The U.S. Department of Justice has reached a settlement in a civil antitrust lawsuit against the nation’s largest credit card issuers. The settlement will enable merchants to offer consumers incentives to use lower-cost cards and increase competition.

In a news conference this afternoon, Iowa Attorney General Tom Miller said the settlement with MasterCard Inc. and Visa Inc. will benefit both merchants and consumers. Iowa is among seven states that joined the Justice Department suit.

“Until this settlement, the merchants couldn’t direct people to the less-expensive cards,” Miller said. “As a result, competition was frustrated. Now, merchants can encourage customers to use the less-expensive cards. We think there will be price reductions and other benefits to encourage people to use the less-expensive card, and therefore pay the credit card companies less.”

The proposed settlement with Visa and MasterCard, if approved by the court, would require the two companies to allow merchants to offer discounts, incentives and information to consumers to encourage the use of payment methods that are less costly.

No settlement has been reached with American Express Co., which said it intends to fight the lawsuit.

Credit card acceptance costs U.S. merchants approximately $35 billion each year, according to a Justice Department release. Miller said card swipe fees can range from below 2 percent of the transaction amount for “basic” credit cards to more than 3 percent for “super-duper” cards that offer rewards programs.