The Visa–Mastercard Settlement: What Changes for Merchants, When, and What It Leaves Alone

On November 10, 2025, Visa and Mastercard signed a settlement with the class of every merchant that accepts their cards in the United States. It is the injunctive-relief half of a case that has been running in the Eastern District of New York since 2005, and it pays merchants no damages. What it does is change the rules: which cards a merchant must accept, how a merchant may surcharge, and how much the networks may charge in interchange for the next five to eight years. Judge Brian Cogan gave it preliminary approval on June 9, 2026, class counsel moved for final approval on July 15, and on September 10 a coalition of 978 merchants and trade groups filed objections asking him to reject it. Trade press reports the fairness hearing is set for November 16, 2026. Nothing in the agreement is in force yet. This guide sets out what the agreement actually says, working from the executed text Visa filed with the SEC, what the objectors say is wrong with it, and what any of it means for a merchant whose account is already priced as high risk.

Who is bound, and why you cannot opt out

The class is defined in the agreement as every person, business or entity that accepted Visa or Mastercard cards in the United States at any time between December 18, 2020 and the date of preliminary approval, and it is a class from which no exclusions are permitted. That is the nature of a Rule 23(b)(2) settlement: it changes conduct rather than paying damages, so there is nothing to claim and nothing to opt out of. The court-authorised settlement website makes the same point in plain terms, that the rule and interchange changes will apply to all merchants that currently accept Visa or Mastercard without those merchants taking any action. If the judgment is entered, the new rules apply to your merchant account whether you followed the case or not.

It is a separate thing from the $5.54 billion damages settlement that merchants filed claims against, whose claims deadline passed on February 4, 2025. Objecting to this one does not affect a claim in that one.

The right to decline whole categories of card

The headline change is to the Honor All Cards rule, which for the whole life of the Visa and Mastercard networks has meant that a merchant accepting one Visa credit card accepts every Visa credit card. Visa's own lawyer told the court in April 2026 that the rule had been an article of faith for sixty years and that giving it up was a big give. Under paragraph 22 of the agreement, within 90 days of the Settlement Approval Date, Visa must change its rules so that a US merchant may accept or decline all Visa debit cards, all Visa commercial credit cards, all Visa standard consumer credit cards, or all Visa premium consumer credit cards, in any combination. Mastercard makes the same commitment in paragraph 71.

The categories are defined by product name, not by how the card looks or what the cardholder earns on it:

• Standard consumer credit: Visa Traditional and Traditional Rewards; Mastercard Core and Enhanced Value.
• Premium consumer credit: Visa Signature, Signature Preferred and Infinite; Mastercard World, World High Value, World Legend and World Elite.
• Commercial credit: Visa Business, Corporate, Purchasing, Fleet and the other business product types; the equivalent Mastercard business, corporate, purchasing and fleet products.

The choice is all or nothing within a category. Paragraph 23 lets the networks keep a rule that a merchant who accepts any card in a category must accept every card in that category regardless of issuer or product type, so a merchant cannot take Visa Signature and refuse Visa Infinite. A merchant that declines a category must give its acquirer at least thirty days' written notice, disclose its acceptance practice to customers at the point of sale in a way that does not disparage the network or the card, and must not state or suggest that the decision was the network's rather than the merchant's. Chains may pilot a declined category at some outlets and not others, and a merchant may enable some digital wallets online and not others, provided the refusal is of the wallet itself rather than the cards inside it.

Surcharging: what changes and what does not

Visa already allows US merchants to surcharge credit cards, and its current published requirements are thirty days' notice to the acquirer, credit only, and a surcharge no higher than the merchant's discount rate for that card or 3%, whichever is lower, disclosed at the point of entry, the point of sale and on every receipt. Mastercard's published cap is 4%, again subject to the merchant's cost of acceptance, with thirty days' notice to both Mastercard and the acquirer. So the 3% figure in the settlement is not new for Visa. What is new is around it.

Under paragraphs 39 to 43, a merchant may surcharge at the brand level, the same percentage on every Visa credit card, or at the product level, a different percentage for each product type such as Traditional, Signature or Infinite, but not both on the same transaction. The cap in either case is the lesser of 3% or the merchant's cost of acceptance, defined as the average effective interchange rate plus the average of all network fees, measured over the preceding one or twelve months at the merchant's option. A merchant that cannot work out its cost of acceptance may simply treat it as 3%. Mastercard's parallel commitment in paragraphs 88 to 90 brings its ceiling down to the same 3%.

Three provisions matter more than the cap. First, paragraph 43(c) says a merchant may surcharge Visa credit cards regardless of whether it accepts or surcharges Mastercard, American Express or Discover. Visa's current guidance is that merchants typically must surcharge Visa on the same terms and conditions as any equal or higher-cost competitor that limits surcharging, and that condition goes. Second, paragraph 42(d) confirms that dual pricing, showing a card total and a cash total for the same basket, is permitted. Third, paragraph 43(f) forbids the networks from creating a default interchange structure that targets a specific merchant with higher rates because it surcharges, while expressly allowing differential rate structures available to all merchants in a segment, with a lower rate for those that do not surcharge. The objectors read that last clause as a loophole; the text allows both readings.

None of this overrides state law. Visa's own Q&A, stating its understanding as of February 15, 2024, lists Connecticut, Maine, Massachusetts, Oklahoma and Puerto Rico as prohibiting surcharging and Colorado, Minnesota, New Jersey and New York as imposing requirements on it, and the agreement funds technical steering support for merchants in states that restrict surcharging rather than pretending those laws do not exist. Confirm the position in your state with counsel before you switch anything on.

The interchange commitments, in three parts

Everything on the price side is in paragraphs 48 to 53 for Visa and 97 to 102 for Mastercard, and the three commitments are easy to conflate.

• A ten basis point reduction in the average. Starting no earlier than four months after the Settlement Approval Date, and timed to the April or October release in which the networks normally change interchange, each network must run a system-wide volume-weighted average effective credit interchange rate at least ten basis points below the combined Visa and Mastercard average for the twelve months ending March 31, 2025, as calculated by an independent auditor. It lasts five years. If a year's data shows the target was missed, the network must retroactively rebalance transactions within 120 days.
• A 1.25% cap on standard consumer cards. From the same start date, and for as long as the release lasts, neither network may post any interchange rate above 125 basis points for a standard consumer credit card, meaning Visa Traditional and Traditional Rewards and Mastercard Core and Enhanced Value.
• A freeze on posted rates. For the five years of the average-rate commitment, no posted rate for a commercial, premium consumer or standard consumer credit card may rise above the rate posted for that category on March 31, 2025.

Merchants with negotiated custom interchange agreements receive a reduction proportional to the ten basis points. The obligations run until the later of five years after the Settlement Final Date or eight years after the Settlement Approval Date, which is why the trade press describes the cap as lasting eight years. The agreement also says, in its anti-circumvention paragraph, that the networks may go on setting network fees such as the Visa Fixed Acquirer Network Fee, but that they will not defeat the benefits of the settlement by increasing other network fees.

To see what the cap would bite on, take Visa's published rates effective April 18, 2026 for a card-not-present transaction in its Product 1 fee program: a Traditional card carries 1.89% plus $0.10, Traditional Rewards 2.04% plus $0.10, Signature 2.05% plus $0.10, Signature Preferred 2.50% plus $0.10 and a spend-qualified Infinite card 2.60% plus $0.10. The 1.25% ceiling would reach the first two columns and none of the others. That is the whole of the objectors' case in one row of a rate sheet.

What the objectors say

The Merchants Payments Coalition filing, signed by 978 businesses and associations from every state, the District of Columbia and Puerto Rico, makes five arguments. The ten basis point cut is a small fraction of the 2.36% average rate the coalition says merchants paid in 2025. More than 90% of credit card spending, it says, runs on rewards cards, so declining premium cards means declining nearly all cards. Nothing stops issuers recategorising standard products as premium, or launching new categories, to escape the 1.25% cap. Surcharging is effectively unworkable because of state laws and because the networks may set higher rates for merchants that surcharge. And in exchange for five years of relief, the release the class gives is of uncertain length and reaches any claim about merchant fees or rules. The National Association of Convenience Stores told Payments Dive in June that it would appeal to the Second Circuit if final approval is granted. Mastercard's response, as reported, is that the agreement meets the court's expectations and balances competing interests, and in granting preliminary approval Judge Cogan wrote, as Credit Union Today reported it, that the standard was not whether the settlement was the best possible outcome but whether it was reasonable compared with the risks of continued litigation.

Both sides are describing the same document accurately. The relief is real and it is narrow; the release is broad and it is long. Which of those weighs more is the question the November hearing exists to answer.

Why most of this passes a high-risk merchant by

Interchange is a pass-through. Your processor collects it and hands it to the issuing bank, and on an interchange-plus account a change in the posted rate flows straight to your statement. But if you are on a high-risk account, interchange is not what makes it expensive. The cost sits in the acquirer's markup over interchange, in the annual registration fees Visa and Mastercard charge for merchants in their high-risk programs, in the rolling reserve, in per-item chargeback fees and in the monitoring-program penalties that follow a bad quarter. Ten basis points off the network's average, spread across cards you may or may not see, does not move any of those. If your effective rate is 3.5% or 4.5%, the settlement changes the first decimal of a number that is not the problem.

The cap on standard consumer cards is worth more to a subscription or card-not-present merchant than the headline cut, because Visa's recurring and e-commerce programs put standard cards in the range the cap would reach. Whether it shows up on your statement depends on your pricing model: on interchange-plus it must; on a tiered or flat-rate high-risk account it appears only if your processor passes it through, and that is a question to put in writing.

Declining premium cards is the change least suited to a merchant who fights for every approval. A business that a mainstream processor turned down is not in a position to turn away the cards that carry most consumer spending, and in a card-not-present channel the mechanics are harder still: the agreement itself anticipates, in its product-level surcharging rules, that a merchant may be unable to identify the card product from the transaction data before authorising, and lets such a merchant treat its cost of acceptance as 3% rather than work it out per product. The realistic use of the category rules for an online merchant is not refusal but pricing: a brand-level surcharge at or under your cost of acceptance, disclosed on the cart, the checkout and the receipt, with the acquirer notified thirty days ahead. That is already permitted under Visa's rules today, and the settlement makes it cleaner by removing the requirement to treat the other networks the same way.

What to do now

• Do nothing to your acceptance or surcharging setup on the strength of the settlement. It binds no one until final judgment is entered; the rule changes follow within 90 days of the Settlement Approval Date, and the interchange changes cannot start until at least four months after it and are tied to the April and October release cycle.
• Find out which pricing model you are on. If it is interchange-plus, ask your processor to confirm that posted-rate changes pass through automatically. If it is tiered or flat, ask how a change in interchange would be reflected, and get the answer in writing.
• If you already surcharge, check that your program meets the rules in force now: credit only, thirty days' notice to your acquirer, the lesser of 3% or your cost of acceptance, and disclosure at entry, checkout and receipt. Those do not change; what changes later is the flexibility around them.
• If you sell into Connecticut, Maine, Massachusetts or Oklahoma, or have customers in Colorado, Minnesota, New Jersey or New York, get a current reading on state law before any surcharging decision. The settlement does not pre-empt any of it.
• Keep your chargeback ratio where it is. Nothing in this agreement touches the acquirer monitoring programs, the high-risk registration fees or the reserve, and those are the numbers that decide what your account costs.

PayKings underwrites merchants that mainstream processors decline, and prices them on what the account actually costs to keep open: the acquirer's risk, the reserve, the dispute exposure. If the settlement is approved and the interchange changes take effect, they will show on an interchange-plus account the way any interchange change does, and we will say plainly what they mean on yours. The rules on surcharging and card categories will be something we can configure for a merchant who wants them, once they exist. Until the judgment is entered, the right response to this settlement is to know what is in it and to change nothing.