(Reuters) – Stores may not find it easier to charge shoppers fees for paying by credit card as a result of a $7.25 billion class action settlement with Visa Inc. and MasterCard Inc, a problem that may delay or derail its approval, an analyst said on Monday.

The proposed settlement between retailers and the two biggest credit card companies would resolve stores’ claims that Visa and MasterCard conspired with major banks to fix swipe fees—- the amount paid to process debit and credit card payments.

In addition to a $6.05 billion payment and temporary $1.2 billion swipe-fee reduction, the deal would also allow stores to start charging so-called checkout fees to customers who pay with MasterCard or Visa credit and debit cards.

But senior Bernstein Research analyst Rod Bourgeois wrote in a July 23 report that retailers would in reality not get much help from the deal in offsetting the swipe fees by charging customers more.

“We think the settlement’s much-touted surcharging provisions (as currently written) actually have no real usefulness to merchants,” he said.

Buried in the fine print of the agreement are provisions that undercut the stated intent of the settlement, he said.

For example, if retailers force customers to pay more for using Visa and MasterCards, they essentially must charge consumers more when they pay using other credit card networks, such as American Express, according to Bouregois’ analysis of the proposed settlement.

But American Express prohibits merchants from implementing policies that discriminate against its cards, like discounts designed to steer customers to different forms of payment, Bourgeois said.

The settlement is subject to approval by a federal judge.

The surcharge rules will also not apply in the 10 states that prohibit that practice, including Texas, California and New York.

“This situation could undermine the settlement if merchants voice their objections to this provision during fairness hearings prior to the court’s final approval,” Bourgeois wrote. Such objections may open the door for some stores, particularly large ones, to object to the settlement or appeal its approval, he said.

Some stores have said they will not impose extra fees for paying with plastic, even if they can. One of the largest U.S. retailers, Target Corp., issued a statement Friday saying it did not intend to impose checkout fees, and calling it “bad for both retailers and consumers.”

Hours after the proposed settlement was filed, the National Association of Convenience Stores rejected the deal, saying it did not alleviate stores’ long-standing concerns over how Visa and Mastercard set swipe-fee rates.

RETAILERS SAID TO HAVE OPTIONS

Craig Wildfang, a lawyer for merchants who helped negotiate the deal, said the settlement would give retailers several different options should they choose to pursue checkout fees.

For instance, stores could choose not to assess the fees, or if they did, they could re-examine their agreements with competing card issuers or even drop those other cards altogether, he said.

“We see the settlement agreement as providing freedom to merchants to make those choices that they think are in the best interest of their business and their customers,” Wildfang said.

Noah Hanft, general counsel for Mastercard, said it was unlikely that many merchants would wind up charging checkout fees, largely because of anticipated customer feedback.

“The value merchants get from Mastercard acceptance is far in excess of the actual cost of acceptance, and we think that when merchants consider all those factors they’re not likely to impose checkout fees,” Hanft said.

Visa declined to comment.

Ultimately, it will be up to U.S. District Court Judge John Gleeson to approve or reject the proposed settlement, a process that will play out in Brooklyn federal court over the next few months.

Objectors will be given a chance to voice their positions at a fairness hearing in Brooklyn federal court. Stores will also have the opportunity to opt out of the settlement altogether, although that would only apply to their share of damages, and not the rule changes outlined in the proposal.

The case is In re Payment Interchange Fee and Merchant Discount Antitrust Litigation, in the U.S. District Court for the Eastern District of New York, No. 05-1720.

(Reporting by Jessica Dye; Editing by Cynthia Osterman)

Source: http://www.reuters.com/article/2012/07/23/us-creditcards-fees-analyst-idUSBRE86M1CK20120723

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