A legal settlement ending 20 years of litigation by merchants against Visa and Mastercard includes a concession by the card networks that may not ultimately matter much.

The proposed pact, which still awaits a federal judge’s final approval, would eliminate the longstanding rule that forces merchants to agree to accept all Visa cards if they accept one, and similarly accept all Mastercards if they accept any. The rule means merchants must take the networks’ premium cards, for which they pay higher interchange fees, alongside more standard cards, including debit cards, with lower fees.

The rule change would theoretically let restaurants, retailers or other businesses accept some Visa or Mastercard cards, but not others. It would also provide more leeway for imposing surcharges when the more expensive cards are put on the counter by consumers.

But some merchants aren’t impressed. They oppose the legal settlement offered last year by lawyers for the two sides, saying the agreement falls short of expectations, and that eliminating the “honor all cards” rule would essentially be meaningless.

The CEO of American Express seems to agree with them. When Amex CEO Stephen Squeri was asked to comment on his rivals’ agreement to ditch the rule during a webcast with analysts to discuss that company’s recent third-quarter results, he said as much.

"Good luck,” was Squeri’s knee-jerk response on Friday. 

He presumably was directing that comment to merchants, who he knows would be hard-pressed to decline Visa or Mastercard cards. “It's going to be really hard, I think, for people to differentiate,” he said, suggesting there will be “consumer outrage” if merchants start rejecting certain cards.

The rule has had a somewhat equalizing effect for acceptance of cards held by elite consumers, who often pay to hold those cards and receive more benefits for doing so, and cards with fewer benefits held by consumers not interested in annual card fees. 

Amex has always been in a league of its own, with many high-income cardholder customers who are willing to pay for the privilege of receiving more perks. It’s not a party to the litigation, but Squeri’s comments are telling.

The upshot is: There's not much incentive for merchants to start discriminating between the cards they’re willing to accept. In fact, there’s a big downside, for two key reasons. 

First, as Squeri suggested, it’s a bad experience for consumers. Dan Stiel, a former card industry executive who now advises merchants on payments, shares that view. 

The last thing a retailer wants is consumers digging through their wallets in the checkout line looking for a particular card that a store clerk may or may not recognize as an acceptable card, while other customers watch and wait, explained Stiel, whose Abetica Studios firm is based in Palm Springs, California. 

“You want to create a convenient, hassle-free way to pay for your customers,” Stiel said in an interview Wednesday.

To the extent merchants make it difficult for their customers to pay, they stand to lose customers, or at least upset them. Neither one of which is good. So the idea that customers will take a liking to using one card at a particular retailer, another card at a restaurant and a third card elsewhere is a non-starter. 

The second reason merchants should be reluctant to turn away customers handing them premium cards is that those sales are typically worth their while, despite the higher fees, Stiel said.

“They are exponentially more profitable than someone who might be using a debit card,” Stiel said, describing a customer who drives into a gas station with an expensive car to buy a tank full of premium gas using an elite credit card compared to a customer with a debit card who doesn’t fill up. “It might be a lower cost for merchants, but the tickets are smaller.”

For many merchants, potentially aggravating high-end customers and losing out on bigger sales because they want to avoid higher fees would seem a short-sighted strategy. By contrast, merchants hoping to gain from a slew of smaller sales attached to lower fees might only be lucrative at extremely high volumes. 

Ultimately, elimination of the “honor all cards” rule is an “empty benefit,” Stiel said. “If the merchant community sees this as a big win, I think they’re going to find themselves deeply disappointed.”

Maybe that’s why Visa and Mastercard were willing to do away with the rule.