Chase Sapphire, Amex and More May Be Rejected by Merchants as Visa and Mastercard Strike Historic Deal

Visa and Mastercard announced on Monday a proposed settlement that would allow merchants to reject premium rewards credit cards for the first time, potentially upending the landscape for cardholders who rely on Chase Sapphire Reserve, American Express Platinum and other high-fee cards that have surged in popularity. The agreement, which would end 20 years of litigation over interchange fees, could save merchants more than $200 billion whilst threatening the generous perks that have made rewards cards a cornerstone of American consumer finance.

Under the proposed settlement, which requires court approval, Visa and Mastercard would reduce interchange fees, typically between 2 per cent and 2.5 per cent, by 0.1 percentage point for five years. More significantly, merchants would gain the right to choose whether to accept US cards in specific categories including commercial cards, premium consumer cards and standard consumer cards. Standard consumer rates would be capped at 1.25 per cent for eight years, representing a reduction of more than 25 per cent.

The deal marks a dramatic shift from the longstanding 'honour all cards' rule that required merchants accepting Visa or Mastercard to accept all cards from those networks. Businesses have long complained that premium rewards cards, which now account for 85 per cent of all cards issued, force them to pay substantially higher interchange fees whilst they have no ability to refuse them.

Merchants Gain Power to Reject Premium Cards

The settlement addresses litigation that began in 2005 when merchants sued Visa, Mastercard and large banks for allegedly conspiring to violate US antitrust laws through their collection of swipe fees. A previous $30 billion settlement was rejected in June 2024 by US District Judge Margo Brodie in Brooklyn, who called the $6 billion in annual savings for merchants 'paltry' relative to what the card networks could still charge and criticised the agreement for maintaining the honour all cards rule.

The implications for cardholders could be substantial. If significant numbers of merchants begin rejecting premium cards, it would create real problems for consumers who carry only rewards cards. The value proposition of cards like the Chase Sapphire Reserve, which recently increased its annual fee to $795, or American Express Platinum, now at $895, depends heavily on universal acceptance alongside their travel and dining perks.

The settlement also gives merchants more options to impose surcharges when customers pay by card, meaning consumers could face additional costs even when their cards are accepted. Over a third of all purchases in 2024 were made with credit cards, and those who use them may now encounter surcharges or be told to use another payment method if businesses decline their premium cards.

Cardholders Could Face New Fees and Limited Acceptance

Rewards programmes themselves face an uncertain future under the new regime. Credit card rewards are financed by interchange fees, meaning lower fees would likely translate to reduced perks.

Visa said in a Securities and Exchange Commission filing that the settlement would provide merchants of all sizes with meaningful relief, more flexibility and options to control how they accept payments. Mastercard stated it would deliver clarity, flexibility and consumer protections, particularly benefiting smaller merchants with more acceptance choices and reduced costs.

The agreement specifically notes it is not an admission of wrongdoing. American Express, which operates its own closed-loop network and was not party to the lawsuit, may provide a market baseline that prevents excessive disruption to rewards cardholders, as the company manages to fund lucrative rewards whilst maintaining acceptance and a healthy business.

The settlement, one of the largest-ever class-action settlements of a US antitrust case, could be announced formally in coming days pending final court approval.