Why Credit Card Users At Walmart And Target Could Start Paying More

After over two decades of a legal dispute, Mastercard and Visa may be approaching a court-approved settlement with merchants like Walmart and Target that accept their cards. The lawsuit's official name is The Payment Card Interchange Fee and Merchant Discount Antitrust Litigation, and a core element of the debate centers on the "honor all cards" precept. This rule means that, if a merchant accepts Visa and Mastercard, then its stores must accept every type of credit card each company issues. This makes good sense from the perspectives of Visa and Mastercard, brands that want broad acceptance of their credit cards, and helps ensure that consumers' cards are accepted wherever they shop. From a merchant's viewpoint, though, some cards — like premium rewards cards — come with higher processing and interchange fees, which can cut into store profits. If the court approves the most recent settlement between Visa, Mastercard, and the merchants, then stores would have the freedom not to honor all cards and create acceptance tiers instead.

If this happens, consumers shopping with a Visa or Mastercard could discover a surcharge on their credit card receipt if their particular card costs the merchant more in processing fees. While this could simply become another dark truth about reward credit cards, extra charges might not be the only inconvenience consumers experience: Merchants would also have the ability to refuse to accept certain types of Visas and Mastercards altogether under these new regulations.

Some businesses already charge customers extra for using a credit card. However, merchants may soon be able to charge different tiers of surcharges, which would help them to recoup costs associated with cards demanding higher processing fees. If this change goes through, some stores will need to make potentially difficult decisions: Sure, shopping centers want to recoup as much of their costs as possible, but losing customers can cost them, too. For example, if one shopper using a Visa card received a higher surcharge than a friend using a different Visa card at the same store, customers with higher surcharges may revolt. In fact, a 2024 PYMNTS survey showed that 56% of consumers would highly consider switching merchants if surcharges became too severe. This may be especially true during the affordability crisis that's already forcing Americans to change how they spend and save.

Some experts believe that stores will tread lightly when it comes to adding surcharges or rejecting certain types of credit cards to avoid angry responses by the public, though shoppers in different states may feel the impact differently. Credit card surcharges, while legal in most states, can vary by locale.