A landmark legal settlement could soon change how merchants accept credit cards by allowing them to decline certain card types and surcharge others, ending decades of “honor all cards” rules. What does it mean for different payment ecosystem participants?
For more than 20 years, a major U.S. lawsuit has challenged how Visa and Mastercard set rules and fees for card payments. Merchants argued that the card networks’ policies limited competition, charged too much for accepting card payments, and forced them to accept all types of network’s cards, even when some cards were more expensive to process. The case is officially known as the Payment Card Interchange Fee and Merchant Discount Antitrust Litigation, and it has become one of the most important legal disputes in the payments industry.
What the Lawsuit Was About
At the center of the dispute is the “honor all cards” rule, which requires merchants that accept a network (like Visa or Mastercard) to accept all products offered by that network. This means if a merchant accepts Visa, they must accept every Visa card, including premium reward cards that come with higher processing costs.
Merchants claimed this rule unfairly limited their ability to control costs. They also argued that the networks’ fees, known as interchange fees or “swipe fees,” were too high and set in a way that prevented merchants from steering customers toward cheaper payment options.
Major Milestones in the Legal Settlement Story
The case has had many important moments over the years:
- 2005: The lawsuit began, with merchants claiming that Visa and Mastercard were acting like monopolies by controlling card acceptance rules and fees.
- Early 2010s: The case evolved through several rounds of legal debate, appeals, and settlements.
- 2024: A proposed settlement worth about $30 billion was rejected by the court. One key reason was that it did not change the “honor all cards” rule enough, meaning merchants still faced the same acceptance restrictions.
- Late 2025: A new, revised settlement was proposed, worth approximately $38 billion, and it included greater changes to acceptance rules. This is what has made the topic a major industry focus in 2026.
What Was Revised in 2025?
The revised settlement includes several key changes:
- More flexibility for merchants to accept or reject specific card products. That would mean that instead of having to accept every card under a network, merchants could choose to decline certain categories (like premium rewards cards).
- More ability to surcharge specific card types. Merchants may be allowed to charge extra fees on certain cards to cover higher processing costs.
- More transparency and structure, as the card networks would need to provide clearer rules and more detailed information on their card categories.
This shift is significant because it would change how the card networks control acceptance rules. It moves merchants closer to having real choice and control over which card products they accept rather than playing by the rules of a monopolized market.
Why This Matters
If the settlement is approved by the court, it could reshape how card payments work in the U.S. For the first time in decades, merchants could have the power to manage costs by accepting only certain cards or charging more for expensive ones.
The change could also influence the broader market. Merchants may be able to negotiate better terms with banks and payment processors, and new payment options could become more competitive.
What Could Happen If Acceptance Rules Are Rewritten?
If the “honor all cards” rule is changed, several things could happen:
Potential Benefits
- Merchants could reduce costs by refusing high-cost card products.
- More competition could emerge in payment processing, since merchants would have more choice.
- Pricing could become more transparent, as merchants may pass costs directly to cardholders.
Potential Drawbacks
- Customers could face confusion at checkout if certain cards are declined.
- Some consumers may feel unfairly targeted, especially if their card is branded as premium.
- Payment systems would become more complex for merchants and processors, requiring better technology and management.
Payments analyst Dwayne Gefferie has highlighted this shift as a major turning point. He explained that allowing merchants to decline or surcharge by card type would weaken the “honor all cards” rule. This means merchants would need more advanced tools to manage card acceptance, including detailed information about different card products and how they are categorized.
Gefferie’s view is that this change could lead to a more complex payment ecosystem. Merchants and payment providers would need better technology and more data to decide which cards to accept or reject. This could lead to new business models in payment processing and risk management, and also trigger higher cost investments for the industry players.
Consumer advocacy groups, in turn, have raised concerns that changes to acceptance rules could create confusion for shoppers. If merchants begin declining certain card products, customers might be surprised or frustrated at checkout when their card is rejected. In addition, consumers may not understand why some cards are subject to extra surcharges, which could lead to negative perceptions of merchants and the payment system as a whole.
Consumer groups argue that any new acceptance rules should include clear protections and strong disclosure requirements so customers know what to expect. They also warn that inconsistent card acceptance across merchants could make shopping more unpredictable.
Final Thoughts
The 2025 settlement proposal is not just about fees. It is about changing the basic rules of card acceptance. If approved, it could give merchants greater control over how they accept payments, which would be a major shift for the payments industry. It would also reshape how consumers experience card payments, especially when certain cards are declined or surcharged.
Whether this change ultimately improves the market or complicates and fragments it depends on how the new rules are implemented and whether merchants, banks, and networks can manage the complexity fairly. But one thing is clear: after decades of litigation, the future of card acceptance in the U.S. could be changing after all.
