Additional Coverage:
- Retailers including Walmart and Target can now decline your credit card — key details revealed (marketrealist.com)
Your Credit Card Might Not Be Welcome Everywhere Anymore: What Shoppers Need to Know
America’s major retailers, including household names like Walmart and Target, may soon have the power to decline certain credit cards, potentially shaking up how millions of Americans pay for their groceries and everyday essentials.
A recent settlement involving Visa, Mastercard, and numerous U.S. merchants has granted retailers greater control over credit card acceptance and surcharges. This shift could mean that the credit card you rely on for your weekly shopping trip might not always be accepted at your favorite store.
For years, a standing rule dictated that if a retailer accepted one type of card from a network (like any Visa card), they had to accept all cards from that same network. This proved to be a point of contention for many businesses, especially when it came to reward cards.
Often, these cards come with higher interchange fees – the costs retailers pay to credit card companies for processing transactions. While these reward cards benefit consumers, they can eat into a store’s profit margins.
Under the new terms, retailers will gain the ability to set specific surcharges for credit card usage and, more significantly, reject certain cards they deem unsuitable for their business model. This gives them the power to decline cards that carry higher interchange fees, allowing them to better manage their costs.
This development is the result of a protracted legal battle, spanning two decades. Merchants first sued Visa and Mastercard in 2005, alleging anticompetitive practices related to interchange fees and card acceptance policies. This long-standing dispute has often left consumers caught in the middle, as smaller merchants sometimes absorbed these fees into product prices.
While the settlement aims to reduce interchange fees by 0.1% over the next five years if approved and implemented, the immediate concern for consumers is the potential for their preferred credit cards to be turned away. Shoppers might find themselves needing to apply for new cards if their current ones are no longer accepted at their go-to supermarkets or department stores.
As this settlement moves forward, consumers are advised to stay informed about their preferred retailers’ card acceptance policies to avoid any surprises at the checkout.