Why the Visa and Mastercard Settlement Is Back in the News

If you’ve noticed more signs at checkout lately warning about “credit card surcharges” or businesses refusing certain “premium” cards and providing a different price for cash, you’re seeing the fallout of a massive legal battle.

For years, I’ve tracked how merchant fees affect consumer bankruptcy and debt, including the impact on small businesses like my own. For a long time, the Florida Bar effectively prohibited us from passing these surcharges on to clients. I always found this unfair; if a client put $2,500 down to start their case, I was the one left ‘feeling the pain’ of the processing fees just for providing a convenient payment option.

Clients would get upset about this, but with new cases every day, the amount added up quickly at the end of the year. The Florida Bar updated its rules in 2019 to finally allow us to pass on these actual costs.

In 2024, Federal courts recently rejected a settlement for being inadequate, but a new 2026 agreement and fresh legislation are now set to change how we all pay for everything.

By Alexander Hernandez, J.D., Professor, and Author of Consumer Bankruptcy Law (Routledge).

Updated on February 8, 2026.

Key Takeaways: What You Need to Know in 2026 About Credit Card Fees

• Update on the Credit Card Surcharge Lawsuit: The 2024 settlement was rejected for being “inadequate.” A new 2026 proposed settlement could finally allow merchants to add a surcharge of up to 3% specifically on “Premium” rewards cards.
• The CCCA 2026 Momentum: The Credit Card Competition Act is back with bipartisan support and a 2026 endorsement from President Trump. If passed, it would force large banks to offer a second, cheaper processing network on every card, saving money for small businesses and consumers.
• Hidden Fees Might Be Coming: If swipe fees are capped, banks will seek to offset the losses through higher annual fees.
• Rewards at Risk: While merchants and consumers win lower costs, reward programs will likely be eliminated.

The Update on the Credit Card Lawsuit: Why the First Deal Failed

Initially, there was a $30 billion settlement where Visa and Mastercard agreed to cap their fees. In a surprising move, a federal judge rejected that deal, arguing it was just a temporary “band-aid” that didn’t truly fix the broken system. Now, in 2026, we are looking at a more aggressive proposal that could change your checkout experience significantly.

How These Changes Hit Your Wallet

The core of the issue remains the “swipe fee.” Merchants pay roughly 2% every time you tap your card. These are hidden costs that ultimately get passed down to us.

Here is what the 2026 legal landscape means for you:

The “Premium Card” Rejection: Under new rules, merchants may soon be allowed to decline high-reward “premium” cards (like certain Chase Sapphire or Amex cards) while still accepting standard cards.

Higher Surcharges: Retailers might now charge you a fee of up to 3% just for the “privilege” of using credit.

The “Hidden Tax”: While the settlement aims to lower fees for stores, there is no law requiring stores to pass those savings on to you.

What to Look For: The New “Hidden Fees”

As a lawyer, my instinct is to say read the fine print.” Be on high alert. If credit card companies lose billions in swipe fees, they will look to recover that money elsewhere. Watch for:

1. Increased Annual Fees: Those “metal” or “black” cards with luxury travel perks are becoming more expensive as banks try to offset their losses.
2. Higher Interest Rates: Even with the Fed’s movements, credit card APRs remain at historic highs. Check your statements; your “fixed” rate might not be as stable as you think.
3. Balance Transfer Traps: I’ve blogged before about the dangers of balance transfers. If you don’t pay off the balance within the 6–12 month promo window, you could be hit with a “deferred interest” bomb.
4. The Rise of Cash Discounts: Gas stations started it, but now restaurants and local shops are following suit. Always ask if there’s a “cash price” to avoid the 3% surcharge.

The Professor’s Take

The battle between big banks and retailers is far from over. With the Credit Card Competition Act of 2026 currently in Congress, we might see even more shifts in how cards are processed.

The Credit Card Competition Act (CCCA) of 2026 is a bipartisan bill reintroduced in January 2026 by Senators Roger Marshall (R-KS) and Dick Durbin (D-IL). The bill has even been endorsed by President Trump.

The Requirement: Large banks (with over $100 billion in assets) must offer at least two unaffiliated networks to process credit card transactions.

The Goal: If merchants have more options, networks will compete on price. Currently, businesses pay more than $100 billion in “swipe fees.”

The “Main Street” Impact: By lowering fees, this would save money for consumers and help small businesses.

“Wall Street” Fights Back: Not surprisingly, proponents argue they will lose revenue and be forced to eliminate rewards programs (miles/points), increase interest rates, or even reduce card security.

Like every other credit card user, I do take advantage of my rewards, but I would rather have zero rewards and save money on purchases, including capping interest rates, but that is easier said than done.

My advice? Don’t let the convenience of a “tap” blind you to the cost of the transaction. Stay informed, read the updated terms of service from your bank, and as always, read the fine print.

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