If you pull out a premium rewards card at checkout, the cashier may soon ask you to pay a small surcharge, or hand it back and ask for a different card. Not everywhere. Not right away. But the rule that used to force every merchant to take every card at the same price is on its way out.
On June 9, a federal judge in Brooklyn granted preliminary approval to a $38 billion Visa and Mastercard settlement with roughly twelve million merchants. Judge Brian Cogan called the terms “fair, reasonable, and adequate.” Final approval is expected late this year or early next, with appeals that could push full rollout into 2027 and beyond.
Two things change. First, the swipe fee that merchants pay Visa and Mastercard is capped and cut. Standard consumer credit-card interchange, the fee your card network charges the store when you tap, gets capped at 1.25 percent for eight years. Average interchange also drops about 0.1 percentage points for five years. Merchants pay less. Whether any of that savings shows up at your register is anyone’s guess, and merchants are not required to pass it on.
Second, and this is the piece that will show up in your daily life: merchants can surcharge high-fee rewards cards or refuse them outright. The old rule, called “Honor All Cards,” required a store that took any Visa to accept every Visa. That rule is gone. Merchants can now pick which tiers of cards they want and price accordingly.
Here’s what they don’t tell you in the press releases. The premium rewards cards you love, the ones with the lounges and the transfer partners and the four-percent categories, are expensive for merchants to process. Current average swipe fees run around 2.35 percent. Premium cards run higher. That is exactly the tier a coffee shop or a corner store may choose to slap a surcharge on, or reject.
Big-box chains will keep taking premium cards. Walmart, Costco, and Target need the traffic and know shoppers won’t swap wallets over a two-percent surcharge. Small merchants will not be as polite. Expect surcharge signs at independent restaurants, specialty retailers, and neighborhood stores first. Two to three percent is the range being floated.
Do the math. If you spend $600 a month at small merchants on a card earning 2 percent cashback, and half of those merchants add a 3 percent surcharge, you paid $9 to earn $6. Bank’s bet, and it’s a bad trade.
Check your wallet this week. Keep a no-annual-fee Visa or Mastercard debit or a plain 1-to-2 percent cashback card handy as your “surcharge card.” Basic tiers usually fall under the fee level merchants target. Pull that one out when you see a surcharge notice.
Watch for signage at checkout. Merchants can legally add a surcharge up to 4 percent as long as they disclose it, and disclosure is usually a sticker at the register or a line on the terminal. If a store surcharges you without disclosing, you can dispute the charge with your issuer.
Keep the premium card. Use it where it wins: online travel, chain restaurants and grocers that won’t surcharge, the airport, gas stations that haven’t added a fee yet. That is still where the rewards math beats the surcharge risk cleanly.
File this away. The final approval and the merchant behavior it triggers will roll out over the next 12 to 24 months, and appeals may push full implementation to 2029. Nothing changes at your register this weekend. The move to make now is knowing which card goes with which store, and being ready when the sign appears.
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