Visa, MasterCard and several major banks have agreed to pay U.S. retailers a record $7.25 billion in penalties to settle a long-running lawsuit that alleged the card giants conspired to fix so-called swipe fees paid by shops and supermarkets.

The settlement, which lawyers are calling the largest antitrust settlement in U.S. history, would resolve dozens of lawsuits filed by retailers in 2005 that accused the card companies of fixing fees for processing credit and debit card payments and prohibiting stores from steering their customers to cheaper forms of payment.

The agreement will see Visa, MasterCard and more than a dozen banks pay a number of high-profile retailers, such as Kroger supermarkets, Rite Aid and Payless ShoeSource, as well as the National Association of Convenience Stores, the National Grocers Association and the American Booksellers Association, $6 billion in compensation and agree to reduce swipe fees for eight months, a move valued at $1.2 billion, the Chicago Tribune reported.

Swipe fees are the fees that charge card providers levy on retailers for using their cards for each transaction. The fee is deducted by the card's issuing bank, effectively making it a charge on retailers for using the service.

Banks that issued their credit cards have also agreed to the settlement and will allow stores to encourage customers to use cheaper forms of payment, according to settlement papers filed on Friday in a lawsuit in Brooklyn federal court.

Over time, the reforms induced by this case and in this settlement should help reduce card-acceptance costs to merchants, which, in turn, will result in lower prices for all consumers, lead lawyer for the merchants, Craig Wildfang, told the AFP.

The agreement also calls for merchants to be allowed to negotiate collectively about how much the card companies charge in swipe fees.

But the settlement has raised fears customers could be charged more as, beginning Friday, retailers will be allowed to raise or lower the price of goods depending on the swipe fee.