Earlier this week, we told you that a settlement in a huge lawsuit between merchants and Visa and MasterCard was in the offing and that it could open the door to retailers tacking on surcharges to credit card customers. Well, that proposed settlement has come to pass, meaning you may soon be paying more for the privilege of using your credit card.

The settlement will result in a huge $6 billion payout — shared by Visa, MasterCard and banks like JPMorgan Chase and Bank of America — to the group of plaintiff retailers, which includes grocery giants Kroger and Safeway. The two credit card companies will also, at least temporarily, reduce fees to merchants.

But the biggest thing for consumers is that the settlement will alter the Visa and MasterCard’s longstanding policies against merchants adding a credit card surcharge or charging customers more than the price for a cash purchase.

According to the Electronic Payments Coalition, a group of banks, credit unions and payment card networks, any credit card surcharges will be limited to the amount of money the merchant pays to the credit card company.

So if a retailer is charged $.35/swipe by Visa, the most it can pass on to you is $.35.

Retailers who add the surcharge most post a fee disclosure to the consumer at the point of entry, point of sale and on the receipt.

In states where the law currently prohibits credit card surcharges, merchants will not be able to pass on the cost. Ironically, this case is before a U.S. District Court in New York, one of the ten states where surcharges are verboten. The others are California, Colorado, Connecticut, Florida, Kansas, Maine, Massachusetts, Oklahoma and Texas.

Among the allegations in the lawsuit, the plaintiffs claimed that Visa and MasterCard colluded to keep swipe fees — the amount of money they charge to retailers for each purchase — at high levels. This resulted in an anti-competitive atmosphere, alleged the retailers, who say they had no choice but to pay the high fees to both card companies.

Though American Express and Discover were not part of the lawsuit, neither of these companies have policies prohibiting merchants from charging extra to credit card users. Instead, their merchant agreements state that a retailer can not charge extra to use these cards if they don’t charge for using competitors’ cards.

So now that Visa and MasterCard have opened the floodgates to credit card surcharges, merchants are free to tack on the surcharge for Amex and Discover purchases.

Some argue that allowing merchants to pass on the swipe fee to customers is actually a good thing. They say it will add transparency to the whole process, letting customers see exactly how much retailers have been paying to Visa and MasterCard, especially on smaller purchases.

Additionally, it’s hoped that this settlement will spur Visa and MasterCard to actually lower their swipe fees to compete against each other. Instead of the two companies marketing themselves based on balance transfers and interest rates, we could see ads touting a credit card’s low swipe fees, giving consumers one more factor to consider when selecting a credit card.

But not everyone is happy with the settlement. Two plaintiff groups — the National Association of Convenience Stores (NACS) and the National Association of Truck Stop Operators (NATSO) — say they reject the settlement.

These groups say the settlement does not go far enough to introduce transparency into the transaction process. According to a statement, they claim that while the proposed settlement allows merchants to show consumers some of the costs associated with accepting credit cards, what retailers can actually tell consumers is limited by Visa and MasterCard.

“NACS does not accept this proposed settlement, and we reserve the right to fight it if other class representatives do accept it,” said NACS president and CEO Henry Armour. “There is plenty of time for merchants to make thoughtful decisions related to this proposed settlement. 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.”

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