Visa Mastercard Settlement: What Small Merchants Get

A customer hands you a metal rewards card for a $60 order. You ring it up and smile, and a couple of dollars of that sale quietly goes to the card's bank. You never agreed to that price. You just could not say no to the card.

That could change. The Visa Mastercard settlement that ends a fight going back to 2005 goes before a federal judge in Brooklyn on November 16. If it wins final approval, about 12 million merchants get slightly lower card fees, a legal way to add a surcharge, and the right to turn down some premium cards for the first time.

None of it is in force yet, and the big retailers want it thrown out. Below: what the deal actually changes, what it is worth in dollars to a small shop, the traps in surcharging and refusing cards, and what to do before and after the ruling.

What the Visa Mastercard Settlement Changes

The deal settles a class action that merchants filed over the fees banks charge on every card swipe, known as interchange. Visa and Mastercard set those rates, the card's issuing bank collects them, and you pay them through your processor.

According to Payments Dive's report on the networks' October court filing, the settlement has four main parts:

• A rate cut. Credit interchange falls by 10 basis points across the board for five years.
• A ceiling on standard cards. Standard consumer credit cards carry a 1.25% rate for eight years.
• The end of "honor all cards" for some products. You could decline certain higher-cost premium and commercial Visa and Mastercard credit cards while still taking the rest.
• Steering rights. You gain new rights to surcharge expensive cards or offer discounts that nudge customers toward cheaper ways to pay.

For context, merchants paid a weighted average of 2.35% on Visa and Mastercard transactions in 2024, according to the Nilson Report figures cited in the same article. A 10 basis point cut takes that toward 2.25%.

Judge Cogan gave the deal preliminary approval in June, finding it better than the 2024 version the same court rejected. Preliminary approval only opened the door to notices and objections. The November 16 hearing is where he weighs those objections, and a written ruling may come later rather than from the bench.

What a 10 Basis Point Cut Is Worth to a Small Shop

Basis points sound abstract, so put a store on it. Picture a neighborhood café with $40,000 a month in card sales. Suppose 60% of that, or $24,000, comes in on Visa and Mastercard credit cards. The rest is debit, American Express and cash.

1. Monthly credit volume on the two networks: $24,000.
2. Rate cut: 0.10% of $24,000 = $24 a month.
3. Over a year: $24 × 12 = $288.

Over the five years the cut lasts, that is about $1,440. The bigger lever for most small merchants sits in the surcharge and card acceptance rules, covered below.

Whether you see the cut depends on your pricing plan

Most coverage skips this step. Interchange is a cost to your processor first. Whether a lower rate shows up on your statement depends on how your processor prices you.

• Interchange-plus pricing passes the network rate through and adds a fixed markup. A cut in interchange flows to you automatically.
• Flat-rate pricing charges one blended percentage on every card. If interchange falls and the flat rate does not, your processor keeps the difference.
• Tiered pricing sorts cards into "qualified" and "non-qualified" buckets that the processor defines. Savings may or may not reach you.

If you are on a flat rate, the settlement by itself saves you nothing. It gives you a reason to ask your processor, in writing, whether it will lower your rate once the new interchange tables take effect.

Surcharging Premium Cards: The Math and the Risk

The surcharge rules are where a small shop can move real dollars. Payments Dive reported in July that merchants could surcharge up to 3% to cover the cost of premium and commercial cards. You would pick one approach:

• Product level: add the surcharge only when a customer pays with a premium or rewards card.
• Brand level: add it to every Visa card, or every Mastercard, regardless of tier.

Run the numbers on that $60 order. A 3% surcharge adds $1.80. If 15 such orders come through on premium cards each day, that is $27 a day, or about $9,855 over a 365-day year.

Now the downside. Suppose the surcharge annoys one regular a week into taking their $60 order down the street. That is $3,120 in lost sales a year, and you lose the profit margin on every one of those sales, not just the fee. A surcharge pays only if almost nobody walks.

Rules that apply before any surcharge

Surcharging is not a free-for-all even with the settlement. Some states restrict or ban credit card surcharges, so check your state's rules before you change a sign. Card network rules generally require that you disclose the fee at the store entrance and at checkout, show it as a separate line on the receipt, and never charge more than your actual cost of acceptance. Surcharges also do not apply to debit cards, even when a customer runs debit as "credit."

If you already pass card costs through on invoices, our breakdown of whether to keep absorbing holiday shipping surcharges uses the same test: compare the fee you recover with the customers you lose by showing it.

Turning Down Premium Cards Sounds Better Than It Works

The headline change is the crack in "honor all cards." Today, if you take one Visa credit card, you must take them all, including a $795 Chase Sapphire Reserve that costs you more per swipe than a basic card. Under the deal you could refuse some premium and commercial credit cards while still accepting standard ones.

Not everyone thinks merchants will use it. In a Payments Dive analysis in late October, American Express chief executive Stephen Squeri responded to the idea with "Good luck," and warned of "consumer outrage" if merchants began rejecting cards. Dan Stiel, a former card industry executive who now advises merchants, called it an "empty benefit," noting that premium card sales are far more profitable than debit sales despite the higher fees.

There is a practical problem too. Most customers cannot tell you which tier their card is. Your cashier would have to decline at the terminal, mid-transaction, with a line forming. Trying it means a terminal that flags card type and a polite script for staff.

A simple rule of thumb: if your average ticket is small and your customers are regulars, surcharging is gentler than refusing. A surcharge gives the customer a choice. A declined card gives them a reason to leave.

Why Big Retailers Object, and What Happens Next

The fight is not over. Walmart wants the court to let it opt out of the class. The National Retail Federation and the Retail Industry Leaders Association have objected as well. Visa and Mastercard, in their October reply, called the objectors "a vocal minority" whose arguments "merely reprise the same arguments this Court already considered and rejected."

The objectors' core complaint is that the relief is too small for the claims they give up. A cut of 0.10 points on a 2.35% average rate is roughly a 4% reduction in the price of card acceptance. The National Association of Convenience Stores has said it will appeal to the Second Circuit if the judge grants final approval, which could delay everything by a year or more.

So the realistic timeline has three gates:

1. November 16: the fairness hearing. A ruling could follow days or weeks later.
2. Final approval or rejection. A rejection sends the parties back to the table, as happened in 2024.
3. Appeals. An appeal can hold the new rules back until a higher court rules.

This is separate from the debit side of the business. Debit fees fall under a different federal cap, and a court recently ruled that cap was set the wrong way. Our explainer on the debit card swipe fee cap ruling covers how that fight could change what you pay on debit transactions.

What Small Merchants Should Do Before the Ruling

Four steps cost nothing and pay off whichever way the ruling goes.

• Pull three months of statements. Work out your effective rate: total fees divided by total card sales. If it sits well above 2.35%, your processor markup is a bigger problem than interchange.
• Find out how you are priced. Ask your processor whether you are on interchange-plus, flat-rate or tiered pricing, and get the answer in an email.
• Measure your premium card share. Many processors can report sales by card type. If premium and commercial cards are under 10% of volume, surcharging them may not be worth the signage and the friction.
• Check your state's surcharge law. Do this before you print a single sign.

If you send invoices to business customers, commercial cards matter more for you than for a café. Those cards carry some of the highest rates, and B2B buyers often pay large tickets with them. A free invoice generator lets you show a card surcharge as its own line, so a client sees the cost before choosing how to pay.

Frequently Asked Questions

When does the Visa Mastercard settlement take effect?

Not yet. The final approval hearing is on November 16, and the rule changes generally wait until the court grants final approval and any appeals are resolved. A convenience store trade group has already said it would appeal if the deal is approved.

Can a store charge me extra for using a credit card?

In many states, yes, within card network limits. The settlement would let merchants surcharge premium and commercial cards up to 3%. Some states restrict surcharges, and merchants cannot surcharge debit cards.

Will the settlement lower prices for shoppers?

There is no guarantee. Merchants keep any savings unless competition pushes them to cut prices. Customers who carry premium rewards cards could see new surcharges at some stores.

Do I need to do anything to join the merchant settlement?

This part of the case is about rule changes and rate cuts for merchants who accept Visa and Mastercard, not a cash payout to each store. Walmart is fighting for the right to opt out, which shows how hard leaving the class is. Watch for notices from your processor if the deal is approved.

The Bottom Line

The rate cut alone is small: a few hundred dollars a year for a typical shop, and only on the right pricing plan. The real change is control. For the first time, you could put a price on the expensive cards customers hand you, or decline some of them.

Use the weeks before the ruling to learn your effective rate, your pricing plan and your premium card mix. Then, if the judge signs off and the appeals clear, you can decide with your own numbers instead of a guess.