The National Retail Federation says it opposes a proposed settlement over a federal antitrust lawsuit that would require Visa Inc., MasterCard Inc. and major banks to pay $6.05 billion to retailers, as well as reduce for eight months the fees those card companies charge the merchants that participated in the suit. That fee reduction is valued at $1.2 billion, according to a statement issued by Robins, Kaplan, Miller & Ciresi LLP, the attorneys representing the retailer plaintiffs.

The NRF’s board of directors has given the retail trade organization authorization to attempt to block the settlement in court because it doesn’t address the fundamental issues in the case, says Mallory Duncan, senior vice president and general counsel at the NRF. However, the NRF is not a party to the suit, so it says it is unsure whether it or any other outside group will be allowed to intervene in the settlement or if the case will qualify as a class action.

The suit, originally filed in 2005 by retailers and retailer association groups, alleged the payment card companies violated antitrust laws. At issue were the interchange, or swipe fees, that credit-card issuing banks charge retailers for each credit card transaction.

When a consumer pays with a credit card, credit card issuers charge the merchant an average of 2% of the value of that transaction, according to the NRF. Those costs add up for online retailers because for many of them, credit cards are the payment method for the majority of their online transactions, says Duncan. Credit-card issuers consider those types of online, card-not-present transactions riskier than store-based transactions where a consumer has her card in hand and charge online retailers interchange rates that are up to one-third higher than those paid by other merchants, the NRF says.

The settlement should include measures to reform the system that Visa and MasterCard use to set fee structures that credit-card issuers then agree to follow, Duncan says. The goal of the antitrust suit is to introduce competitive pressures to bring down costs and make the fees more transparent. However, the settlement doesn’t do that and it includes a provision that prohibits merchants from filing a suit over swipe fees in the future. “The settlement cements the card networks’ cartel-like system and frees them to raise rates in the future without the possibility of restraint or litigation,” he says.

Moreover, even though the settlement would enable retailers to charge consumers more for paying with credit cards, merchants’ ability to do so would be hindered by both state laws and other regulations, says Duncan. “They ‘ve taken complicated surcharging rules and replaced them with another set of surcharge rules,” he says.

The Electronic Payments Coalition, which enables and oversees electronic payments, says it is highly confident that the settlement agreement will be approved. “The substance of [the NRF’s] objections is not new, and identical to those already raised and resolved over the seven year negotiation process,” says a spokeswoman for the group.