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A major retail group recently announced it has clearance to begin pursuing legal action in an effort to stop a hotly-contested settlement between some merchant organizations and the world's two largest processors of debit and credit card payments.

The board of directors for the National Retail Federation recently gave the group the power to take steps toward intervening in the proposed $7.25 billion swipe fee settlement between Visa and MasterCard and several merchant groups, according to a report from the NRF. However, the group, which has 3.6 million member businesses that employ about one in every four U.S. workers - roughly 42 million in all - is still mulling how best to proceed with its intervention.

Part of the reason it does not have a clear course of action yet is that the judge presiding over the case in question has not made two important rulings yet, the report said. First is that he has not outlined how outside parties may enter the case, and the NRF is not currently involved in the suit. Second, he has yet to determine whether the case is a class action.

"The National Retail Federation categorically opposes the proposed settlement," NRF president and chief executive officer Matthew Shay said. "It does nothing to curb the anticompetitive behavior of Visa and MasterCard, and instead ensures that swipe fees paid by retailers and their customers will continue to rise while barring any future legal challenges. The proposal is a lose-lose-lose for merchants, consumers and competition. NRF will take any and all steps necessary to oppose the settlement as it is currently proposed and will work toward real reform of the swipe fee system."

In particular, the NRF is mainly opposed to the settlement because it feels the monetary value of the agreement is relatively small compared with what Visa and MasterCard would have had to pay if the case had gone to trial, the report said. While $7.25 billion might seem like a lot, because the suit covered what it believes were eight years of overcharging for swipe fees - which tripled in the last decade - the value of a jury decision could have exceeded a few hundred billion dollars.

Further, the settlement does nothing to preclude Visa and MasterCard from boosting swipe fees for credit purchases in the future, and in fact prevents future lawsuits over any increases that may come later, the report said. As a consequence, it could be relatively easy for the payment processors to recoup the $7.25 billion in a few years, given that swipe fees have risen an average of 16 percent per year over a decade.

The Federal Reserve Board recently gave both consumers and retailers a bit of relief from this system by placing a cap on the amount payment processors could charge for debit card swipe fees, which significantly reduced the average cost of doing so.