Rewards Cards Lose Their Luster as Merchants Finally Push Back on Fees

Payment choice has always been convenient — now it might cost you. A new settlement between VisaV

, MastercardMA

, and merchants ends the rule that required stores to accept every version of a card once they accepted the brand. That means merchants can now turn away higher-fee cards, setting up a checkout experience where the price changes depending on which rewards card you pull out.

• Merchants can add surcharges of up to 3% based on card type, but refusing rewards cards is a tough call since they represent 85% of all issued cards and nearly 90% of spending.
• The deal trims interchange fees by 0.1 percentage point over five years, a cut too small to dent rewards much — though growing surcharges could eventually cool the race for ever-bigger perks.

What changes at checkout: In the short term, little is likely to shift since merchants rely on cards that dominate overall spending, but surcharges may spread over time as retailers look to offset the $83B in fees they paid last year. The deal still needs court approval, though many merchants say it barely scratches the cartel-like pricing they’ve been fighting for years.