Will consumers see effects of retail, bank deal

— -- Shoppers are unlikely to notice any effects from a multibillion-dollar lawsuit settlement announced Friday between banks and retailers over credit card processing fees, experts say.

Visa, MasterCard and several major banks agreed to pay more than $7 billion to settle a antitrust case brought on behalf of 7 million retailers that accept Visa and MasterCard. As part of proposed deal, credit card companies agreed to reduce for eight months the so-called swipe fees businesses pay credit card companies for card transactions they process.

Stores would be able to charge consumers more if they pay with credit cards under changes to Visa and MasterCard rules in the settlement. These transactions are more expensive for stores to process because they aren't subject to the caps on fees imposed by a financial services overhaul law enacted in 2010.

But an attorney for the retailers says few, if any, stores will charge more for credit card purchases. When credit card surcharges are allowed in other countries, retailers seldom slap them on credit card purchases, says Craig Wildfang, co-lead counsel for the plaintiffs. Instead, credit card companies have sometimes agreed to lower the amount they charge per transaction, he says.

Retailers don't actually know what they're charged for credit card purchase anyway, as fees vary by type of card. That would make it difficult for stores to pass the costs along, says National Retail Federation general counsel Mallory Duncan.

That's also a central shortcoming of the settlement, which Duncan says "does very little to actually fix the problem." While the banks will pay $6 billion for their past fees and lower them to another eight months, "it's a one time bump back to the bad old world" of higher fees, Duncan says.

"Although we have strong defenses to all claims, a settlement avoids years of litigation and uncertainties that are inherent in such cases," MasterCard general counsel Noah Hanft said Friday

The settlement still must be approved by a judge, who will consider objections to it and could accept, reject or ask the parties to renegotiate. The National Association of Convenience Stores has already said it opposes the deal and Duncan says he expects many more retailers will ultimately oppose it for not being far-reaching enough.

"There's a growing number of disgruntled retailers of all sizes," says Duncan.

Whether the billions from the lawsuit would be passed along to consumers is subject to debate, just as it's still being hotly contested whether now-lower fees for debit card purchases have benefited shoppers. Retailers say the fee they're charged now is still too high, but insist stores are passing their savings along to consumers.

The settlement of the 2005 case is said to be the largest ever for an antitrust suit. The retailers alleged card issuers and banks conspired to fix the fees stores paid to accept credit and debit cards, which average about 2% of the price of a purchase.

Wildfang says shoppers will see savings if the deal is approved.

"I am highly confident the benefits of this settlement will accrue to consumers," says Wildfang of law firm Robins, Kaplan, Miller & Ciresi.