Americans stepped up their borrowing in May, helped by the largest one-month gain in credit card debt in more than four years. But overall credit card use is still well below where it was just before the Great Recession began. (CX Matiash/AP)

Visa, MasterCard and several of the nation’s largest banks have agreed to pay as much as $7.25 billion to settle retailers’ complaints over the fees they are charged each time a customer swipes a credit or debit card, according to court documents filed Friday.

If the proposal is approved by a judge and fully executed, it would represent the largest private antitrust settlement in history. It would also mean that shoppers could start seeing prices for products vary depending on how they choose to pay.

“Reducing these fees will reduce costs, ultimately resulting in lower prices for consumers,” said Patrick J. Coughlin, senior trial counsel at Robbins Geller Rudman & Dowd and one of the merchants’ attorneys.

But one of the largest plaintiffs in the case rejected the terms of the agreement on Friday, casting doubt on whether it would move forward and how effective it would be.

The National Association of Convenience Stores called the monetary settlement a “mirage” and said the agreement does little to change the rules in the battle between retailers and card companies.

Several other retail trade groups involved in the suit, including the National Community Pharmacists Association and the National Grocers Association, said that they are still reviewing the court documents and assessing its impact on members.

The proposed settlement stems from a 2005 lawsuit brought by 20 merchants and trade groups over “swipe fees,” also known as interchange. Swipe-fee rates are set by card processors, like Visa, but are paid by retailers to banks each time a shopper uses plastic. Swipe fees typically run between 2 and 5 percent of the purchase price.

Retailers have long argued that they have little power to negotiate the amount of the fees, calling them “hidden” taxes on consumers that total as much as $50 billion a year. But financial companies say they are charging merchants for providing a key service that many shoppers find indispensable. Last year, the Federal Reserve set caps on the size of swipe fees for debit cards but left credit cards untouched.

Under the terms of the agreement, Visa, MasterCard and the banks would create a $6.05 billion fund to repay retailers for charging high swipe fees.

They would also reduce the fees for eight months to allow new negotiating rules to take effect, an amount expected to total $1.2 billion.

Those new rules include allowing merchants to raise or lower prices on a product to reflect the amount of the swipe fee. Gas stations, for instance, could charge less for using cash. They also require Visa and MasterCard to negotiate in good faith with retailers who band together.

“We believe that today’s settlements should resolve all issues with the merchant community,” Noah Hanft, general counsel for MasterCard, said Friday.

The changes mirror, in part, an agreement reached two years ago between the Justice Department and Visa and MasterCard after an antitrust investigation. The settlement also allowed merchants to discount goods for different forms of payments, although that has not been widely adopted.

The convenience store trade group said the other changes were insignificant: Merchants already have the ability to form buying groups, and the restrictions in the settlement on raising prices to reflect higher swipe fees were onerous.

“We hope and expect that, as they have the time to review it, many other merchants including class representatives will decide to reject this proposal,” said Henry Armour, the group’s president and chief executive.

Although the proposed settlement would cover an estimated 7 million merchants, each retailer must decide whether to participate in the class action. That could reduce the size of the $6.05 billion fund by as much as 25 percent.

The agreement still requires the approval of a U.S. District Court judge. If a significant number of retailers oppose the settlement, the judge may reject it.

“The money is significant, but the test will be whether the injunctive relief that goes along with it is meaningful,” said Mallory Duncan, general counsel for the National Retail Federation, one of the industry’s largest trade groups.

“If it isn’t, then the card market will remain broken, and neither merchants nor their customers will benefit,” Duncan said.

But one of the lead plaintiffs in the suit said he was thrilled with the terms of the agreement.

Mitch Goldstone, who is the president and chief executive of, called the deal “a huge win for Main Street versus Wall Street.”

“This is my Erin Brockovich moment after seven years,” he said.