Updated at 8:13 p.m. ET: Visa, MasterCard and the nation's biggest banks have agreed to pay $7.3 billion to millions of merchants to end a seven-year dispute over credit card “swipe” fees. The settlement includes at least $6.05 billion in payments to some 7 million merchants for past damages and a temporary reduction in fees valued at $1.2 billion.

Visa alone has agreed to pay $4.4 billion to settle the class action and related individual claims from merchants who alleged the card issuers violated the Sherman antitrust act by fixing the fees imposed to process credit card transactions. The settlement, which still requires judicial approval, is believed to represent the largest payment ever in a private antitrust case brought under the Sherman Act.

"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," said K. Craig Wildfang, a partner at Robins, Kaplan, Miller & Ciresi, and co-lead counsel for the plaintiffs.

The settlement agreement also would give merchants new rights to impose a surcharge on credit transactions, subject to a cap and other limitations. The rules governing such surcharges likely would be implemented in early 2013. Merchants also would be allowed to band together to try to negotiate better rates on the so-called interchange fees.

Trish Wexler, a spokeswoman for the Electronic Payments Coalition, which represents the card issuers, said the provision for new surcharges is “not necessarily a consumer-friendly provision -- and something that our side certainly did not want to happen.”

But she said the industry is satisfied by measures that prohibit retailers from charging consumers more than they actually pay for card processing, which typically ranges from 1.5 to 3 percent of the transaction.

Plaintiffs attorney Martin Lueck, chairman of the executive board of Robins, Kaplan, said the allowed “surcharge” is actually a pro-consumer provision of the settlement.

“Really it’s a discount that the merchants are now allowed to offer for the less expensive form of payments,” he said. He also said merchants would for the first time be allowed to disclose how much it costs them to accept credit cards.

Although the settlement still requires the approval of U.S. District Judge John Gleeson, Wexler said the industry was pleased that the long battle appears to be nearing a conclusion.

“The language puts a period at the end of this epic interchange battle between merchants and the credit card industry,” she said. “From our industry’s perspective we're very pleased that this long political battle is finally over.”

Based on the legal timetable, a settlement could be submitted to the judge for preliminary approval in 90 to 120 days. That would set in motion a notice period and then final approval, meaning payments likely would not go out until 2013. Legal fees have not yet been determined, Lueck said.

Follow @msnbc_business

The settlement also includes a reduction of 10 basis points, or 0.1 percent, for eight months to merchants involved in the case, probably beginning in mid-2013.

"We believe settling this case is in the best interests of all parties," Joseph Saunders, Visa chairman and CEO, said in a statement. He said the company is "comfortable with the terms" of the settlement and does not anticipate an impact on earnings expectations.

“Although we have strong defenses to all claims, a settlement avoids years of litigation and uncertainties that are inherent in such cases," said Noah Hanft,  general counsel for MasterCard, which will pay $790 million toward the settlement.

Rep. Peter Welch, D-Vt., who has been active in the interchange fee issue, called the settlement a "step in the right direction."

"And it should send an unambiguous message to big banks and credit card companies: Stop ripping off your customers with excessive fees," he said in a statement.

The Dodd-Frank financial regulation reform law established after the 2008 financial industry meltdown includes a provision, bitterly fought by the card industry, authorizing the Federal Reserve to limit swipe fees for debit cards.

The class-action suit dates to 2005, and involves most major U.S. banks as defendants, including JPMorgan Chase, Bank of America, Citibank, Wells Fargo, Capital One and others. Merchants include grocery chains Kroger Inc. and Safeway Inc., Rite Aid Corp., QVC Inc. and a long list of other trade groups and small merchants.

Not everyone is happy with the settlement. The National Association of Convenience Stores issued a statement of rejection, saying the deal fails to introduce competition and transparency into “a clearly broken market.”

"This proposed settlement 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,” said NACS Chairman Tom Robinson, president of Santa Clara, Calif.-based Robinson Oil Corp. “Consumers and merchants ultimately will pay more as a result of this agreement — without any relief in sight."