Using Your Credit Card at the Checkout Is Set to Get a Lot More Complicated

Visa-MasterCard settlement follows long-running legal battle and gives merchants more flexibility on card acceptance

Your favorite latte at the local coffee shop could soon cost $5, $5.10 or $5.25—depending on how you pay.

A settlement between Visa, Mastercard and U.S. merchants announced this week could usher in a new era of tiered pricing at the register, giving businesses more power to charge fees depending on the credit card you use. The agreement comes after a two-decade antitrust battle over interchange fees, the charges banks collect from merchants every time a customer pays with plastic.

The settlement still needs court approval, and is likely to be contested by some merchant groups, which have disagreed over the fees and other terms in the past. A deal last year fell apart after lawyers for some merchants objected.

Here’s what else to know:

Card acceptance

Merchants have always had the right to refuse to do business with a payment network entirely. Costco, for example, only accepts Visa credit cards in stores. But current network rules say that if a store accepts one Visa credit card, it has to accept all Visa credit cards.

The settlement could change that practice by allowing merchants to pick and choose which categories of cards to accept within a network. Analysts say the groupings are broad enough that merchants are unlikely to start refusing any one of the categories, including those that offer rewards. The categories would lump in midmarket cards with more premium cards, meaning they would get blocked together, TD Cowen analysts wrote in a note.

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