A settlement may lead to some rewards credit cards being declined

Visa and Mastercard have proposed a settlement in their long-running legal dispute with merchants and retailers over how much they charge merchants to accept their cards.

- By KEN SWEET

IN A proposed settlement, merchants may discriminate among various Visa and Mastercard products.

(KEITH SRAKOCIC Associated Press)

The most important part of the settlement could directly affect how customers use their Visaand Mastercard-issued credit cards, and may result in some consumers getting denied at the point-of-sale for purchases.

Visa and Mastercard have been in litigation with a class-action group of merchants for nearly 20 years over the costs they impose on merchants to use their payment networks, known as interchange. A previous settlement was rejected by the judge overseeing the case, requiring Visa and Mastercard’s lawyers to go back to the drawing board on the scope and size of the settlement.

The new part of the settlement announced Monday addresses the “honor all cards” rule, a cornerstone of how credit and debit cards work in the U.S.

‘The “honor all cards” rule states that if a merchant accepts Visa or Mastercard as a form of payment, they are required to accept all iterations of Visa and Mastercard products, regardless of who issues it and the cost to the merchant.