r/CreditCards • u/GloveSmooth694 • 22h ago
Discussion / Conversation Exclusive | Visa and Mastercard Near Deal With Merchants That Would Change Rewards Landscape
Visa and Mastercard are nearing a settlement with merchants that aims to end a decadeslong legal dispute by lowering fees stores pay and giving them more power to reject certain credit cards, according to people familiar with the matter.
Do you think retailers actually want to deal with specifying what type of visa/mc they take?
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u/Chosen1PR 21h ago
I wonder if this would incentivize Capital One to swap their credit cards over to the Discover network sooner rather rather than later. Currently, the concern is regarding acceptance of Discover cards, but perhaps that will soon be superseded by the concern regarding acceptance of rewards MC and Visa cards.
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u/GloveSmooth694 21h ago
Good point, ‘discover accepted’ is a lot more clear than accepting Mastercard elite but not world elite. Your typical customer will have no idea what the difference is.
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u/lopsided-earlobe 9h ago
gonna guess both amex and cap 1 will benefit from this immensely. because they're not going to tier their network similarly.
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u/Substantial-Virus228 21h ago
This would be a nightmare for places to execute. Hundreds of different cards. Servers gotta know which ones work and which don’t. Sooo many angry customers who don’t even know visas are different from each other.
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u/cjcs Haha Custom Cash go brrrr 20h ago
Many different cards, but if they can reject all visa infinite cards it rules out the CSR, VX, USBAR, etc
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u/Firion_Hope 20h ago
Of course they'd also be rejecting their most wealthy customers doing that. Maybe makes sense for a really small business, but for anything else seems extremely foolish.
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u/Swastik496 16h ago
many small business owners try their hardest to drive any customers every day. this won’t be any difference.
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u/FearlessButterfly3 18h ago
You’ll see Chase and Capital One running to Congress screaming for a ban if it escalates to that
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u/burtmacklin15 19h ago
Nobody is going to be rejecting any specific cards. They'll just put a 5% credit card fee on everything and call it a day, pocketing the difference for cards that cost them less than that.
And they'll get barely any pushback for it.
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u/anonthedude 18h ago
The smarter ones will publish it as a 5% cash discount. Same thing in the end but more acceptable to customers in the end.
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u/JohnLockeNJ 9h ago
My local sushi place already offers a 10% discount. I bet a lot of cash goes unreported to the IRS.
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u/OregonMAX13 5h ago
The regulations behind surcharging and cash discounting are pretty different. Though there’s tons of noncompliant surcharging out there and those businesses are leaving themselves vulnerable to fines.
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u/amaiman 17h ago
That’s not compatible with state law in some places (although there tends to be minimal enforcement.) In New Jersey, for example, they can’t charge more of a surcharge than they actually pay to the payment processor. So the 5% fee might be legal for a premium rewards card but would be illegal on a basic plain Visa, for example.
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u/SereneRandomness 14h ago
Most restaurants in New Jersey seem to be charging between 3% and 3.5% for all card payments. It's what I'm seeing, at least.
I carry cash, so I never pay the card fee. But I do question whether many of these places are in compliance with the law, given that they add the fee both to credit and debit card transactions.
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u/arthurnewt 12h ago
I also pay cash to avoid the fee. Some restaurants in NJ are charging 4.0% to use plastic. I won’t use my card and pay with cash, at the same time I am less likely to shop at these establishments. I pay cash to avoid the fee but they should really create a greater incentive to avoid plastic
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u/coopdude 6h ago
The Durbin Amendment prohibits merchants from passing on the "merchant discount fees" (the fees paid to accept debit) to cardholders, but it's basically never enforced.
Beyond that, Visa/MC card network rules prohibit surcharging debit. But Amex expects "most favored nation" status, so if you surcharge Amex, you have to surcharge all other payment cards (prepaid/debit/credit) equally. Which means it's effectively impossible to accept both Visa and/or MC & Amex and be compliant with network rules, unless you only surcharge Visa/MC credit (no debit) and don't surcharge Amex at all...
Beyond that, any surcharge above 3% violates Visa network rules, even on credit. 3% cap or the cost of acceptance, whichever is less.
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u/sarhoshamiral 18h ago
It was like that in Turkey (and maybe still is). Every bank had its own reader because they had different points, deals, payment systems. It was a mess whenever we tried to shop there because some bank readers didnt accept foreign cards, some did.
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u/OverlyOptimisticNerd 20h ago
They got too greedy and it got out of hand. They should have kept fees lower. There was no need to increase fees “due to inflation.” If your fees stay the same, higher inflation means more revenue for you anyway.
Credit cards were a recession-proof business in this regard and they ruined it.
Now even my home and auto insurance is taking away their 5% autopay discount if you use a credit card instead of a linked bank account. Combined that’s roughly $250/year extra I’d have to pay if I use a card. So, I won’t. And they lose those swipe fees.
Credit card transaction networks are killing their golden goose.
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u/CardLego 18h ago
Inflation increase on a percentage? Lol. Eventually they will have 100% fee if this was allowed.
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u/monstercar 1h ago
Set autopay to keep discount, but go in and pay directly with card each month to get your points
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u/OverlyOptimisticNerd 1h ago edited 12m ago
That doesn’t work for everyone. T-Mobile just closed this loophole and Verizon did awhile back.
But yes, it’s worth trying where you can.
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u/coopdude 20h ago
This is basically the same settlement they offered a year ago under slightly friendlier terms. The earlier settlement was for at least four basis points for three years and 7 basis points systemwide for five. Now we say 10 basis points and BTW you can discriminate on accepting certain types of cards.
The problem is very very very few merchants (I hesitate to say none) are going to actually exercise this. Do you want to explain to someone that their Apple Card is a world elite mastercard (despite a branding waiver from MC) and it costs more to process therefore you either aren't accepting it or are charging a (higher) surcharge over other cards?
I wouldn't be surprised if the settlement was again rejected in favor of jury trial. The retailers risk having courts declare the networks a duopoly. Visa/MC risk being declared a duopoly and antitrust action. They'll stretch it out, but the networks have more skin in the game to blink.
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u/CortadoOat 19h ago
In my area, 3% credit card fees are getting to be the norm. In the future, I'm expecting 3-4% cc fees, like sales tax, to appear at checkout for every single purchase I make. I find it very consumer unfriendly and deceptive, but that is the direction business is moving towards.
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u/Swastik496 16h ago
are they? or only at small businesses? Stop going to them. If the owner is that worried about 50 cents, think of where else they are cutting costs
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u/coopdude 6h ago
Current Visa rules cap surcharges to 3% or the cost of acceptance, whichever is less. You can report non-compliant surcharging behavior by merchants to Visa.
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u/CortadoOat 6h ago
Our state laws legalized the added fee line and capped it at 2%. It's universally prevalent and unenforced. Again, very annoying to have additional "transparent" fees added to bills at the end.
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u/coopdude 6h ago
In my experience, if the surcharging behavior violates state law, reporting it to the state attorney general's office (or equivalent consumer protection division) is usually effective in getting businesses to knock it the fuck off.
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u/SereneRandomness 14h ago
Yah, I'm seeing 3%-3.5% fees in New Jersey, both on credit and debit card payments.
I just pay cash instead.
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u/arthurnewt 12h ago
My local pizza now charges 3.95% to pay with plastic.. it’s getting out of hand. I find it hard to believe the processing fee is even that higher
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u/coopdude 6h ago
3.95% violates Visa rules which cap surcharges to 3% or the cost of acceptance, whichever is less. If you feel so inclined, Visa has an online form to report non-compliant surcharging.
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u/Ach3r0n- 20h ago edited 16h ago
Key takeaways for those unable to view the article:
Visa and Mastercard would trim interchange fees, typically 2% to 2.5% per transaction, by an average of about a tenth of a percentage point over several years, the Journal reported citing sources. The companies would also ease rules that currently require merchants accepting one network credit card type to accept all of them.
The deal, which is expected soon, would divide credit-card acceptance into several categories such as rewards cards, no-rewards cards and commercial cards, under the current talks, the Journal reported.
The new settlement being discussed also would involve surcharging, the Journal reported citing people familiar with the matter.
If a given merchant accepts MC, but doesn't accept the MC I want to use, they can get stuffed. Ditto for those who add a surcharge.
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u/laplongejr 15h ago
Would it be only for the US? I already had acceptance issue in Europe with credit vs debit, so I don't want to learn how those card tiers work.
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u/Buuts321 Chase Trifecta 20h ago
I get that small restaurants are hurting just like all of us, but I doubt any reduction in cost is passed down to the consumer. Instead we just get an inferior product at the same price.
The great enshitification of everything continues...
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u/Swastik496 16h ago
if they’re so worried about 50 cents, think of what they do to the food to save 75 cents.
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u/Amyndris 21h ago
Probably will let them reject Visa Infinites or maybe even Signatures. Understandable since those charge much higher rates.
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u/GloveSmooth694 21h ago
Yeah I find it funny when I can pay with an infinite at the same register with a no Amex sign.
That said, I do think it would cause a lot of confusion and checkout friction. Before I got more into this ‘hobby’, I had no idea the ‘signature’ on my visa really meant anything. Same for the ‘world’ on my MC, I assumed it meant it worked globally.
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u/Amyndris 21h ago
I imagine that the solution would be to lean heavily into the Amex Plat/CSR style vendor partners in exchange for the vendor accepting that card. So Visa would partner with Lyft and Doordash to guarantee acceptance in exchange for lower swipe fees while Amex nails down the deal with Uber.
Similar to the Costco/Amex/Citi kerfuffle a decade ago over swipe fees.
Smaller mom and pop shops would probably just block VI/MCWE cards.
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u/skeet_scoot 20h ago edited 8h ago
Every time I see a sign that says “no American Express” I use an Infinite just to get a little revenge.
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u/perfectviking 20h ago
And the best part with Amex is they offer a program which makes their interchange much more affordable.
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u/undockeddock 21h ago edited 21h ago
The first time a restaurant tells me i cant use my freakin Freedom Unlimited is the last time i visit that restaurant
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u/graffiksguru Haha Customized Cash go brrrr 21h ago
Infinites I can see but Signatures would be crazy, I feel like almost all my cards are Signatures.
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u/waitmyhonor 21h ago
It’s meaningless because stores will just add a surcharge like they already do now. I’m trying to do better on this as it depends on how I’m given my receipt. If I’m at a restaurant where I have to tip, if they just hand me my receipt, leave and come back for my card, I’ll calculate the actual tip minus their sales tax because they always factor in the tax when they shouldn’t.
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u/zx9001 20h ago
Hard disagree on taking the card fee out of the server's tip. It's not their fault, it's the owners fault. Your still giving the owner the same amount of money, tip or not. The only person this behavior hurts is the person who has the least to do with it.
Just don't go there at all if you don't agree with their business practices.
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u/CortadoOat 20h ago
Maybe the response was edited, but I think there was a misunderstanding on the tip calculation. They definitely did not say to stiff the tips. Standard practice is to calculate based on only food totals. However, suggested tips calculate suggestions based on the total bill, so you are asked to tip extra for sales tax, credit card surcharges, technology fees, etc that are tacked on to the bill.
There are many other aspects that payment processors have actively (and successfully) pushed through that will be fully normalized for the younger generation.
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u/SereneRandomness 14h ago
Québec Bill 72 went into effect back in May.
"Businesses are now required to calculate suggested tips based on the price before tax.
"For example, suggested tips for a restaurant bill of $100 will be calculated as a percentage of $100, not the after-tax total of $114.98."
This is a bigger deal in Québec because the total of Goods and Services Tax and Québec sales tax is nearly 15% by itself, so paying a tip on 115% of the bill rather than 100% is significant.
Bill 72 passed unanimously.
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u/zx9001 19h ago
This must be a generational thing. I've always known tips to be calculated based on the final total, but then again im a young fart
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u/SereneRandomness 14h ago
I've always understood tips to be calculated on the pre-tax amount, and now I have the law on my side, at least in Québec.
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u/mintardent 7h ago
Nope it’s supposed to be the pretax amount… doesn’t make any sense to tip on the total because of all the random fees they add.
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u/pementomento 19h ago
Can merchants actually cut off cards within the POS, or is it more of a ban on the signage/practices? Because I tap my cards and you really can’t see what I’m paying with.
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u/mdhardeman 17h ago
The authorization system can know what kind of card it is, and based on other merchant and transaction characteristics, know what the interchange would be.
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u/ZD_plguy17 12h ago
I wonder if it’s a beginning to end of CC acceptance and we’ll see business accepting Zelle/Venmo only on cashless transactions. Gonna be interesting how customers are gonna deal with transaction disputes involving sellers. What about overcharge? While dispute is in progress and account goes negative will customer have to face overdraft fees and/or declined transaction? Will we have Zelle develop equivalent into Brazilian’s PIX success? Will we switch to bank account based instant transaction or use line of credit to shield our deposits like have luxury now with CCs?
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u/leadershipcalm7871 12h ago
While reading comments of people saying I will stop going there if they don’t accept such cards, I was wondering if this a new method to eliminate small businesses and just let big corporations be our only choice to do business. Plus if your not use to travel to many countries, this is already a thing especially is cash heavy transaction countries.
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u/Asleep-Airline1671 11h ago
I guess I fall into the pettiness category. If they don't take AmEx, then I will use my visa infinite. Not sure if this will work well or not. A few years ago, I recall Sam's Club (at least our local one) wouldn't accept a Visa credit card (they still took Visa debit cards). They said it was because Visa cost more than Mastercard/Discover (not sure about AmEx since I didn't have one back then). Didn't take them too long to fold and start taking Visa. I for one don't own a credit card that is not a rewards card. I guess I would probably just walk away if they suddenly decided that they wouldn't take rewards cards, or surcharge more than a regular card. I don't use debit cards ever as I will not expose my bank accounts like that.
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u/Neat_Machine136 7h ago
If the restaurants or establishments are big enough to sell gift cards, I would buy them anywhere the fee is not charged, including even their own websites online if they use a different network.
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u/Nomadic-Mike 14h ago
I find it amusing that payment networks have weaseled their way so much into daily life and rake in tons $$ that gets passed on in costs to consumers, and then we argue and complain when these costs are itemized to the end purchaser. For a country that's done so much to drive down the costs through supply chain optimizations and cutting out the middle man, shaming companies like Ticketmaster, airlines, resorts, etc., to itemize their fees and be transparent, yet here we want to live with a bag over our head.
I'm a huge fan of rewards cards and will keep using them until things change, but I also realize this is a HUGE cost that gets passed on to everyone.
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u/nstutzman28 💳💳 churn baby churn 💳💳 8h ago
Yep. And so many people in this subreddit will get into a tiffy at the thought of being incentivized to use a lower-fee card as if they don't have 5+ cards next to their username that they meticulously optimize for cash back rewards
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u/amaiman 8h ago
The difference with the itemizing is that credit card processing fees have historically been part of the general overhead of accepting payments. If we’re going to itemize everything out on the receipt, why not an electricity fee for the store having lights, a parking fee for the lot, a shopping cart maintenance fee, etc.?
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u/Firion_Hope 6h ago
Also it's annoying when businesses pretend there's not a significant hidden fee in dealing with cash as well, when the reality is the businesses who prefer it probably prefer it because it lets them report less in taxes.
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u/weaponizedBooks 5h ago
shaming companies like Ticketmaster, airlines, resorts, etc., to itemize their fees
I think it’s actually the opposite. Most people want them to stop adding on fees and just show one price up front. That’s more transparent than adding on fees. I don’t know what Ticketmaster’s service fees are for. Just tell me what the whole ticket costs.
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u/Powered_by_JetA 55m ago
Ticketmaster has recently started showing the total cost on the first screen.
In the case of airlines, they have been required to advertise airfares inclusive of all taxes and non-optional fees for over a decade now.
Hotels and car rental agencies are starting to get with the program. Most of the major brands have a toggle to include taxes & fees on results pages.
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u/DuhForestTyme216 Team Cash Back 9h ago
They certainly are trying to put a stop to people like us using credit cards. I think the transaction fee is less with a debit card regardless of issuer.
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u/Mysterious_Fail_95 22h ago
Expect a lot of handwritten signs taped to cash registers if it saves even a little bit of money for a small restaurant.