Millions of Americans rely on credit cards to cover everyday essentials, including groceries. With prices still elevated, many households have leaned even more heavily on plastic at major retailers such as Walmart and Target.
That convenience may not be guaranteed going forward. Under a recent settlement involving Visa, Mastercard, and a group of U.S. merchants, some retailers could gain added flexibility around how they handle credit cards—potentially including the ability to place surcharges on certain transactions and, in some cases, decline specific types of cards.
According to a report in The US Sun, participating retailers would be allowed to set certain surcharges for credit card use and could also reserve the right to reject cards they consider a poor fit for their business model. Today, a common rule has been that if a store accepts a network—such as Visa or Mastercard—it must generally accept all cards on that network. Many merchants have long argued that this requirement is too restrictive.
One major source of tension is rewards cards. Credit-card networks often promote premium or rewards-heavy cards to consumers. But when shoppers use those cards, retailers can end up paying higher fees to accept the transaction—even though the consumer is the one receiving the reward benefits. Merchants have said those added costs squeeze profit margins and leave them wanting more control over which cards they accept, while the networks have resisted changes that could reduce usage of high-fee cards.
From the networks’ perspective, giving retailers more power could push customers toward “store-friendly” cards and away from premium rewards cards, which could reduce revenue. The fees at the center of the debate are known as interchange fees. Under the settlement framework described, those fees would decrease by 0.1% over the next five years—assuming the settlement is approved and implemented as intended.
For shoppers, the practical concern is simple: will their card work at checkout? If a major retailer decides not to accept certain cards, consumers might be forced to use a different card for groceries—or apply for a new one—just to shop at their preferred stores.
While the settlement is recent, the dispute itself has been going on for years. As reported by The Wall Street Journal, merchants first sued Visa and Mastercard in 2005, accusing them of anticompetitive practices tied to interchange fees and card-acceptance terms. The merchants also sued several large banks, and the fight has strained relations between retailers and payment networks ever since.
In the meantime, many smaller businesses have said they’ve had little choice but to pass interchange costs into higher prices for customers. And even with a settlement on the table, consumers may still be the ones left managing the uncertainty—especially if card acceptance becomes less universal at major grocery and retail chains.
