The entire thing is a shell game and honestly a kind of sham by Visa/MC.

Prepare for a long post...

When cards started offering rewards, Visa argued that the issuer was taking a hit on offering the rewards, and essentially "the more you spend, the more you earn!" mentality would lead people to spend more, meaning the merchants would get more spend overall. So paying a little more swipe fees to get more money overall was a net win for everyone. Of course eventually almost every card became a rewards card.

Visa/MC wanted a way to push rewards rates even higher, so they started introducing the Visa Signature cards. When Visa Signature came out, they boasted of the cardmember benefits: The first Visa Signature Cards usually had "no pre-set spending limit" (which anybody who knows anything about risk management knows this means there's a preset spending limit that the bank doesn't tell you until you hit it, but to those who don't, it sounds like the bank is writing you a blank check), and later on, $5K minimum credit limit. Mastercard had World Elite as the essential equivalent of Visa Signature. Both argued that with higher credit limits that they were offering you a more valuable, more spendy clientele and that they came with oodles of perks like extended warranty, purchase protection, travel benefits, etc. etc. so higher interchange was justified.

The dilution of benefits (or what some term "enshitification") came later, where Visa and Mastercard essentially allowed any issuer with a pulse to issue was World Elite/Visa Signature. First the no preset spending limit caved to $5K minimum CL, and nowadays, at least some issuers have choice (I'm damn sure my AOD FCU Visa Signature was issued at $5K because they're risk averse and that was the maximum CL they were willing to extend me because they had to) and products like the Amazon Prime Visa are routinely issued as Visa Signature with well below a $5,000 CL. Citi over the past few years has basically done the same, converting essentially all Mastercard Reward cards to World Elite over time. Very few Visa Signature products actually offer the extended warranty, purchase protection, etc. benefits anymore. Sure, an AF card is likely to offer them, but almost every Visa I have is a no AF Visa Signature where the issuer opted out of all of the benefits that were supposed to justify the interchange.

This of course did not sit well with merchants who recognized the farce. Often Visa Signature interchange is the same or 1-10 basis points more than standard rewards as a dilution.

Visa Infinite was introduced as a "no guys we're serious" level to say hey these are cards with Amex Plat level AFs. There may be exceptions, but generally Visa Infinite products have at least a $400 AF in the US market, and actually still have premium cardholder benefits. These cards generally have benefits still and Visa's posturing is it's more comparable to an Amex plat level cardholder, more spendy, perks, more valuable, therefore more interchange. However, looking at the current October 2023 interchange chart, Visa Signature and Visa Infinite interchange generally mirror each other.

So to make an even further division, Visa decided to make tiers within Visa Signature and Visa Infinite. Fine, we bring back the no-preset spending (thereafter NPSL) limit option of the Visa Signature. If you issue with NPSL, then you can be Visa Signature Preferred. Taking an example of, say, Supermarket Credit Tier 0, a Visa Signature Preferred would get 1.65% + $0.05, and a regular Visa Signature card would get 1.55% + $0.05. Other interchange is wider - small merchant recurring payments for telecom is 2.20% + $0.05 Visa Signature Preferred, but a mere 1.43% + $0.05 (matching standard Visa rewards and all other products) on non-Preferred Visa Signature.

Visa Infinite is binned into two buckets, spend qualified and not. Details are scant on what this actually means, but best I can tell, it's essentially the same as Visa Signature Preferred - the lack of a preset credit limit is a spend qualification flag that has a value of Q if it "meet's spend qualified management amount for the card product", N if it doesn't, and is blank if it doesn't apply to the product (non-infinite/non-signature cards).

In essence, the entire thing has been a game of cat and mouse between Visa/MC and merchants. Over time between posturing, the marketplace legitimately competing, and lawsuits, merchants have strived to lower interchange, and Visa/MC/other networks have invented pretexts to essentially reset interchange. OK standard Visa card interchange is down, we swear Signature is new, it's going to be great because no spending limit so we need more money to pay for you getting access to high net worth customers. OK some of them don't have a preset spending limit but they still have oodles of benefits and will attract a better cardholder. OK they're offered with <$5K CL to basically anyone with a pulse on no AF cards now so there's a REAL tier of Visa Signature Preferred, just trust me bro, it's worth the higher interchange. As much as the cardholder is the customer and a merchant is a customer, issuing banks are the most real customer to these networks. Visa Signature was allowed to be diluted to the degree it was to allow issuers to collect more interchange.

I realize I'm way into my diatribe now, but my point is that the card networks are not our friends. I look at this settlement very passively because, as I've stated multiple times, I don't see it changing much. Visa gives a temporary and very small reprieve on interchange rates (4 basis points for three years), which is why a lot of retailers don't like it. What the smarter retailers realize is that basically this doesn't change the status quo, but it ends the lawsuit. Courts are slow as hell. Visa gets to end this lawsuit, get a 5 year reprieve on getting sued over swipe fees, and if they raise them again in five years - the retailers can sue again. Oh no! Except this lawsuit has been going on for 18+ years. If the settlement ends this lawsuit and Visa starts hiking base interchange back up in three years/average overall fees by 7 basis points in five years, Visa can spend the next 15+ years dragging out the next lawsuit.

Some would say that this settlement is an example of why the credit card competition act is needed. Essentially, the oligopoly of Visa/MC/token competition from Amex & Discover is a broken system that doesn't actually compete. The Credit Card Competition Act strikes me (personally) as the worst of both worlds, in that it would exempt Amex and Discover (maybe merged Cap1/Discover if that's allowed to go through) from the secondary network requirement on cards they issued themselves. Especially with a merged Cap1/Discover, these issuers would be too large to realistically drop by merchants, and thus Amex/Discover would have more fat in interchange to offer rewards, but way less competition as Visa/MC issuers have secondary networks and would have to cut rewards rates. Less competition overall on credit card rewards would mean that Amex/Discover would not have to compete as hard, just offer better rewards than the larger Visa/MC issuers (Visa/MC issuers with <$100B assets would be exempt. Rise of the credit union rewards cards?) . Essentially as I see it, the Credit Card Competition Act is a "worst of both worlds".

I'll end my rambling by saying that the larger issuers have a ton of choice. Infinite does not seem diluted yet from a benefits perspective. Signature absolutely is, and at the largest issuers, basically everything is issued at Visa Signature or World Elite level now after both were diluted.