Merchant litigation over credit card interchange seems increasingly likely to end in a settlement, leaving observers to speculate about its final impact.

Several retailers, including Safeway Inc. and Kroger Co., have sued MasterCard Inc., Visa Inc. and several big banks, alleging they conspired to fix the credit card interchange fees charged to merchants. Now industry members are anticipating a conclusion to this years-long spat.

"I would say that the likelihood of a settlement is probably higher, because of all of the downside," Brian Gardner, a senior vice president at Keefe, Bruyette & Woods, told an audience during a panel discussion Thursday. "This has all the feel of a judge who is more interested in a settlement, not wanting to go to trial."

Gardner was speaking at the annual Keefe, Bruyette & Woods Cards, Payments and Financial Technology Symposium in New York.

Both MasterCard and Visa have in recent months put aside billions of dollars, signaling that they may be getting ready to settle. Visa has allocated more than $4 billion to cover potential costs from the lawsuits. In February, MasterCard said it put away $495 million tied to the litigation.

It is hardly the first merchant lawsuit Visa and MasterCard have faced over the way they set the interchange fees that banks charge retailers.

In 1996, Wal-Mart, along with several other retailers, alleged that the payment networks could not charge higher interchange for what amounted to a "plastic check," said panelist Mallory Duncan, the National Retail Federation's senior vice president and general counsel.

The 2003 settlement included a $3 billion payment, and a clear separation of debit from credit, which is why debit cards now carry the word "debit" on the front of the plastic.

"We were in front of the same judge. We had the same mediator. So I have some sense of the dynamics," Duncan says. "The power of the judge to force a settlement is still pretty strong."

That judge is John H. Gleeson of the U.S. District Court for the Eastern District of New York.

The networks may also offer some small concessions as part of the settlement, such as allowing retailers to charge customers an additional fee if they pay with credit cards.

Small merchants, such as doctor's offices and convenience stores, are the most likely companies to add on such a credit card surcharge, the panelists said.

"I'd say 50/50, we have a settlement,'" said panelist Eric Grover, a principal at consulting firm Intrepid Ventures. "But I'd be surprised if they included something with teeth."

Another potential concession could be a temporary reduction in interchange, said panelist Inderpreet Batra, a principal at Oliver Wyman.

"But I don't think there would be something permanent," he said. (The chief executives of Visa and MasterCard have said they would be unwilling to make permanent, significant changes to the interchange system.)

A date for the cases, which have been consolidated in U.S. District Court for the Eastern District of New York, is set for September.

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