March 27 (Reuters) - U.S. banks could see a modest hit

to their earnings due to the $30 billion settlement to limit

credit and debit card fees for merchants by payments networks

Visa and Mastercard ( MA ), Wall Street analysts said.

The antitrust settlement announced on Tuesday is one of the

largest in U.S. history. If approved by court, it would resolve

most claims in a nationwide litigation that began nearly two

decades ago.

Swipe or interchange fees, paid by merchants, typically

includes small fixed fees plus a percentage of total sale

amounts, and averages about 1.5% to 3.5% per transaction,

according to Bankrate.com.

"On a preliminary basis, we estimate the impact at around

1%-2% of EPS before any mitigation efforts using retail card

volumes, but interchange fees can vary significantly by

transaction," J.P.Morgan said in a note.

POTENTIAL RISKS

Brokerage Evercore ISI said the move to reduce and cap

interchange fees impacts issuing banks that generate revenue

through the charges and will not be financially material to Visa

and Mastercard ( MA ).

"The removal of anti-steering restrictions and by enabling

competitive pricing, we could see merchants encouraging more

cash transactions or cheaper debit transactions," it said.

As part of the settlement terms, Visa and Mastercard ( MA ) have

agreed to reduce swipe rates by at least four basis points -

0.04 percentage points - for three years, and ensure an average

rate that is seven basis points below the current average for

five years.

Wall Street analysts expect banks to absorb a large part of

the revenue loss by sharing the impact with both card networks

and trimming reward expense.

Cards are among the most lucrative and stable streams of

revenue for lenders, but most large banks do not disclose what

they charge as interchange fees and the amount typically varies

according to the card type.

"Small banks and credit unions may object to this deal or

try to fight it. This is because it could give Walmart or

another big retailer the ability to cut a deal with a mega bank

for a credit card that provides a discount when used at

checkout," TD Cowen analysts said in a note.

The brokerage flagged the settlement as a potential risk to

Capital One's $35 billion deal for Discover Financial

, which is expected to face tough anti-trust scrutiny.

"A bigger Capital One could try to use its card issuance

advantage to lock in discounts to further expand its customer

base," it said.