MasterCard Inc. hopes to prepay $335 million for the remaining funds it owes merchant plaintiffs from its 2003 settlement of the "honor-all-cards" antitrust lawsuit. Under the agreement that MasterCard and plaintiffs representatives signed yesterday, MasterCard would pay the discounted final payment on September 30 instead of $400 million disbursed in annual payments over the next four years, MasterCard disclosed this morning in a filing with the U.S. Securities and Exchange Commission. The deal is subject to court approval. "We believe this is a good use of our cash and offers good returns," a MasterCard spokesperson tells CardLine. "In addition, it allow us to put the remaining financial piece of this legacy litigation behind us." In June 2003, MasterCard agreed to pay $1.025 billion to settle its part of a class-action lawsuit brought against Visa USA and MasterCard International by Wal-Mart Stores Inc., Sears, Roebuck and Co. and other merchants (CardLine, 6/5/2003). Plaintiffs had argued it was unfair for the card networks to require merchants to accept debit cards if they also wanted to accept credit and charge cards. The original settlement agreement required MasterCard to pay $125 million in 2003 and $100 million annually each December from 2004 through 2012. MasterCard also agreed to set debit interchange rates that were at least one-third lower than previous rates. Visa settled with merchants in 2003 as well, for $2.025 billion.

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