NEW YORK CITY, New York: If you rely on premium rewards credit cards like the Chase Sapphire Reserve or Citi Strata Elite, your next swipe might not go through, and not because of a bank issue. A proposed legal settlement between Visa, Mastercard, and a group of merchants could soon allow retailers to reject certain high-fee credit cards at checkout.

The change stems from a class-action lawsuit that's been dragging on for nearly 20 years. At the heart of the dispute are the fees merchants pay to accept Visa and Mastercard payments, known as interchange fees. These costs are typically higher for premium, rewards-heavy cards.

The new settlement includes a potentially game-changing revision to the "honor all cards" rule, a long-standing requirement that says merchants who accept Visa or Mastercard must accept all cards issued on those networks, regardless of type or tier.

This rule has been a pain point for many businesses, particularly as more consumers flock to luxury cards with hefty perks, which cost merchants more to process. For example, Visa Infinite cards (like the Sapphire Reserve) can cost 0.15 percent more per transaction than a standard Visa Signature.

If approved, the settlement would give merchants the right to decline higher-tier cards or to pass the added fees on to customers as surcharges. That means consumers could face awkward refusals at checkout or end up paying extra just for using a rewards card.

The change puts merchants in a tricky position: reject premium cards and risk frustrating affluent customers, or absorb the higher fees and reduce profit margins. The settlement also includes a temporary 10-basis-point reduction in swipe fees for five years, and a cap of 1.25 percent on standard credit card processing rates for eight years.

But not everyone is satisfied. "Once again, this proposal is all window dressing and no substance," said Stephanie Martz, chief administrative officer and general counsel for the National Retail Federation. "The reduction in swipe fees doesn't begin to go far enough, and the change in the honor-all-cards rule would accomplish nothing. If the courts can't fix this, it's time for Congress to take action."

Visa and Mastercard, eager to move on after two decades of litigation, say the settlement is a reasonable compromise.

"We believe that this is the best resolution for all parties, delivering the clarity, flexibility, and consumer protections that were sought in this effort," a Mastercard spokesperson said.

The proposal doesn't apply to American Express cards, which operate under a closed-loop system, or to debit card transactions.