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.
