(FORTUNE Magazine) - In late May, MasterCard Inc., the world's second-largest credit card association, is scheduled to go public in what should be the richest IPO on Wall Street in two years. The offering, led by Goldman Sachs, is expected to raise more than $2.5 billion.

But this is hardly a moment of unqualified triumph for MasterCard or its larger cousin, Visa. In fact, the stock offering could mark the end of a long, golden age for the two card behemoths.

Debt is as American as the dollar, but MasterCard and Visa have never been so besieged. The two competitors face mounting legal battles over the so-called interchange fees they charge retailers. They're also being sued by rival card companies American Express (Research) and Discover on antitrust charges.

Indeed, one of the reasons MasterCard is going public, according to its offering filing, is to raise money to cover its pending legal costs. It also says going public will help it "compete in a global industry with a raft of new competitors." MasterCard declined to comment, citing quiet-period restrictions. Visa says its fees are appropriate.

Since a 2004 Supreme Court ruling that allows banks to issue other cards - namely American Express and Discover - competition among card brands has never been so fierce. And merchants who are ticked off by increasing interchange fees aren't content merely to sue. Several with plenty of heft, like Wal-Mart, are coming up with innovative and incentivized ways - usually involving direct bank-account debit programs - for customers to pay without using credit cards.

There are larger economic forces working against MasterCard and Visa as well. For the past 40 years the two card giants have harnessed an exploding market for plastic purchases. The average household with at least one major credit card had about $9,500 in debt in 2005. It was about half that a decade ago.

And the average American now has five general purpose cards, according to the Nilson Report, a payment-card newsletter, up from about two just ten years ago.

"We now live in an embedded payment-card culture," says David Robertson, the Nilson Report's publisher.

But there are strong signs that the boom is finally slowing. Robertson says the card market has become so saturated that it will probably grow only around 4 to 5 percent annually, as opposed to the double-digit growth it experienced as little as five years ago.

What's more, consumers have been paying off high-interest credit card debt and making major purchases with low-interest home-equity loans. Also, experts agree it's inevitable that the fees the card companies charge merchants will be slashed. Last year MasterCard's and Visa's member banks took in about $30 billion in revenues from interchange fees - about 75 percent of what merchants pay to accept credit and debit cards.

As for MasterCard's post-IPO prospects, Sanford Bernstein analyst Howard Mason says that the lawsuit could be a huge cash drain. Mason points out that the closest settlement precedent was in 2003, when MasterCard paid merchants $1 billion regarding alleged antitrust violations related to its debit cards.

In a May 8 report, Mason wrote that the liability this time "could be meaningfully higher." That's because the current suit relates to MasterCard's credit and debit business - three times the size of its debit business alone.

"MasterCard's legal liability could exceed its current book value of $1.3 billion," he notes.

Of course, by taking it public the bank consortium that has long owned MasterCard will not have to pony up the full cost of any settlement. That task will fall to shareholders. And unlike MasterCard's long-running ads, that's anything but priceless.

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