Some merchants are already crying foul over a proposed $6 billion swipe-fee settlement, threatening the payments industry's attempts to move past long-pending litigation. 

The National Association of Convenience Stores, a trade group representing more than 3700 merchants and a plaintiff in the lawsuits, rejected a proposed settlement of those suits announced late Friday.  Now the group has hired law firm Constantine Cannon, which negotiated a landmark $3 billion settlement against Visa (NYSE:V) and MasterCard (MA) in 2003, to help hold out for a better deal.

"This is not a done deal," Jeffrey I. Shinder, managing partner of Constantine Cannon, said in an interview on Sunday. "This structural relief is grossly inadequate. If Visa and MasterCard are going to continue to have the right to set interchange, which I don't think they should have, you need much greater structural relief."

Retailers have long protested the prices they have to pay for accepting credit or debit cards, and the control Visa and MasterCard have over how those prices are set. The proposed deal announced Friday would settle price-fixing lawsuits that grocery stores and other retailers started filing in 2005. Under its terms, Visa, MasterCard and several major banks, including JPMorgan Chase (JPM), Bank of America (BAC), Citibank (NYSE:C) and Wells Fargo (WFC), would establish a fund for $6.05 billion for roughly seven million merchants. 

But Shinder says that if enough of the plaintiffs decline to sign onto the settlement, it could be over before a judge even gets to approve it.  He pointed to the timing of the announcement – late afternoon Friday, on a day when many financial journalists had spent the day covering JPMorgan Chase earnings and their readers had already left for the Hamptons – as a strategic move to make the deal seem inevitable. 

"The way it was done, Friday afternoon at 5:30, is a reflection of the fragility of the whole thing," he says.

Any setback to the settlement would be a blow for Visa and MasterCard, which have faced mounting legal and regulatory challenges in recent years to how they set interchange fees.

The Durbin amendment to the Dodd-Frank Act fundamentally overhauled that system for debit cards, but the proposed settlement does not go nearly as far for credit cards. Under its terms, the networks have agreed to temporarily reduce for eight months the level of interchange fees by 10 basis points, a benefit estimated by plaintiffs' attorneys to be worth $1.2 billion.

Visa and MasterCard will also drop their "no surcharge" rules, which prohibited merchants from making customers pay extra to use their credit cards. Payments industry members and severalmedia stories have highlighted this portion of the proposed settlement, pointing out that it could translate into higher fees for consumers – much to Shinder's dismay.

"What you would need to provide meaningful relief to the merchant community is something well beyond the anemic set of relief around surcharging. It's a mirage and it's a trap for the merchant community," he says. "I think many merchants are going to be concerned about the PR ramifications."

Shinder says that a more effective settlement would preferably eliminate the card networks' ability to "fix prices for their banks" and "failing that, the relief should include substantial interchange reductions and a meaningful ability to route to competing networks."

The National Association of Convenience Stores hired Constantine Cannon late last week as supplementary counsel. The group said in a press release Friday that the proposed settlement fails "to introduce competition and transparency into a clearly broken market  …  [and] allows the card companies to continue to dictate the prices banks charge and the rules that constrain the market including for emerging payment methods, particularly mobile payments."