Four merchant associations have filed a class action suit against Visa USA, MasterCard Inc. and major US banks including Bank of America Corp., Citigroup Inc., and JPMorgan Chase & Co., alleging collusion in setting interchange fees, according to a report from Reuters. Merchants pay an interchange fee on every transaction, part of which goes to the merchant’s bank and part to the consumer’s credit card company.

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The plaintiffs in the suit, who represent over 200,000 retailers, are the National Association of Convenience Stores, the National Association of Chain Drug Stores, the National Community Pharmacists Association and the National Cooperative Grocers Association, Reuters reports.

The merchants’ groups state that interchange fees are meant to cover the cost of processing a transaction, and the risk that the credit won’t be repaid, the Wall Street Journal reports. Yet they claim that fraud costs and processing costs are steadily decreasing, while the US interchange rate continues to increase.

Because the interchange fee is a percentage of the purchase price, and a fee is charged for every transaction, major credit card companies are benefiting from the rise in gasoline prices, the Washington Post reports. Fees paid by gas stations to credit card companies have risen by 64 percent as the price of gas increases.

“It’s unexpected revenue, because people are just doing what they were always doing, said David Robertson, publisher of the Nilson Report, a credit card industry newsletter. “There’s no behavioral change. It’s just more money, he told the Post. Typically a retailer’s bank gets 25 percent of the fee and the credit card companies get 75 percent Robertson said.

“The credit card interchange system serves as a hidden tax, both on merchants and consumers, and raises the costs of all products regardless of the form of tender,” said Hank Armour, chief executive of the National Association of Convenience Stores, according to the Wall Street Journal. John Rector, general counsel for the National Community Pharmacists Association, said the lawsuit seeks to bring about “long-term reform of the credit card interchange fee system,” according to the Associated Press.

Visa said that it was confident that the interchange system was fair, the Wall Street Journal reports. MasterCard said that the lawsuit lacks merit and called it “yet another example of merchants wanting the benefits of accepting payment cards without having to pay for the value of the services they receive,” the Reuters report says. Banks named in the suit either declined to comment or were unavailable.

The National Association of Convenience Stores says, according to the Washington Post, that since Hurricane Katrina, gasoline purchases paid for by credit cards have risen from 70 percent to 80 percent. Cards that offer rewards are used most often for these purchases. In a recent review of rewards programs offered by American Express, CitiBank MBNA and Visa SmartMoney.com found that no single reward program was outstanding. Consumers should select cards depending on how they planned to use the rewards, SmartMoney advised.