Beyond the headlines: what the Visa – Mastercard settlement really means for surcharging
Status check: this settlement hasn’t been approved and is an evolving situation. Federal Judge Brian Cogan won’t rule until late 2026 or early 2027. But the proposal is already reshaping market expectations around how surcharging may be deployed in the future.
What the proposal actually does
As part of the proposed settlement in the long-running merchant litigation, Visa and Mastercard have agreed to several structural changes that could reshape how merchants manage card acceptance, if the court approves the agreement.
- Softening of the “honor all cards” rule. Historically, the Visa and Mastercard “honor-all-cards” rule required merchants who accepted a network’s brand to accept every card issued under that brand, whether it was a low-cost basic card or a high-interchange premium rewards card. That meant a merchant couldn’t choose to accept standard Visa credit cards while declining higher-cost tiers like Visa Infinite or World Elite Mastercard. Under the proposed settlement, that rule would be partially unwound. For the first time, merchants would be allowed to refuse certain premium Visa and Mastercard credit cards instead of being forced into all-or-nothing acceptance. It’s not a full repeal of honor-all-cards, but it introduces selective acceptance where none previously existed.
- Differential surcharging becomes possible. Under the current honor-all-cards framework, merchants have to accept every Visa and Mastercard credit card they’re presented with, which makes it impractical to apply different pricing based on the cost of the card. The proposed settlement would remove that contractual barrier. If approved, merchants could decline certain premium cards, or accept them with a surcharge that reflects their higher interchange cost. For the first time, differential surcharging becomes strategically meaningful instead of theoretical.
- Interchange gets partially capped. The proposed settlement also includes a temporary cap on interchange: standard consumer Visa and Mastercard credit cards would be limited to 1.25% interchange for eight years, if the agreement is approved. Premium and commercial cards are excluded, and the cap applies only to the interchange portion of fees, not network assessments or processor markups. In addition, the networks would reduce the average effective credit interchange rate by roughly 10 basis points for five years (compared to the seven-basis-point reduction in the failed 2024 deal). It’s not a full overhaul of interchange, far from it, but it does introduce a more predictable baseline for merchants processing large volumes of standard credit cards.
Why this matters now (before approval)
Even though the settlement isn’t approved yet, it sends a clear signal about where the card networks expect merchant economics to move: toward more selective acceptance and more explicit pricing of high-cost cards. When Visa and Mastercard indicate structural changes, especially ones tied to interchange and acceptance rules, the ecosystem responds long before the court signs off. Platforms begin building capability. Merchants start evaluating strategy. Processors and SaaS providers shift their roadmaps.
If the settlement is finalized on the current timeline, surcharging and differential pricing will likely feel far more mainstream by 2027 than they do today. Merchants and platforms that recognize this inflection early, here in late 2025, will be able to plan, test, and operationalize their approach well before the rules formally change.
For merchants
What changes: If the settlement is approved, merchants would no longer be forced to absorb the full cost of premium rewards cards without any ability to respond. Instead of treating every Visa or Mastercard credit card the same, you would gain meaningful levers: the ability to decline certain high-cost cards or to accept them with transparent, card-specific pricing. A transaction that previously created unavoidable margin erosion could instead be priced in a way that reflects its actual cost.
What this means operationally: Your point-of-sale system will need to support differential pricing or surcharging logic, including real-time card identification and compliant disclosure. Your customer messaging must clearly explain why certain cards carry different costs. And if you choose to accept premium cards with a surcharge, the margin impact shifts from unpredictable to manageable, depending on how you configure your pricing strategy.
What you need to do in the next 18 months:
- Audit your card mix to identify which card tiers are actually creating margin pressure: premium, commercial, or specific issuer portfolios.
- Review surcharging and pricing rules in every country, state, and province where you operate; the legal landscape varies significantly.
- Run a controlled test, even on a subset of transactions, to understand how your customers respond to surcharging or differential pricing.
- Develop clear customer-facing messaging so card-specific pricing is transparent and easy to understand.
- Evaluate your payment partners and POS systems to confirm they can support real-time card identification, differential pricing, and full surcharging compliance.
The competitive reality: Most merchants don’t yet have the infrastructure for differential pricing or surcharging, and many POS systems still can’t support it. But if the settlement moves forward, these capabilities will likely be expected by 2027. Merchants who start now will be ready; those who wait will be rushing to catch up.
For platforms
What changes: If the settlement is approved, surcharging and differential pricing will shift from edge cases to expected capabilities. Merchants facing rising card costs will look to their platforms for solutions, and processors will be building infrastructure to support it. Platforms that fail to offer these tools by 2027 risk falling behind competitors that do.
What this means for your product: Surcharging becomes both an acquisition lever and a retention feature. Merchants evaluating platforms will increasingly ask, “Do you support card-type pricing or surcharging?” If the answer is no, they’ll find a platform that does.
What you need to do in the next 18 months:
- Build surcharging and differential pricing into core payments infrastructure, real-time card identification, dynamic pricing, and jurisdiction-specific rules.
- Create education and onboarding materials so merchants implement surcharging without harming customer relationships.
- Prepare for increased operational complexity, including disputes and regulatory variation.
- Design merchant workflows that support card-type decline policies and pricing optimization.
The competitive reality: Surcharging is rapidly becoming table stakes. Platforms that invest early will gain merchants; platforms that wait will lose them.
The execution window
The settlement isn’t law yet, but waiting for final approval is the wrong strategy. The industry is already moving toward selective acceptance and card-type pricing, and merchants and platforms that prepare early will have a clear advantage.
For merchants: Use the next 18–24 months to understand your margin drivers, test card-specific pricing in controlled environments, and determine how surcharging fits into your brand and customer experience.
For platforms: This same window is your chance to build the infrastructure – real-time card identification, dynamic pricing logic, compliance workflows, before your merchants start expecting it by default. Waiting until 2027 means racing to catch up while competitors are already in the market.
If the settlement is approved on the current timeline, surcharging and differential pricing will likely feel like standard infrastructure by 2027. Those who prepare now will adapt smoothly; those who delay will be scrambling.
Yeeld helps both merchants and platforms navigate payment economics and optimization for surcharging. As surcharging moves from edge case to standard, understanding your cost structure, execution strategy, and customer positioning is critical.
