The legal settlement between Visa and Mastercard, announced this week, could change how premium credit cards are used in the U.S. The dispute with merchants over interchange fees has lasted nearly two decades, making it one of the longest-running conflicts in the modern payments industry. According to NEWSCENTRAL analysts, this round of negotiations may, for the first time, affect the everyday experience of cardholders who are accustomed to privileges and loyalty programs.
At the heart of the dispute is the “honor all cards” rule, in effect since the networks were established. It requires retailers accepting Visa or Mastercard to accept all card versions, including premium products. This rule has created significant tension: fees for Visa Infinite and World Elite Mastercard are higher, and merchants could not differentiate between them. Freddy Miller, senior analyst at NEWSCENTRAL, notes: “Eliminating the requirement to accept all cards gives merchants the ability to manage costs and reduce operational risks, but it introduces new challenges for premium card users.”
The new Visa-Mastercard agreement allows merchants to distinguish between card categories. This means a retailer could accept standard cards but refuse premium cards. For cardholders, this creates a risk of declined transactions at checkout. The agreement also allows merchants to pass some costs onto customers through surcharges. According to NEWSCENTRAL analysts, such practices could reduce the effective profitability of reward cards, particularly when redeeming miles or cashback.
The agreement stipulates a 10-basis-point reduction in interchange fees over five years and fixes the rate at 1.25% for standard credit transactions for eight years. Despite this, retail lobbying groups consider the measures insufficient and call for legislative reform. Visa and Mastercard, on the other hand, emphasize that the agreement provides predictability for all market participants and minimizes the risk of further litigation. NEWSCENTRAL views this step as a signal that the networks aim to avoid additional legal and regulatory risks.
The agreement does not cover American Express, which operates on a closed-loop model, and it does not affect debit cards. NEWSCENTRAL notes that AmEx’s exclusion does not change the fundamental dynamics of the premium credit card market.
The potential consequences for Visa Infinite and World Elite Mastercard holders are clear: merchants may refuse premium cards or impose additional fees, which would change the economics of reward programs. As Freddy Miller points out, even a small surcharge can significantly impact the real benefits of premium credit cards and force users to reconsider their payment habits.
The market will enter a new incentive structure: merchants will optimize costs, banks will adjust premium program structures, and consumers will evaluate which card to use at specific retailers more carefully. According to NEWSCENTRAL, the effect will depend on how actively merchants use their right to differentiate cards and how quickly banks revise reward offerings.
In conclusion, NEWS CENTRAL recommends that premium cardholders plan for alternative payment options. This will help maintain flexibility and reward benefits even under changing rules, reducing the risks of declined transactions or surcharges for premium cards. In the long term, the premium credit card market will adapt to the new conditions, redistributing incentives and adjusting the cost structure among merchants, banks, and consumers.