The nation's largest merchants have banded together against a possible settlement over so-called swipe fees charged by credit card issuers MasterCard (NYSE: MA) and Visa (NYSE: V). Last week, major U.S. retailers including Target, Wal-Mart, and Home Depot (NYSE: HD) officially opposed a multibillion-dollar offer from the credit card companies to settle a 7-year-long dispute over credit card transaction fees.

The price-fixing case in question could have long-lasting effects on MasterCard and Visa if enough plaintiffs reject the proposed settlement deal. However, perhaps more important is what this class action suit means for consumers like you and me.

The not-so-secret truth
For many U.S. merchants, the cost of accepting plastic is a drain on profits. That's because stores are forced to pay an interchange fee to take credit cards, which can cost as much as 3% per transaction. Depending on how much business a merchant generates, those fees can add up. In fact, Business Insider estimates that interchange charges account for about $50 billion in annual revenue for the credit card companies.  

If you're not yet concerned, you should be. You see, most retailers pass this expense on to you (the consumer) by raising merchandise prices. But here's the kicker: If a settlement is reached in the case, that product markup will become a lot pricier for shoppers paying with plastic.

Here's why
In addition to the $6 billion Visa and MasterCard would pay to settle the dispute, retailers would also gain the right to impose a surcharge on each purchase made with a credit card. To sweeten the deal for merchants, Visa and MasterCard also agreed to cut transaction fees for eight months.

Put plainly, if you wanted to purchase a gallon of milk at Wal-Mart, the discount retailer could charge you as much as 3% more if you paid for that milk using a credit card. Not to mention that if you keep a card balance at the end of each month, you would also have to pay interest on that surcharge.

If you're curious why American Express and Discover Financial Services aren't getting mentioned in this controversy, it's because they already allow interchange fee surcharges, as long as the merchant also imposes surcharges on payments made with other cards. Have you ever wondered why some stores don't accept American Express? In many cases, it's because they would have to charge customers more to make it economical for them.

Prior to the proposed agreement from Visa and MasterCard, consumers were generally protected by a no-surcharge rule. Yet there's still hope, as Target and Wal-Mart, among others, understand that this is a short-term remedy for a much larger problem.

In a statement last month, Wal-Mart urged plaintiffs to refuse the offer, saying, "As Walmart continues to seek reform that will provide transparency and true competition among financial institutions, we encourage all merchants to put consumers first and reject the settlement."

Thanks or no thanks?
Before we praise Wal-Mart for defending "the consumer," there's an important distinction to be made. Swipe fees exist for a reason. For one thing, these processing charges help subsidize the benefits we enjoy as cardholders. I can't speak for everyone, but if you're like me, airline miles and points programs are welcome perks to paying with plastic.

Unfortunately, these luxuries could disappear or at least be significantly reduced if changes are made to the swipe fees paid by merchants. Rest assured, credit card companies will find a way to make up the difference. At the same time, if the settlement is approved there will be long-term ramifications for both consumers and retailers.

Personally, I think it is in consumers' best interest if the retailers involved refuse the terms of the settlement. Conversely, if they accept the terms and are paid the offered amount, eight months from now merchants will once again be pummeled with outrageous transaction fees -- only this time they'll have no defense.   

Final thoughts
In an unsurprising twist, retailers are being proactive about the move to mobile payment processing. It's my hope that new payment services such as those offered by eBay's (Nasdaq: EBAY) PayPal and upstart Square will soon make allegations of price-fixing by credit card conglomerates moot. In fact, Starbucks' (Nasdaq: SBUX) recent deal with Square will bring the tech start-up's digital purchase platform to nearly 7,000 Starbucks coffee shops around the country.

Similarly, PayPal is also gaining traction as more merchants are choosing to test PayPal's point-of-sale systems in their stores. Clearly, these offerings make more sense from an investment standpoint considering most retailers are able to utilize the technology free of charge. Bigger picture, increased competition in the payments business should help redistribute some of the pricing power currently held by credit card companies.

While widespread adoption of mobile payments won't happen overnight, we're certainly heading in the right direction. Going forward, consumers should try to keep abreast of developments in digital payments and the price-fixing tactics of credit card companies. In the meantime, The Motley Fool has created a special free report to help you navigate the tricky world of banking. Click here for instant access to your free copy of the research report:  "The Only Big Bank Built to Last." And don't forget to add these stocks to MyWatchlist, the Fool's free tool that lets you track and monitor your favorite stocks.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.