The preliminary approval of the MDL-1720 settlement represents a significant milestone in the longest-running payments lawsuit in U.S., spanning over 21 years. The agreement introduces a range of changes intended to provide merchants with additional flexibility in managing card acceptance costs, including expanded surcharging rights, issuer-level discounting, greater discretion over card acceptance, and the ability to decline certain digital wallets.

The final approval hearing for MDL-1720 is scheduled for November 16th in New York. The merchant community has continued to push back on the settlement and the value it provides for merchants, although it remains to be seen whether there is sufficient opposition to prevent final approval.¹ Merchant-side objections have noted that the interchange relief is relatively small, while many of the rules changes opened up by the settlement are not realistically applicable.

During CMSPI’s recent webinar on the settlement, 80 merchant attendees were asked how they intend to respond to several of the key provisions. The results suggest that while merchants are interested in the opportunities created by the settlement, many remain cautious about implementing changes that could affect customer experience or require significant operational adjustments.

1. Awareness Has Outpaced Action

Perhaps the most striking finding from the webinar relates to merchant preparedness.
While the settlement has generated considerable discussion across the payments industry, relatively few merchants appear to have developed concrete response plans. Sixty-six percent of respondents stated they were aware of the settlement but had not yet begun planning. A further 14% reported they were unfamiliar with the settlement altogether. Only 17% indicated that planning activities were already underway. This highlights a significant gap between awareness and execution.

The settlement introduces several new opportunities for merchants to influence payment costs, but many of these changes may require updates to payment acceptance strategies, operational processes, customer communications, and technology infrastructure. As implementation approaches, merchants that begin evaluating these opportunities early may be better positioned to capture available value.

2. Digital Wallet Rejection Appears Unlikely

One of the settlement’s most notable rule changes is the relaxation of the “Honor All Wallets” requirement, allowing merchants to decline certain digital wallets across both online and in-store environments.

However, webinar attendees demonstrated little appetite for exercising this option. Ninety-one percent of respondents indicated that they would not consider rejecting digital wallets.

The result reflects the increasingly central role digital wallets play within the broader payments ecosystem, with CMSPI’s Merchant Payments Intelligence suggesting mobile wallets now constitute nearly 10% of all card present transactions. While merchants have historically raised concerns around costs, routing restrictions, and reduced transparency associated with some wallet transactions, consumer adoption continues to accelerate. For many businesses, the potential operational or customer experience risks of limiting wallet acceptance appear to outweigh any perceived benefits.

The finding suggests that merchants are more likely to focus on optimizing acceptance costs within existing wallet ecosystems rather than restricting access altogether.

3. Expanded Surcharging Flexibility Does Not Guarantee Adoption

The settlement would allow merchants to surcharge at a more granular level than previously permitted, including the ability to apply surcharges to specific card brands or card products without applying equivalent surcharges across all card networks. Despite this additional flexibility, merchant sentiment remains mixed. Seventy percent of respondents indicated they would not consider surcharging Visa or Mastercard credit card transactions, while twenty two percent remain undecided.

This hesitation is unsurprising. Although surcharging can provide a direct mechanism for recovering acceptance costs, merchants have historically balanced the potential financial benefits against customer perception and competitive pressures. State-level surcharging restrictions provide an extra layer of complexity. The sizeable undecided cohort may indicate that businesses are still evaluating whether the revised rules create a sufficiently compelling business case to revisit surcharging strategies.

4. Issuer-Level Discounting Generates Curiosity and Uncertainty

The settlement would also permit merchants to offer price discounts at an issuer level, a practice that has historically been restricted by network rules. Merchant responses suggest considerable interest, albeit accompanied by substantial uncertainty.

Only 15% of respondents ruled out issuer-level discounting entirely. Another 15% indicated they would actively consider implementing issuer-specific incentives, while 30% reported they were evaluating the possibility. The largest group, representing 40% of respondents, stated they were unsure.

Unlike surcharging, issuer-level price discounting remains largely unexplored territory for many merchants. The results suggest that businesses recognize the strategic potential of influencing payment behavior through targeted incentives but have yet to determine whether the operational complexity and implementation requirements justify the potential savings.

5. Merchants Continue to View Visa and Mastercard Acceptance as Mandatory

The settlement’s modification of the Honor All Cards rules would allow merchants to selectively accept certain categories of Visa and Mastercard credit cards, including premium and commercial products. Despite longstanding concerns regarding the cost of premium card acceptance, most merchants remain reluctant to restrict acceptance.

Seventy percent of respondents indicated they would not consider ceasing acceptance of Visa or Mastercard products. However, 21% stated they were interested in exploring the option, while 5% indicated they would consider doing so.

The results highlight an important distinction between dissatisfaction and action. While merchants continue to express concerns regarding rising card acceptance costs, most remain cautious about introducing measures that could create friction at the point of sale. Nevertheless, the sizeable proportion of respondents expressing interest suggests that merchants increasingly value having additional leverage and choice within the card acceptance landscape.

Conclusion

The Merchant Community Is Still Evaluating Its Options

Taken together, the webinar poll responses reveal a merchant community that is engaged but not yet committed to a particular course of action. Merchants appear willing to explore new tools provided by the settlement, particularly those that offer greater control over acceptance costs. However, there remains a clear preference for solutions that minimize disruption to customer experience and preserve broad payment acceptance.

From a cost perspective, the available pot for merchants will not be evenly distributed, and there will likely be winners and losers. This means that merchants must act fast to quantify what piece of the pie they can get. Merchants that can best understand their leverage, especially when compared to the market, are best positioned to take advantage of all available relief. CMSPI has unrivalled market visibility and is uniquely placed to support merchants with their MDL-1720 strategies.