined the industry.
Modest Fee Cuts, Lingering Concerns
While the settlement’s headline feature is merchant choice, it also includes a modest reduction in interchange fees—an average cut of 0.1 percentage point across all rates for five years. Some economists estimate this could save retailers over $200 billion during the agreement’s term. However, critics point out that Visa and Mastercard retain the ability to raise their own network fees, potentially offsetting any savings for merchants.
The division of interchange fees remains a sticking point. Banks, which receive the majority of these fees, will see caps on what they can charge for standard cards and temporary reductions for premium cards. But Visa and Mastercard themselves face no such limits, fueling concerns among merchant groups that the networks could simply adjust their own fees to recoup lost revenue.
Implementation Hurdles and Industry Reactions
The practical impact of the settlement will be felt by roughly 800,000 U.S. merchants, from small corner stores to national chains. For smaller businesses, the option to reject high-fee premium cards could offer relief from razor-thin margins. Larger retailers, however, face a more complex calculus: affluent cardholders are often their most valuable customers, and turning them away could backfire.
Technical challenges loom as well. Most point-of-sale systems are not currently equipped to distinguish between card categories in real time, meaning merchants would need to invest in new hardware and software to enforce selective acceptance or surcharging. The cost and complexity of such upgrades could deter widespread adoption, especially among smaller retailers.
Merchant groups have voiced skepticism about the settlement’s effectiveness. Some argue that Visa and Mastercard could reclassify cards to sidestep restrictions, while others doubt that many retailers will risk alienating customers by rejecting their preferred cards. Analysts predict that, despite the new legal rights, most merchants will continue to accept all cards to avoid friction at checkout.
A New Era for Credit Cards—With Uncertain Outcomes
For consumers, especially those who pay hefty annual fees for premium rewards cards, the settlement introduces new uncertainty. The possibility of having a card declined at the register or facing surcharges for using a rewards card could diminish the appeal of these products. If merchants begin to reject premium cards in significant numbers, card issuers may be forced to scale back rewards programs or raise fees, potentially ending the lucrative arms race that has defined the industry for years.
Notably, American Express is not part of the settlement and continues to operate its own network with its own acceptance rules. This creates an uneven playing field, as merchants could theoretically reject Visa and Mastercard premium cards while still accepting American Express.
The agreement still awaits approval from a federal judge, and its ultimate impact will depend on how merchants, consumers, and the courts respond. After twenty years of litigation and three failed settlements, the November 2025 deal marks a significant crack in the foundation of the credit card industry. Whether it leads to lasting change or simply a new status quo will be determined in the years ahead.