Credit cards are popular with customers, but they often cost businesses a fee. Over time, these costs compound, reducing the profit margins of businesses. Premium reward cards, in particular, have higher interchange rates, leading to higher transaction fees. Merchants have long resisted these fees and strict rules that restrict them from recovering these costs. Merchants had little control over the higher fees when customers used premium cards. The Visa/Mastercard settlement of 2026 has once again opened this debate.
According to the new settlement, the businesses will have more flexibility than before. There will be changes in card acceptance policies and fee rates. Merchants may gain flexibility around the types of cards they accept. The New rules do not eliminate the fees altogether.
What Is the Visa/Mastercard Settlement 2026?
Visa/Mastercard Settlement 2026 is the result of a long-term dispute between merchants and card networks. Businesses and merchants have been of the view that Visa and Mastercard use their market power to set desired interchange rates. They enforce card acceptance, which keeps transaction costs high with restricted price flexibility.
Key Highlights of the Settlement
- Addresses merchant concerns by changing card fees and increasing business control over pricing.
- Aims to reduce interchange rates and provide relief to merchants.
- Expands pricing options, including surcharging premium cards, offering cash discount programs, and choosing preferred payment routing options.
- Provides greater flexibility around card acceptance policies.
- Seeks to create a more transparent and flexible system while maintaining consistency across payment networks.
What the 2026 Visa/Mastercard Settlement Changes (and What It Doesn’t)
The 2026 visa Mastercard settlements give merchants more control over how they price card transactions and card acceptance. It eases pressure around interchange rates. It does not eliminate card fees. Interchange still exists, and businesses have to follow the rules and regulations.
Quick merchant takeaway
The 2026 settlement does not remove interchange rates. It eases the pressure merchants face due to rising costs. They get more flexibility regarding pricing and card acceptance. As a result, merchants get incremental relief.
Key terms
Let’s have an overview of the key terms to understand the topic more deeply.
Interchange Rate: Fees paid to banks for each transaction and set by card networks.
Basis points: Points used to measure small fee changes. 1 basis point equals 0.01%.
Swipe Fees: Terms merchants use as a cost to accept card payment.
Honor all Cards: Rule set by card networks that requires merchants to accept all cards of a brand, including premium rewards cards.
What stays the same: Fees still exist, brand rules still matter
What does not change after the settlement in 2026 is that merchants will still pay the interchange rates and other transaction costs. They still have to follow the policies regarding compliance and complete disclosure to customers. They must follow Visa and Mastercard guidelines while surcharging and adjusting card acceptance policies.
Interchange Rates & Merchant Swipe Fees Reduction (What Savings Look Like)
Settlement 2026 does not remove interchange rates, but it reduces pressure on merchants. A reduction in price is measured in basis points, which compounds over time and leads to modest savings for merchants. For merchants, this means slightly lower swipe fees per transaction, resulting in improved cash flow.
Why do premium rewards cards cost more?
Premium cards offer different perks to customers, such as cash back and points. These rewards are funded by card-issuing banks. Banks recover these costs by charging higher interchange rates to merchants, which increases the cost of accepting these cards.
Basis points explained with simple examples (small increases compound fast)
A basis point is 0.01 % of a transaction. Any increase in interchange is measured in basis points, which can add up fast across high-volume transactions. Let’s understand this through an example.
A merchant sells goods worth $5000 in a week.
1 basis point = 0.01%
If the interchange rate goes up by 10 basis points (0.10%).
$5000×0.001= $5
The merchant has to pay $5 more this week.
1 month ( 4 weeks)= 4 × $5= $20
Daily Payment Loans: Understanding the Real Cost
Businesses with daily loan payments are highly affected by the higher swipe fees. They have to repay a small amount on a daily basis. When this is combined with a higher transaction fee, it can cause a major cash flow crunch.
Check out our guide Daily Payment Loans: Understanding the Real Cost to make smart financial decisions.
Credit Card Surcharge Rules 2026 + Premium Rewards Cards (Compliance + Reality)
Under the credit card surcharge rules 2026, merchants can surcharge the credit cards, including the premium rewards cards, but within certain rules set by Visa and Mastercard.
What’s actually changing in surcharge rules
According to Surcharge Rules 2026, merchants have to follow the following rules.
- Merchants should inform customers about the surcharge they are applying before the payment is processed. Transparency is clearly required.
- They have to follow the network rules. If the networks require surcharging all the cards of a brand, merchants can not surcharge specific cards.
- Merchants are not allowed to surcharge unlimited amounts. They have to follow the network’s rules about how much surcharge can be charged to a specific card.
Violating these rules can result in penalties.
Can you surcharge premium rewards cards specifically? (brand-level vs tier-level limitation)
According to Visa and Mastercard rules, a surcharge must apply to all the cards of a brand, whether it’s a standard card or a premium card. Surcharge usually applies at the brand level. Some merchants might hope to surcharge only the premium cards, but usually it is not allowed to surcharge selective cards within the same brand.
Cash discount program vs surcharging
- Cash discount programs are safer options. They reward cash payments.
- Surcharging is stronger for margins. It carries more risks if rules such as caps, disclosure, and network rules are not followed properly.
Honor All Cards Rule, Rejecting Rewards Cards & What Merchants Should Do Before 2026
The Honor All Card rule implies that merchants who accept cards from a network are obligated to accept all cards from the same network. According to the proposed settlement of 2026, this rule would be relaxed, allowing merchants to reject entire categories of cards based on the cost. By the time the new settlement is legally approved, merchants should make themselves ready.
Honor All Cards rule after the settlement
The Honor All Cards rule still applies if the settlement is approved. Merchants must accept all cards of a brand if they accept any. However, they can have more flexibility in pricing and managing card acceptance. What they can do
- Implement surcharge or cash discount programs.
- Can have more options in payment processing methods.
- Plan pricing strategies.
Merchant action checklist
Before the Visa/Mastercard settlement of 2026 is approved, merchants should make the following preparations.
- Audit Card Mix: Review the card types customers use and the costs associated with them.
- Choose Policy: Choose among surcharging, cash discounts, and built-in pricing.
- Update POS/ Checkout: update your system to apply the chosen policy.
- Signage: disclose the surcharges or cash discounts at the point of sale.
- Staff Script: Train staff to describe the pricing policies to customers.
Durbin Amendment: debit routing vs credit settlement scope
Durbin Amendments apply only to debit cards. It did not address issues related to credit cards. According to the Durbin Amendments, banks can charge merchants a certain amount when customers pay with a debit card. It allows merchants to choose cheaper payment routes. The Durbin amendments did not cover the credit cards that have higher fees.
According to the Visa/Mastercard Settlement 2026, merchants have more choices. They can add surcharges and cash discounts while staying compliant with rules. In simple words, the Durbin Amendments helped with debit card issues, and Visa and Master card settlements aim to manage the expensive credit card issues.
| Features | Durbin Amendments | Visa/Mastercard Settlement |
| Applicable | Debit cards | Credit cards |
| Impact | Restricts debit interchange fee. Different routing choices | Allows merchant flexibility for surcharges and card acceptance |
| Merchant control | Can select cheaper routes for debit card payments | Can surcharge or decline the entire category of cards. |
| Transparency | Routing choices must be clear | Labelled cards
Surcharge must be clear at the point of sale |
| Goal | Lower debit card costs | Decrease credit card costs
And card acceptance flexibility |
Conclusion
After the Visa/Mastercard Settlement 2026 takes effect, merchants will be able to surcharge and gain flexibility regarding card acceptance. However, they must stay within legal limits and follow category-based restrictions. Preparing early can help businesses stay compliant, reduce interchange costs, and optimize card acceptance. Businesses can navigate the settlement by consulting the processors and preparing clear signage.
