A recent settlement between the world's two largest payment processors and American retail groups was initially seen as a boon for the latter group, but now many are worried about just what the deal might mean.

Visa and MasterCard will pay some $7.25 billion in both payouts and concessions at some point in the near future as part of a deal with a number of merchant groups after a class action settlement, but some experts believe that such an arrangement will hurt many companies, according to a report from the New York Times. In fact, businesses large and small have stringent objections to these changes, ranging from independently owned small companies to retail giants like Walmart and Target.

Businesses afraid of implications
Much of the unease comes as a result of a provision in the settlement that allows retailers to apply an additional charge to customers who decide to make payments with their credit cards, the report said. This extra cost would be in addition to the purchase price and is intended to cover the swipe fees merchants pay for processing a credit card transaction. However, experts say this isn't really beneficial to businesses because it's more likely to drive credit card customers away, or at least annoy them.

Despite having the option available to them now, many small businesses won't actually charge the added fee for credit card customers, the report said. Instead, many will continue to absorb the cost, which experts say can cost tens of thousands of dollars per year for even the smallest privately owned businesses.

"When somebody's in my store, I want them to be impressed by both the quality of my products and the service they receive,” Andy Charles, the owner of Haven's Candies in the Portland, Maine, area, told the newspaper. "And if I suddenly have to get into a conversation where I'm penalizing them if they use a credit card, it doesn’t make for very good customer service."

Settlement falls short?
Many, including groups involved in the creation of the settlement, also say the deal offers too little in the way of financial concessions from the payment processors, the report said. For instance, Visa and MasterCard will pay the groups involved a total of $6 billion from the $7.25 billion total, and the rest will come as a result of swipe fees being discounted for the next eight months.

Mallory Duncan, senior vice president and general counsel for the National Retail Federation, told the newspaper that because the suits were brought as a result of payment processing fees being charged for years, the settlements were actually relatively small, the report said. For its part, the NRF was not involved in the settlement.

Further, many involved also see the allowance of giving merchants the option to apply a credit card surcharge to be somewhat limited, the report said. For example, the surcharge would technically only apply to Visa and MasterCard purchases, but would also have to be extended to those on American Express accounts if they accept those cards, despite that processor's lack of involvement in the settlement. About half of all merchants in the U.S. who take both Visa and MasterCard also accept AmEx payments.

The waiting game
The settlement has still not been approved by a court, which means that the various terms of the deal cannot yet go into effect, the report said. However, one quirk of the arrangement, over which many experts have expressed concern, is that, when it's approved, both Visa and MasterCard cannot be hit with any suits from these groups over transaction pricing in the future. That includes any terms that could have been included in this suit but were not.

"The release is remarkably overbroad," Douglas Kantor, a Washington lawyer who represents NACS, the convenience store trade association, told the newspaper. "There are all kinds of rules that aren't touched by the settlement at all, and it releases them to abuse merchants with those rules in perpetuity."

While few expect a large number of merchants to actually adopt these surcharges for credit card customers, the deal might still end up affecting a number of consumers. As a consequence, those who attempt to pay with a credit card may want to think about switching to an alternative method if the surcharge would be applied, so that they can avoid more credit card debt, even in small amounts.

Additional credit card debt can be detrimental to your credit score, but so too can unfair markings on your credit report. For this reason, you should take the time to check this document as often as possible, and work with a credit repair law firm to clear up any entries you don't recognize.