Card Acceptance Costs: What Merchants Can Actually Do
Interchange and network fees routinely consume 2–3% of merchant revenue, and the trend has moved in one direction for years. For most of the past two decades, the practical options were: absorb it, price it in, or sue. That’s now changing, through a mix of market tools, a maturing instant-payments infrastructure, and a landmark court settlement.
Want to learn more and ask questions? NYPAY is running and event on June 24 (6:00–7:30 PM ET, Zoom): Paying Less to Get Paid: Practical Strategies for Reducing the Cost of Card Acceptance. Speakers from a managed surcharge provider, a payments consultancy, and an A2A provider will work through the same options below — what’s operational, what’s developing, and the trade-offs.
What’ll topics of the dicussion?
The Visa/Mastercard Settlement: Watch This Space
The biggest near-term development is the preliminary approval (April 2026) of a revised $38 billion class-action settlement resolving antitrust claims against Visa and Mastercard dating to 2005. Final approval is pending, likely late 2026 or early 2027, and merchant opposition remains meaningful — the National Association of Convenience Stores has indicated it will appeal. Treat this as directionally important, not yet actionable.
If finalized, the key provisions are:
• A 10 bps annual interchange rate reduction for five years (modest, against a 2024 weighted average of ~2.35%)
• Standard consumer card interchange capped at 1.25% for eight years — though many standard cards already clear that bar
• Modification of the “honor all cards” rule: merchants could decline premium rewards or commercial cards — the most operationally significant provision, but one requiring careful customer-mix analysis before use
• Expanded surcharge and steering rights, and a requirement for Visa/Mastercard to permit merchant buying groups within 90 days of approval
Four Tools Available Now (or Soon) — and on the NYPAY Agenda
Compliant surcharging is the most mature option. Legal under network rules since 2013, and operational at scale from SMBs to large enterprises. Merchants may surcharge credit cards up to their actual cost of acceptance (capped at 3–4% depending on network), with required disclosures. Debit surcharging remains prohibited. State restrictions still apply — Connecticut and Massachusetts prohibit it outright [verify current status]. The settlement would loosen rules further, including allowing single-network surcharging.
Cash discounting and steering — offering a price reduction for non-card payment — is legally distinct from surcharging and available more broadly. The settlement’s “honor all cards” modification would add a harder-edged option: simply declining premium cards. The practical constraint is that premium cardholders often represent above-average spend, so the math is worth running before the policy is.
Merchant buying groups, another panel topic, are gaining real traction. Aggregating volume to negotiate interchange and processing rates directly has historically been more theoretical than practical, partly because network rules created friction — friction the settlement would require Visa and Mastercard to remove. Best suited to mid-market merchants with meaningful card volume but without direct scheme relationships.
Pay-by-bank / account-to-account (A2A) payments — the panel’s most forward-leaning topic — offer the most structurally disruptive economics: bypassing card rails entirely means no interchange. The infrastructure is now credible, with RTP and FedNow providing real-time settlement and broad bank coverage. The gap is consumer experience: card networks bundle authorization, dispute resolution, and rewards, and a new generation of A2A providers is building those layers in, some with merchant-funded loyalty on top. Consumer adoption at point-of-sale remains early-stage in the US, with stronger traction in utilities, insurance, and B2B.
Scorecard: What’s Settled, What Isn’t
• Surcharging: operationally mature. Main variables: state law and customer sensitivity.
• Settlement – interchange reduction: preliminary approval only; not yet in effect. Final decision expected late 2026 / early 2027.
• Settlement – “honor all cards” modification: significant if finalized; adoption will depend on customer mix.
• Merchant buying groups: gaining traction; gated on settlement approval and network willingness to engage.
• Pay-by-bank / A2A: infrastructure ready, adoption early-stage. Strongest case in verticals with lower card dependency.
Join the Conversation
None of this is settled enough to run on autopilot — which is exactly why it’s worth an hour and a half on the calendar. Register for NYPAY’s June 24 panel to hear practitioners compare notes on what’s working, where the gotchas are, and where the market is heading. Free, 6:00–7:30 PM ET, on Zoom — seats are limited, so register now.