Mastercard (MA) 10-K risk factor changes: FY2020 vs FY2019

[added: These projects also carry risks associated with working with different types of customers, for example organizations such as corporations that are not financial] institutions and non-governmental organizations (“NGOs”), and end users other than those we have traditionally worked with.

Our failure to [removed: render] [added: deliver] these integrated products and services could make our other integrated products and services less desirable to customers, or put us at a competitive disadvantage.

In addition, if there is a delay in the implementation of our products or services or if our products or services do not perform as anticipated, [added: or] we [added: are unable to adequately anticipate risks related to new types of customers, we] could face additional regulatory scrutiny, fines, sanctions or other penalties, which could materially and adversely affect our overall business and results of operations, as well as negatively impact our brand and reputation.

As a result, information security and the continued development and enhancement of our controls, processes and practices designed to protect our systems, computers, software, data and networks [removed: from attack, damage or unauthorized access remain a priority for us.]

Such events could also slow or reverse the trend toward [added: electronic payments.]

MASTERCARD [removed: 2019] [added: 2020] FORM 10-K [removed: 25][added: 27]

Although we maintain a [removed: business continuity] [added: enterprise resiliency] program to analyze risk, assess potential impacts, and develop effective response strategies, we cannot ensure that our business would be immune to these risks, because of the intrinsic importance of our switching systems to our business, any interruption or degradation could adversely affect the perception of the reliability of products carrying our brands and materially adversely affect our overall business and our results of operations.

Losing a significant portion of business from one or more of our largest [removed: financial institution] customers could lead to significant revenue decreases in the longer term, which could have a material adverse impact on our business and our results of operations.

Most of our [removed: financial institution] customer relationships are not exclusive and may be terminated by our customers.

In addition, a significant portion of our revenue is concentrated among our five largest [removed: financial institution] customers.

[removed: 26] [added: 28] MASTERCARD [removed: 2019] [added: 2020] FORM 10-K

While we work directly with many stakeholders in the payments system, including merchants, [removed: governments] [added: governments, fintechs] and large digital companies and other technology companies, we are, and will continue to be, significantly dependent on our relationships with our issuers and acquirers and their respective relationships with account holders and merchants to support our programs and services.

[removed: | • | Governmental entities typically fund projects through appropriated monies.] Changes in governmental priorities or other political developments, including disruptions in governmental operations, could impact approved funding and result in changes in the scope, or lead to the [removed: termination of,] [added: termination, of] the arrangements or contracts we or financial institutions enter into with respect to our payment products and services. [removed: |]

[removed: | • |] [added: -] Our work with governments subjects us to U.S. and international anti-corruption laws, including the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act. [removed: A violation and subsequent judgment or settlement under these laws could subject us to substantial monetary penalties and damages and have a significant reputational impact. |]

MASTERCARD [removed: 2019] [added: 2020] FORM 10-K [removed: 27][added: 29]

[removed: | • |] [added: -] Working or contracting with governments, either directly or via our financial institution customers, can subject us to heightened reputational risks, including extensive scrutiny and publicity, as well as a potential association with the policies of a government as a result of a business arrangement with that government. [removed: Any negative publicity or negative association with a government entity, regardless of its accuracy, may adversely affect our reputation. |]

[removed: | • |] [added: -] Customers mitigating their economic exposure by limiting the issuance of new Mastercard products and requesting greater incentive or greater cost stability from us [removed: |]

[removed: | • |] [added: -] Consumers and businesses lowering spending, which could impact domestic and cross-border spend [removed: |]

[removed: | • |] [added: -] Government intervention (including the effect of laws, regulations and/or government investments on or in our financial institution customers), as well as uncertainty due to changing political regimes in executive, legislative and/or judicial branches of government, that may have potential negative effects on our business and our relationships with customers or otherwise alter their strategic direction away from our products [removed: |]

[removed: | • |] [added: -] Tightening of credit availability that could impact the ability of participating financial institutions to lend to us under the terms of our credit facility [removed: |]

Cross-border activity [added: has, and] may [removed: be] [added: continue to be,] adversely affected by world geopolitical, economic, [added: health,] weather and other conditions.

These include [added: COVID-19, as well as] the threat of terrorism and [added: separate] outbreaks of flu, viruses and other diseases, as well as major environmental events (including those related to climate change).

During [removed: 2019,] [added: 2020,] approximately [removed: 68%] [added: 67%] of our revenue was generated from activities outside the United States.

[removed: 28] [added: 30] MASTERCARD [removed: 2019] [added: 2020] FORM 10-K

[added: If the U.S. dollar strengthens compared] to currencies in which we generate revenue, this revenue may be translated at a materially lower amount than expected.

Moreover, adverse developments with respect to our industry or the industries of our customers or other companies and organizations [removed: with which we work] [added: that use our products and services (including certain legally permissible but high risk merchant categories, such as alcohol, tobacco, fire-arms and adult content)] may also, by association, impair our reputation, or result in greater [added: public,] regulatory or legislative scrutiny.

MASTERCARD [removed: 2019] [added: 2020] FORM 10-K [removed: 29][added: 31]

Additionally, changes in immigration and work permit laws and [added: visa] regulations and related enforcement have made it difficult for employees to work in, or transfer among, jurisdictions in which we have operations and could impair our ability to attract and retain qualified employees.

We rely on key personnel to lead with [removed: integrity.][added: integrity and decency.]

Acquisitions, strategic investments or entry into new businesses could [added: be impacted by regulatory scrutiny, and if successful, could] disrupt our business and harm our results of operations or reputation.

[removed: Although] [added: To the extent] we [removed: may continue to evaluate and/or] [added: do] make [removed: strategic acquisitions of, or acquire interests in joint ventures or other entities related to, complementary businesses, products or technologies,] [added: these acquisitions,] we may not be able to successfully partner with or integrate them, despite original intentions and focused efforts.

Any acquisition or entry into a new business could subject us to new [removed: regulations] [added: regulations, both directly as a result of the new business as well as in the other existing parts of our business,] with which we would need to comply.

[removed: | • |] [added: -] our stockholders are not entitled to the right to cumulate votes in the election of directors [removed: |]

[removed: | • |] [added: -] our stockholders are not entitled to act by written consent [removed: |]

[removed: | • |] [added: -] a vote of 80% or more of all of the outstanding shares of our stock then entitled to vote is required for stockholders to amend any provision of our bylaws [removed: |]

[removed: | • |] [added: -] any representative of a competitor of Mastercard or of Mastercard Foundation is disqualified from service on our board of directors [removed: |]

[removed: 30] [added: 32] MASTERCARD [removed: 2019] [added: 2020] FORM 10-K

As of February [removed: 11, 2020,] [added: 9, 2021,] Mastercard Foundation owned [removed: 111,101,204] [added: 108,210,635] shares of Class A common stock, representing approximately [removed: 11.2%] [added: 11.0%] of our general voting power.

payments markets, we are continually involved in diversifying our integrated products and services.

These efforts carry the risks associated with any diversification initiative, including cost overruns, delays in delivery and performance problems.

These new customers are typically less regulated, and as a result, enhanced infrastructure and monitoring is required.

The advent of the global COVID-19 pandemic has resulted in a significant rise in these types of threats due to a significant portion of our workforce working from home in a mostly remote environment.

from attack, damage or unauthorized access remain a priority for us.

Some merchants are increasingly asking regulators to review and potentially regulate our own network fees, in addition to interchange.

- Governmental entities typically fund projects through appropriated monies.

A violation and subsequent judgment or settlement under these laws could subject us to substantial monetary penalties and damages and have a significant reputational impact.

Any negative publicity or negative association with a government entity, regardless of its accuracy, may adversely affect our reputation.

Moreover, as a result of the global COVID-19 pandemic, a significant portion of our workforce is working in a mostly remote environment.

This remote environment may continue after the pandemic due to potential resulting trends, and could impact the quality of our corporate culture.

As we continue to evaluate our strategic acquisitions of, or acquiring interests in joint ventures or other entities related to, complementary businesses, products or technologies, we face increasing regulatory scrutiny with respect to antitrust and other considerations.

Such scrutiny could prevent us from successfully completing such acquisitions in the future.

electronic payments.

| | |

| --- | --- |

If the U.S. dollar strengthens compared

The United Kingdom’s proposed withdrawal from the European Union could harm our business and financial results.

In June 2016, voters in the United Kingdom approved the withdrawal of the U.K. from the E.U. (commonly referred to as “Brexit”).

The U.K. government triggered Article 50 of the Lisbon Treaty on March 29, 2017, which commenced the official E.U. withdrawal process.

In January 2020, Parliament and the E.U. approved of an agreement between the U.K. and the E.U., and the U.K. officially departed from the E.U. On February 1, 2020, the U.K. entered into a transition/implementation period, during which all E.U. laws regulations, court decisions, trading agreements and other obligations continue to apply to the U.K. During this period, which is set to expire on December 31, 2020, the U.K. and E.U. will negotiate additional terms.

Uncertainty over these terms could cause political and economic uncertainty in the U.K. and the rest of Europe, which could harm our business and financial results.

Subsequent to the end of the transition/implementation period on December 31, 2020, Brexit could lead to legal uncertainty and potentially divergent national laws and regulations in the U.K. and E.U. We, as well as our customers who have significant operations in the U.K., may incur additional costs and expenses as we adapt to potentially divergent regulatory frameworks from the rest of the E.U. We may also face additional complexity with regard to immigration and travel rights for our employees located in the U.K. and the E.U. These factors may impact our ability to operate in the E.U. and U.K. seamlessly.

Any of these effects of Brexit, among others, could harm our business and financial results.

| | | [removed: (in] [added: | | | | ($ in] millions) | | | | | | | | | | | | | | | | | | | [added: | | | | | | | |]

[removed: | 1 | Amounts relate to the maturity of our operating lease liabilities.] See Note [removed: 10 (Property, Equipment] [added: 23 (Derivative] and [removed: Right-of-Use Assets)] [added: Hedging Instruments)] to the consolidated financial statements included in Part II, Item 8 for further discussion. [removed: |]

[removed: | 3 | Amounts relate to the U.S. tax liability on the Transition Tax on accumulated non-U.S. earnings of U.S entities.] See Note 20 (Income Taxes) to the consolidated financial statements included in Part II, Item 8 for further discussion. [removed: |]

[removed: | • | Litigation provision of $914 million as of December 31, 2019 as the timing of payments is not fixed and determinable.] See Note [removed: 21 (Legal and Regulatory Proceedings)] [added: 16 (Stockholders' Equity)] to the consolidated financial statements included in Part II, Item 8 for further discussion. [removed: |]

Rebates and incentives are recorded as a reduction to gross revenue based on these estimates primarily when volume- and [removed: transaction -] [added: transaction-] based revenues are recognized over the contractual term.

[removed: 52] MASTERCARD [removed: 2019] [added: 2020] FORM 10-K [added: 49]

In calculating our effective income tax rate, [removed: we need to make] estimates [added: are required] regarding the timing and amount of taxable and deductible items which will adjust the pretax income earned in various tax jurisdictions.

[removed: We] [added: In assessing the need for a valuation allowance, we] consider [added: all sources of taxable income including,] projected future taxable [removed: income] [added: income, reversing taxable temporary differences] and ongoing tax planning [removed: strategies in assessing the need for the valuation allowance.][added: strategies.]

The acquisition purchase [removed: price] [added: price, including contingent consideration,] is allocated to the underlying identified, tangible and intangible assets, liabilities assumed and any non-controlling interest in the acquiree, based on their respective estimated fair values on the acquisition date.

The amounts and useful lives assigned to acquisition-related tangible and intangible assets impact the amount and timing of future amortization [removed: expense.]

[removed: Item 7A.][added: ITEM 7.]

[added: 50] MASTERCARD [removed: 2019] [added: 2020] FORM 10-K [removed: 53]

The following table summarizes the drivers of change in net revenue:

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | For the Years Ended December 31, | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | Volume | | | | | | | | | | | | Acquisitions | | | | | | | | | | | | | | | | | | Currency Impact 1 | | | | | | | | | | | | Other 2 | | | | | | | | | | | | Total | | | | | | | | | | | | | | |

| | | | | | | 2020 | | | | | | 2019 | | | | | | 2020 | | | | | | 2019 | | | | | | | | | | | | | | | | | | 2020 | | | | | | 2019 | | | | | | 2020 | | | | | | 2019 | | | | | | 2020 | | | | | | 2019 | | |

| Domestic assessments | | | | | | —% | | | | | | 13% | | | | | | —% | | | | | | —% | | | | | | | | | | | | | | | | | | (3)% | | | | | | (3)% | | | | | | 1 | | % | 3 | | | 1 | | % | 3 | | | (2) | | % | | | | 10 | | % |

| Cross-border volume fees | | | | | | (30)% | | | | | | 14% | | | | | | —% | | | | | | —% | | | | | | | | | | | | | | | | | | —% | | | | | | (3)% | | | | | | (7) | | % | | | | 2 | | % | | | | (37) | | % | | | | 13 | | % |

| Transaction processing | | | | | | 3% | | | | | | 14% | | | | | | —% | | | | | | —% | | | | | | | | | | | | | | | | | | —% | | | | | | (2)% | | | | | | — | | % | | | | 3 | | % | | | | 3 | | % | | | | 15 | | % |

| Other revenues | | | | | | | | | | | | | | | | | | 3% | | | | | | 2% | | | | | | | | | | | | | | | | | | (1)% | | | | | | (1)% | | | | | | 12 | | % | 4 | | | 22 | | % | 4 | | | 14 | | % | | | | 23 | | % |

| Rebates and incentives | | | | | | (6)% | | | 5 | | | 9% | | | 5 | | | —% | | | | | | —% | | | | | | | | | | | | | | | | | | (2)% | | | | | | (3)% | | | | | | 10 | | % | 6 | | | 11 | | % | 6 | | | 3 | | % | | | | 18 | | % |

| Net revenue | | | | | | (5)% | | | | | | 13% | | | | | | 1% | | | | | | 1% | | | | | | | | | | | | | | | | | | (1)% | | | | | | (3)% | | | | | | (4) | | % | | | | 2 | | % | | | | (9) | | % | | | | 13 | | % |

Note: Table may not sum due to rounding

Not applicable

1Represents the translational and transactional impact of currency.

2Includes impact from pricing, other non-volume based fees and geographic mix.

3Includes impact of the allocation of revenue to service deliverables, which are primarily recorded in other revenue when services are performed.

4Includes impacts from cyber and intelligence fees, data analytics and consulting fees and other payment-related products and services.

5Includes the impact from mix on volume-based incentives.

6Includes the impact of new, renewed and expired agreements.

The following tables provide a summary of the trend in volumes and transactions.

| | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | For the Years Ended December 31, | | | | | | | | | | | | | | | | | | | | |

| | | | | | | 2020 | | | | | | | | | | | | 2019 | | | | | | | | |

| | | | | | | Increase/(Decrease) | | | | | | | | | | | | | | | | | | | | |

| | | | | | | USD | | | | | | Local | | | | | | USD | | | | | | Local | | |

| Mastercard-branded GDV 1 | | | | | | (2) | | % | | | | — | | % | | | | 10 | | % | | | | 13 | | % |

| Asia Pacific/Middle East/Africa | | | | | | (3) | | % | | | | (2) | | % | | | | 8 | | % | | | | 12 | | % |

| Canada | | | | | | (4) | | % | | | | (3) | | % | | | | 4 | | % | | | | 7 | | % |

| Europe | | | | | | (2) | | % | | | | 1 | | % | | | | 12 | | % | | | | 18 | | % |

| Latin America | | | | | | (17) | | % | | | | (2) | | % | | | | 9 | | % | | | | 15 | | % |

| United States | | | | | | 2 | | % | | | | 2 | | % | | | | 10 | | % | | | | 10 | | % |

| Cross-border volume 1 | | | | | | | | | | | | (29) | | % | | | | | | | | | | 16 | | % |

| | | | | | | | | | | | | | | | | | | | | | | | | | | |

1Excludes volume generated by Maestro and Cirrus cards.

| | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | For the Years Ended December 31, | | | | | | | | |

| | | | | | | Increase/(Decrease) | | | | | | | | |

Future Obligations

The following table summarizes our obligations as of December 31, 2019 that are expected to impact liquidity and cash flow in future periods.

We believe we will be able to fund these obligations through cash generated from operations and our cash balances.

| | | Payments Due by Period | | | | | | | | | | | | | | | | | | |

| | | 2020 | | | | 2021 - 2022 | | | | 2023 - 2024 | | | | 2025 and thereafter | | | | Total | | |

| Debt | | $ | — | | | $ | 1,435 | | | $ | 1,000 | | | $ | 6,165 | | | $ | 8,600 | |

| Interest on debt | | 242 | | | | 470 | | | | 423 | | | | 2,235 | | | | 3,370 | | |

| Operating leases 1 | | 112 | | | | 216 | | | | 169 | | | | 376 | | | | 873 | | |

| Other obligations | | | | | | | | | | | | | | | | | | | | |

| Sponsorship, licensing and other | | 404 | | | | 356 | | | | 59 | | | | — | | | | 819 | | |

| Employee benefits 2 | | 62 | | | | 50 | | | | 48 | | | | 113 | | | | 273 | | |

| Transition Tax 3 | | — | | | | 89 | | | | 227 | | | | 161 | | | | 477 | | |

| Redeemable non-controlling interests 4 | | 76 | | | | — | | | | — | | | | — | | | | 76 | | |

| Total 5 | | $ | 896 | | | $ | 2,616 | | | $ | 1,926 | | | $ | 9,050 | | | $ | 14,488 | |

| | |

| --- | --- |

| 2 | Amounts relate to severance along with expected funding requirements for defined benefit pension and postretirement plans. |

| 4 | Amount relates to the fixed-price put option for the Vocalink remaining shareholders to sell their ownership interest to Mastercard on the third and fifth anniversaries of the transaction and quarterly thereafter. See Note 2 (Acquisitions) to the consolidated financial statements included in Part II, Item 8 for further discussion. |

| 5 | The table does not include the following: |

| • | Payment related to a definitive agreement to acquire the majority of the Corporate Services business of Nets Denmark A/S, for €2.85 billion (approximately $3.19 billion as of December 31, 2019) as the transaction is subject to regulatory approval and other customary closing conditions. See Note 2 (Acquisitions) to the consolidated financial statements included in Part II, Item 8 for further discussion. |

| • | Liability for unrecognized tax benefits of $203 million as of December 31, 2019. These amounts have been excluded from the table since the settlement period of this liability cannot be reasonably estimated and the timing of these payments will depend on the progress of tax examinations with the various authorities. See Note 20 (Income Taxes) to the consolidated financial statements included in Part II, Item 8 for further discussion. |

| • | Future cash payments that will become due to customers and merchants under business agreements as the amounts due are contingent on future performance. We have accrued $4.8 billion as of December 31, 2019 related to these customer and merchant agreements. |

Quantitative and qualitative disclosures about market risk

Market risk is the potential for economic losses to be incurred on market risk sensitive instruments arising from adverse changes in factors such as interest rates and foreign currency exchange rates.

Our exposure to market risk from changes in interest rates and foreign exchange rates is limited.

Management monitors risk exposures on an ongoing basis and establishes and oversees the implementation of policies governing our funding, investments and use of derivative financial instruments to manage these risks.

We enter into foreign exchange derivative contracts to manage [removed: transactional] currency exposure associated with anticipated receipts and disbursements occurring in a currency other than the functional currency of the entity.

The effect of a hypothetical 10% adverse change in [removed: foreign exchange rates] [added: the value of the functional currencies] could result in a fair value loss of approximately [removed: $144] [added: $58] million and [removed: $113] [added: $144] million on our foreign exchange derivative contracts outstanding at December 31, [removed: 2019] [added: 2020] and [removed: 2018,] [added: 2019,] respectively, [removed: related to] [added: before considering] the [removed: hedging program.][added: offsetting effect of the underlying hedged activity.]

To manage this risk, we enter into [added: short duration] foreign exchange contracts based upon anticipated receipts and disbursements for the respective currency position.

This risk is typically limited to a few days between [removed: the timing of] when a payment transaction takes place and the subsequent settlement with our customers.

The effect of a hypothetical [removed: 100 basis point] [added: 10%] adverse change in [removed: interest rates] [added: the value of the functional currencies] could result in a fair value loss of approximately [removed: $168] [added: $23] million on our [removed: interest rate] [added: short duration foreign exchange] derivative contracts outstanding at December 31, [removed: 2019.][added: 2020.]

[removed: In addition, our] [added: Our] available-for-sale debt investments include fixed and variable rate securities that are sensitive to interest rate fluctuations.

A hypothetical 100 basis point adverse change in interest rates would not have a material impact [removed: on] [added: to the fair value of] our investments at December 31, [removed: 2019] [added: 2020] and [removed: 2018.][added: 2019.]

[removed: 54] MASTERCARD [removed: 2019] [added: 2020] FORM 10-K [added: 55]

| | | | [added: | | | | | |] Page | [added: | |]

| As of December 31, [removed: 2019] [added: 2020] and [removed: 2018] [added: 2019] and for the years ended December 31, [removed: 2019, 2018] [added: 2020, 2019] and [removed: 2017] [added: 2018] | | | | [added: | | | | | | | |]

| | [added: | |] [Management’s report on internal control over financial [removed: reporting](#s81995EB3A2B25FCCBD23C7F9C37104BC)] [added: reporting](#ic14da07effa044f185a4e5e61b3e1ecd_85)] | | [removed: [56](#s81995EB3A2B25FCCBD23C7F9C37104BC)] | [added: | | | [57](#ic14da07effa044f185a4e5e61b3e1ecd_85) | | |]

| | [added: | |] [Report of independent registered public accounting [removed: firm](#sE924773AAAB6544B8862BFDFBF911648)] [added: firm](#ic14da07effa044f185a4e5e61b3e1ecd_88)] | | [removed: [57](#sE924773AAAB6544B8862BFDFBF911648)] | [added: | | | [58](#ic14da07effa044f185a4e5e61b3e1ecd_88) | | |]

| [removed: | [Consolidated] [added: Consolidated] Statement of [removed: Operations](#sC0663F998821583E8460BFBA1D385469)] [added: Operations] | | [removed: [59](#sC0663F998821583E8460BFBA1D385469)] | [added: | | | | | | | | | | | | | | | | | |]

| [removed: | [Consolidated] [added: Consolidated] Statement of Comprehensive [removed: Income](#s6AFE6399E8D05F5BBA83FF15F102CCCD)] [added: Income] | | [removed: [60](#s6AFE6399E8D05F5BBA83FF15F102CCCD)] | [added: | | | | | | | | | | | | | | | | | |]

| [removed: | [Consolidated] [added: Consolidated] Balance [removed: Sheet](#sE93E7C3006F153C582460855DC8823F6)] [added: Sheet] | | [removed: [61](#sE93E7C3006F153C582460855DC8823F6)] | [added: | | | | | | | | | | | |]

| [removed: | [Consolidated] [added: Consolidated] Statement of Changes in [removed: Equity](#s6A69483B34A753A9B103A81E34900014)] [added: Equity] | | [removed: [62](#s6A69483B34A753A9B103A81E34900014)] | [added: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |]

| [removed: | [Consolidated] [added: Consolidated] Statement of Cash [removed: Flows](#sDD7B563C11245AC98EC80E868AD95E35)] [added: Flows] | | [removed: [64](#sDD7B563C11245AC98EC80E868AD95E35)] | [added: | | | | | | | | | | | | | | | | | |]

| | [added: | |] [Notes to consolidated financial [removed: statements](#s472BAB4845555A74BE129037FA79E483)] [added: statements](#ic14da07effa044f185a4e5e61b3e1ecd_112)] | | [removed: [65](#s472BAB4845555A74BE129037FA79E483)] | [added: | | | [66](#ic14da07effa044f185a4e5e61b3e1ecd_112) | | |]

[added: 56] MASTERCARD [removed: 2019] [added: 2020] FORM 10-K [removed: 55]

As required by Section 404 of the Sarbanes-Oxley Act of 2002, management has assessed the effectiveness of Mastercard’s internal control over financial reporting as of December 31, [removed: 2019.][added: 2020.]

Management has concluded that, based on its assessment, Mastercard’s internal control over financial reporting was effective as of December 31, [removed: 2019.][added: 2020.]

The effectiveness of Mastercard’s internal control over financial reporting as of December 31, [removed: 2019] [added: 2020] has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears on the next page.

[removed: 56] MASTERCARD [removed: 2019] [added: 2020] FORM 10-K [added: 57]

To the Board of Directors and Stockholders of Mastercard [removed: Incorporated:][added: Incorporated]

We have audited the accompanying consolidated balance sheets of Mastercard Incorporated and its subsidiaries (the “Company”) as of December 31, [removed: 2019] [added: 2020] and [removed: 2018] [added: 2019] and the related consolidated statements of operations, comprehensive income, changes in equity and cash flows for each of the three years in the period ended December 31, [removed: 2019,] [added: 2020,] including the related notes (collectively referred to as the “consolidated financial statements”).

We also have audited the Company’s internal control over financial reporting as of December 31, [removed: 2019,] [added: 2020,] based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, [removed: 2019] [added: 2020] and [removed: 2018,] [added: 2019,] and the results of its operations and its cash flows for each of the three years in the period ended December 31, [removed: 2019] [added: 2020] in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, [removed: 2019,] [added: 2020,] based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

[added: 58] MASTERCARD [removed: 2019] [added: 2020] FORM 10-K [removed: 57]

As described in Notes 1 and 3 to the consolidated financial statements, the Company provides certain customers with rebates or incentives which totaled [removed: $8.1] [added: $8.3] billion for the year ended December 31, [removed: 2019.][added: 2020.]

Rebates and incentives are recorded as a reduction [removed: to] [added: of] gross revenue primarily when volume- and transaction-based revenues are recognized over the contractual term.

[removed: Management considers] [added: As disclosed by management,] various factors [added: are considered] in estimating customer performance, including forecasted transactions, card issuance and card conversion volumes, expected payments and historical experience with that customer.

The principal considerations for our determination that performing procedures relating to rebates and incentives is a critical audit matter [removed: was] [added: are (i)] the significant judgment [removed: of] [added: by] management when developing estimates related to rebates and incentives based on customer [removed: performance.][added: performance; and (ii) a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating management’s estimates related to customer performance, including the reasonableness of the various applicable factors considered by management in the estimate.]

These procedures included testing the effectiveness of controls relating to [removed: customer] rebates and incentives, including controls over evaluating [added: estimated] customer [removed: performance based upon historical experience with that customer, forecasted transactions, card issuance and card conversion volumes and expected payments.][added: performance.]

These procedures also included, among others, evaluating the reasonableness of estimated customer performance for a sample of customer agreements, including (i) evaluating rebate and incentive contracts to identify whether all incentives are identified and recorded accurately; (ii) testing management’s process for developing [removed: the] estimated customer performance, including evaluating the reasonableness of the [removed: assumptions related to the forecasted transactions, card issuance and card conversion volumes, expected payments and historical customer experience;] [added: various applicable factors considered by management;] and (iii) evaluating [removed: the] estimated customer performance as compared to actual results in the period the customer reports actual performance.

[removed: 58] MASTERCARD [removed: 2019] [added: 2020] FORM 10-K [added: 59]

| [removed: Consolidated Statement of Operations] | | | [removed: |] [added: [Consolidated Statement of Operations](#ic14da07effa044f185a4e5e61b3e1ecd_91)] | | | | | | [added: [60](#ic14da07effa044f185a4e5e61b3e1ecd_91)] | | |

| | | [added: | | | |] For the Years Ended December 31, | | | | | | | | | | | [added: | | | |]

| | | [removed: 2019] | | | | [removed: 2018] [added: 2020] | | | | [removed: 2017] | | [added: 2019] | [added: | | | | | 2018 | | |]

| | | [added: | | | |] (in millions, except per share data) | | | | | | | | | | | [added: | | | |]

Market risk is the potential for economic losses to be incurred on market risk sensitive instruments arising from adverse changes in factors such as interest rates and foreign currency exchange rates.

Our exposure to market risk from changes in interest rates and foreign exchange rates is limited.

Management monitors risk exposures on an ongoing basis and establishes and oversees the implementation of policies governing our funding, investments and use of derivative financial instruments to manage these risks.

The Company did not have any outstanding short duration foreign exchange derivative contracts related to this activity at December 31, 2019.

| | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | |

| Reclassification adjustment for cash flow hedges | | | | | | 4 | | | | | | — | | | | | | — | | |

| | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | Common Stock | | | | | | | | | | | | Additional Paid-In Capital | | | | | | Class A Treasury Stock | | | | | | Retained Earnings | | | | | | Accumulated Other Comprehensive Income (Loss) | | | | | | Mastercard Incorporated Stockholders' Equity | | | | | | Non- Controlling Interests | | | | | | Total Equity | | |

During the fourth quarter of 2019, we entered into interest rate derivative contracts that were designated as cash flow hedges in order to manage our exposure to interest rate changes on future forecasted debt issuances.

At December 31, 2019, the total notional amount of these contracts was $1 billion.

The maximum length of time over which we have hedged our exposure to the variability in future cash flows is 30 years.

There were no similar contracts outstanding as of December 31, 2018.

PART II

ITEM 8.

| | | | |

| --- | --- | --- | --- |

This in turn led to a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating management’s estimates related to customer performance and the reasonableness of assumptions related to the forecasted transactions, card issuance and card conversion volumes, expected payments and historical experience with that customer.

February 14, 2020

| | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Balance at December 31, 2016 | | $ | — | | | $ | — | | | $ | 4,183 | | | $ | (17,021 | ) | | $ | 19,418 | | | $ | (924 | ) | | $ | 5,656 | | | $ | 28 | | | $ | 5,684 | |

| Dividends | | — | | | | — | | | | — | | | | — | | | | (967 | | ) | | — | | | | (967 | | ) | | — | | | | (967 | | ) |

| Venezuela charge | | — | | | | — | | | | 167 | | |

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Certain prior period amounts have been reclassified to conform to the 2019 presentation.

Prior to December 31, 2017, the Company included the financial results from its Venezuela subsidiaries in the consolidated financial statements using the consolidation method of accounting.

In 2017, due to foreign exchange regulations restricting access to U.S. dollars in Venezuela, an other-than-temporary lack of exchangeability between the Venezuelan bolivar and U.S. dollar impacted the Company’s ability to manage risk, process cross-border transactions and satisfy U.S. dollar denominated liabilities related to operations in Venezuela.

As a result of these factors, Mastercard concluded that effective December 31, 2017, it did not meet the accounting criteria for consolidation of these Venezuelan subsidiaries, and therefore would transition to the measurement alternative method of accounting as of December 31, 2017.

This accounting change resulted in a pre-tax charge of $167 million ($108 million after tax or $0.10 per diluted share) that was recorded in general and administrative expenses on the consolidated statement of operations for the year ended December 31, 2017.

acquired, as additional information is obtained and as the Company’s operating environment changes.

If the carrying value of the asset cannot be recovered from estimated

| | |

| --- | --- |

Any gains and losses deferred in other comprehensive income (loss) are then recognized in current-period earnings when earnings are affected by the variability of cash flows of the hedged forecasted transaction.

| | | |

| --- | --- | --- |

The service cost component is recognized in general and administrative expenses on the consolidated statement of operations.

average exchange rate for the period.

Accounting pronouncements adopted

*Leases* - In February 2016, the Financial Accounting Standards Board (the “FASB”) issued accounting guidance that changed how companies account for and present lease arrangements.

This guidance requires companies to recognize lease assets and liabilities for both finance and operating leases on the consolidated balance sheet.

The Company adopted this guidance effective January 1, 2019, under the modified retrospective transition method with the available practical expedients.

The following table summarizes the impact of the changes made to the January 1, 2019 consolidated balance sheet for the adoption of the new accounting standard pertaining to leases.

The prior periods have not been restated and have been reported under the accounting standard in effect for those periods.

Anti-Money Laundering, Counter [removed: Terrorist Financing,] [added: Financing of Terrorism,] Economic Sanctions and Anti-Corruption. We are subject to anti-money laundering (“AML”) and [removed: counter financing] [added: counter-financing] of terrorism (“CFT”) laws and regulations globally, including the U.S. Bank Secrecy Act and the USA PATRIOT Act, as well as the various economic sanctions programs, including those imposed and administered by the U.S. Office of Foreign Assets Control (“OFAC”).

[removed: Iran, Sudan] [added: Iran] and Syria have been identified by the U.S. State Department as terrorist-sponsoring states, and we have no offices, subsidiaries or affiliated entities located in [removed: any of] these countries [removed: or geographies] and do not license entities domiciled there.

[removed: In addition, we are or may be subject to regulation by a number of agencies charged with] oversight of, among other things, consumer protection, financial and banking matters.

Issuer Practice Legislation and Regulation. Our customers are subject to numerous regulations and investigations applicable to [removed: banks and other] [added: banks,] financial institutions [added: and others] in their capacity as issuers and otherwise, impacting us as a consequence.

A number of regulators and policymakers around the globe are using the GDPR as a reference to adopt new or updated privacy and data protection laws, including in the U.S. (California), Argentina, Brazil, [added: Canada,] Chile, India, Indonesia and Kenya.

Due to [removed: constant changes to the nature of] [added: increasing] data [added: collection] and [added: data flows, numerous data breaches and security incidents as well as] the use of emerging technologies such as artificial intelligence, regulations in this area are constantly evolving with regulatory and legislative authorities in numerous parts of the world adopting proposals to [added: regulate data and] protect information.

[added: 18] MASTERCARD [removed: 2019] [added: 2020] FORM 10-K [removed: 17]

[added: In addition,] the interpretation and application of these privacy and data protection laws are often uncertain and in a state of flux, thus requiring constant monitoring for compliance.

| RISK HIGHLIGHTS | | | | | | | [added: | | | | | | | | | | | | | | | | | | | |]

| | [added: | |] Legal and Regulatory | | | | [added: | | | | | | | |] Business and Operations | | [added: | | | | | | | | | |]

| | [removed: Other Regulation] | | [added: Litigation] | | [added: | | | | | | | | | |] Settlement and Third-Party Obligations | | [added: | | | | | | | | | |]

[removed: 18] MASTERCARD [removed: 2019] [added: 2020] FORM 10-K [added: 19]

Many jurisdictions have enacted such regulations, establishing, and potentially further expanding, obligations or restrictions with respect to the types of products and services that we may [removed: offer to financial institutions for consumers,] [added: offer,] the countries in which our integrated products and services may be used, the way we structure and operate our business and the types of consumers and merchants who can obtain or accept our products or services.

[removed: Such laws or compliance burdens could result in] [added: As a result,] issuers and acquirers [removed: being] [added: could be] less willing to participate in our payments system, reduce the benefits offered in connection with the use of our products (making our products less desirable to consumers), reduce the volume of domestic and cross-border transactions or other operational metrics, disintermediate us, impact our profitability and limit our ability to innovate or offer differentiated products and services, all of which could materially and adversely impact our financial performance.

In addition, any regulation that is enacted related to the type and level of network fees we charge our customers could also materially and adversely [removed: impact our results of operations.]

Regulators could also require us to obtain prior approval for changes to [removed: its] [added: our] system rules, procedures or operations, or could require customization with regard to such changes, which could [added: negatively] impact [removed: market participant risk and therefore risk to] us.

Such [removed: regulatory] changes could lead to new or different criteria for participation in and access to our payments system by financial institutions or other customers.

In addition, issuers could seek [added: a fee reduction from us] to decrease the expense of their payment [removed: programs by seeking a reduction in the fees that we charge to them,] [added: programs,] particularly if regulation has a disproportionate impact [added: on us as compared to our competitors in terms of the fees we can charge.]

[added: 20] MASTERCARD [removed: 2019] [added: 2020] FORM 10-K [removed: 19]

[removed: | • |] [added: -] Governments in some countries [removed: are considering,] [added: have implemented,] or may [removed: consider,] [added: implement,] regulatory requirements that mandate switching of domestic payments either entirely in that country or by only domestic companies. [removed: |]

[removed: | • |] [added: -] Some jurisdictions are considering requirements to collect, process and/or store data within their borders, as well as prohibitions on the transfer of data abroad, leading to technological and operational implications. [removed: |]

[removed: | • |] [added: -] Geopolitical events and resulting OFAC sanctions, adverse trade policies or other types of government actions could lead jurisdictions affected by those sanctions to take actions in response that could adversely affect our business. [removed: |]

[removed: | • |] [added: -] Regional groups of countries are considering, or may consider, efforts to restrict our participation in the switching of regional transactions. [removed: |]

[removed: This] [added: Our inability to effect change in, or work with, these jurisdictions] could adversely affect our ability to maintain or increase our revenues and extend our global brand.

As we continue to develop integrated and personalized products and services to meet the needs of a changing marketplace, as well as acquire new companies, we [removed: may expand] [added: have expanded] our information profile through the collection of additional data from additional sources and across multiple channels.

This expansion [removed: could amplify] [added: has amplified] the impact of these regulations on our business.

Regulation of privacy and data and information security often times require monitoring of and changes to our data practices in regard to the collection, use, disclosure, storage, transfer and/or security of personal and sensitive [removed: information.][added: information, as well as increased care in our data management, governance and quality practices.]

Some jurisdictions are also considering requirements to collect, process and/or store data within [added: their borders, as well as prohibitions on the transfer of data abroad, leading to technological and operational implications.]

[removed: 20] MASTERCARD [removed: 2019] [added: 2020] FORM 10-K [added: 21]

New requirements or interpretations of existing requirements in these areas, or the development of new regulatory schemes related to the digital economy in general, may also increase our costs [removed: and could impact the products and services we offer and other aspects of] [added: and/or restrict] our [removed: business, such as fraud monitoring, the development of information-based products and solutions and technology operations.][added: ability to leverage data for innovation.]

In addition, fraudulent activity [removed: could encourage] [added: and increasing cyberattacks have encouraged legislative and] regulatory intervention, which could damage our reputation and reduce the use and acceptance of our integrated products and services or increase our compliance costs.

Criminals are using increasingly sophisticated methods to capture consumer [removed: account] [added: personal] information to engage in illegal activities such as counterfeiting or other fraud.

While we are taking measures to make card and digital payments more secure, increased fraud levels involving our integrated products and services, or misconduct or negligence by third parties switching or otherwise servicing our integrated products and services, could lead to [added: legislative or] regulatory intervention, such as enhanced security [removed: requirements,] [added: requirements and liabilities,] as well as damage to our reputation.

[removed: | • | Account-based] [added: - Account-based] Payment Systems - In the U.K., [removed: Her Majesty’s Treasury has expanded the Bank of England’s oversight of certain payment system providers that are systemically important to U.K.’s payment network. As a result of these changes,] aspects of our Vocalink business are [removed: now] subject to the U.K. payment system oversight regime and are directly overseen by the Bank of England. [removed: |]

[added: 22] MASTERCARD [removed: 2019] [added: 2020] FORM 10-K [removed: 21]

Each [added: instance] may individually or collectively materially and adversely affect our financial performance and/or our overall business and results of operations, as well as have an impact on our reputation.

[removed: | • |] [added: -] Some of our traditional competitors, as well as alternative payment service providers, may have substantially greater financial and other resources than we have, may offer a wider range of programs and services than we offer or may use more effective advertising and marketing strategies to achieve broader brand recognition or merchant acceptance than we have. [removed: |]

[removed: | • |] [added: -] Our ability to compete may also be affected by the outcomes of litigation, competition-related regulatory proceedings, central bank activity and legislative activity. [removed: |]

[removed: 22] MASTERCARD [removed: 2019] [added: 2020] FORM 10-K [added: 23]

[added: If we continue to attract more regulatory scrutiny than] these competitors because we operate a four-party system, or we are regulated because of the system we operate in a way in which our competitors are not, we could lose business to these competitors.

- ability to serve a broad array of participants in global payments due to our expanded on-soil presence in individual markets and a heightened focus on working with governments

- world class talent and culture, with a focus on inclusion and being a “force for good”

Government Regulation

General. Government regulation impacts key aspects of our business.

We are subject to regulations that affect the payments industry in the many countries in which our integrated products and services are used.

We are committed to comply with all applicable laws and regulations and implement policies, procedures and programs designed to promote compliance.

We coordinate globally while acting locally and leverage our relationships to manage the effects of regulation on us.

See “Risk Factors” in Part I, Item 1A for more detail and examples of the regulation to which we are subject.

Payments Oversight and Regulation. Central banks and other regulators in several jurisdictions around the world either have, or are seeking to establish, formal oversight over the payments industry, as well as authority to regulate certain aspects of the payment systems in their countries.

Such authority has resulted in regulation of various aspects of our business.

In the European Union, Mastercard is subject to systemic importance regulation, which includes various requirements we must meet, including obligations related to governance and risk management.

In the U.K., the Bank of England designated Vocalink, our real-time account-based payment network platform, to be a “specified service provider”, which includes supervisions and examination requirements.

In addition, European Union legislation requires us to separate our scheme activities (brand, products, franchise and licensing) from our switching activities and other processing in terms of how we go to market, make decisions and organize our structure.

Interchange Fees. Interchange fees that support the function and value of four-party payments systems like ours are being reviewed or challenged in various jurisdictions around the world via legislation to regulate interchange fees, competition-related regulatory proceedings, central bank regulation and litigation.

Examples include statutes in the United States that cap debit interchange for certain regulated activities, our settlement with the European Commission resolving its investigation into our interregional interchange fees and the European Union legislation capping consumer credit and debit interchange fees on payments issued and acquired within the European Economic Area (the “EEA”).

For more detail, see “Risk Factors - Other Regulation” in Part I, Item 1A and Note 21 (Legal and Regulatory Proceedings) to the consolidated financial statements included in Part II, Item 8.

In addition, we are or may be subject to regulation by a number of agencies charged with

We believe that various forms of data localization requirements are under consideration in other countries and jurisdictions, including the European Union.

| | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | Payments Industry Regulation | | | | | | | | | | | | COVID-19 | | | | | | Global Economic and Political Environment | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | Preferential or Protective Government Actions | | | | | | | | | | | | Competition and Technology | | | | | | Brand and Reputational Impact | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | Privacy, Data and Security | | | | | | | | | | | | Information Security and Service Disruptions | | | | | | Talent and Culture | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | Other Regulation | | | | | | | | | | | | Stakeholder Relationships | | | | | | Acquisitions | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | Class A Common Stock and Governance Structure | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | |

In addition, several central banks or similar regulatory bodies around the world have increased, or are seeking to increase, their formal oversight of the electronic payments industry.

In some cases, we have been designated as a “systemically important payment system”, and other regulators may consider designating us as systemically important or in a similar category resulting in heightened regulatory oversight.

These obligations, designations and restrictions may further expand and could conflict with each other as more jurisdictions impose oversight of payment systems.

impact our results of operations.

While we make every effort to comply with all regulatory requirements and we deploy a privacy-by-design and data-by-design approach to all of our product development, the speed and pace of change may not allow us to meet rapidly evolving expectations.

Such regulations and investigations have been related to payment card add-on products, campus cards, bank overdraft practices, fees issuers charge to account holders and the transparency of terms and conditions.

In addition,

Employees

As of December 31, 2019, we employed approximately 18,600 persons, of whom approximately 11,400 were employed outside of the United States.

| | | | | | | |

| --- | --- | --- | --- | --- | --- | --- |

| | Payments Industry Regulation | | | | Competition and Technology | |

| | Preferential or Protective Government Actions | | | | Information Security and Service Disruptions | |

| | Privacy, Data and Security | | | | Stakeholder Relationships | |

In addition, several central banks or similar regulatory bodies around the world have increased, or are seeking to increase, their formal oversight of the electronic payments industry and, in some cases, are considering designating certain payments networks as “systemically important payment systems” or “critical infrastructure.” These obligations, designations and restrictions may further expand and could conflict with each other as more jurisdictions impose oversight of payment systems.

on us as compared to our competitors in terms of the fees we can charge.

| | |

| --- | --- |

Our efforts to effect change in, or work with, these countries may not succeed.

their borders, as well as prohibitions on the transfer of data abroad, leading to technological and operational implications.

| • | Anti-Money Laundering, Counter Terrorist Financing, Economic Sanctions and Anti-Corruption - We are subject to AML and CFT laws and regulations globally, including the U.S. Bank Secrecy Act and the USA PATRIOT Act, as well as the various economic sanctions programs, including those imposed and administered by OFAC. The economic sanctions programs administered by OFAC restrict financial transactions and other dealings with certain countries and geographies (specifically Crimea, Cuba, Iran, North Korea and Syria) and with persons and entities included in OFAC sanctions lists including the SDN List. Iran, Sudan and Syria have been identified by the U.S. State Department as terrorist-sponsoring states. We are also subject to anti-corruption laws and regulations globally, including the U.S. Foreign Corrupt Practices Act and the U.K. Bribery Act, which, among other things, generally prohibit giving or offering payments or anything of value for the purpose of improperly influencing a business decision or to gain an unfair business advantage. A violation and subsequent judgment or settlement against us, or those with whom we may be associated, under these laws could subject us to substantial monetary penalties, damages, and/or have a significant reputational impact. |

| • | Issuer Practice Legislation and Regulation - Our financial institution customers are subject to numerous regulations, which impact us as a consequence. In addition, certain regulations (such as PSD2 in the EEA) may disintermediate issuers. PSD2 may enable third-party payment processors to route transactions away from Mastercard products by offering account information or payment initiation services directly to those who currently use our products. This may also allow these processors to commoditize the data that are included in the transactions. If our customers are disintermediated in their business, we could face diminished demand for our integrated products and services. Other regulations, such as PSD2’s strong authentication requirement, could increase the number of transactions that consumers abandon if we are unable to secure a frictionless authentication experience under the new standards. An increase in the rate of abandoned transactions could adversely impact our volumes or other operational metrics. |

If we continue to attract more regulatory scrutiny than

Over the past several years, we have experienced continued pricing pressure.

Our acquisition of Vocalink in 2017 added real-time account-based payment technology to the suite of capabilities we offer.

While expansion into this space presents business opportunities, there are also regulatory and operational risks associated with administering a real-time account-based payment network.

These efforts carry the risks associated with any diversification initiative, including cost overruns, delays in delivery and performance problems.

These projects also carry risks associated with working with different types of customers, for example organizations such as corporations that are not financial

| UNITED STATES SECURITIES AND EXCHANGE COMMISSION | | | | | | [added: | | | | | | | | | | | |]

| Washington, D.C. 20549 | | | | | | [added: | | | | | | | | | | | |]

| | | [added: | | | |] Form | [added: | |] 10-K | | | [added: | | | | | |]

| ☒ | [added: | |] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | [added: | |]

For the fiscal year [removed: ended December] [added: ended December] 31, [removed: 2019][added: 2020]

| ☐ | [added: | |] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | [added: | |]

| For the transition period from to | | [added: | | | |]

Commission file [removed: number: 001-32877][added: number: 001-32877]

| | | [removed: ] | | | | [added: ] | [added: | | | | | | | | | | | | | |]

| | [added: | |] Mastercard Incorporated | | | | | | [added: | | | | | | | | | | | |]

| | [added: | |] (Exact name of registrant as specified in its charter) | | | | | | [added: | | | | | | | | | | | |]

| | [added: | |] Delaware | | | [added: | | | | | |] 13-4172551 | | | [added: | | | | | |]

| | [added: | |] (State or other jurisdiction of incorporation or organization) | | | [added: | | | | | |] (IRS Employer Identification Number) | | | [added: | | | | | |]

| | [added: | |] 2000 Purchase Street | | | | | | [added: | | | | | | | | | | | |]

| | [added: | |] Purchase, | [added: | |] NY | | [added: | | | |] 10577 | | | [added: | | | | | |]

| | [added: | |] (Address of principal executive offices) | | | [added: | | | | | |] (Zip Code) | | | [added: | | | | | |]

[removed: (914) 249-2000][added: (914) 249-2000]

| Securities registered pursuant to Section 12(b) of the Act: | | | | | [added: | | | | | | | | | |]

| Title of each class | | [added: | | | |] Trading Symbol | | [added: | | | |] Name of each exchange of which registered | [added: | |]

| Class A Common Stock, par value $0.0001 per share | | [added: | | | |] MA | | [added: | | | |] New York Stock Exchange | [added: | |]

| [removed: 1.100%] [added: 1.1%] Notes due 2022 | | [added: | | | |] MA22 | | [added: | | | |] New York Stock Exchange | [added: | |]

| [removed: 2.100%] [added: 2.1%] Notes due 2027 | | [added: | | | |] MA27 | | [added: | | | |] New York Stock Exchange | [added: | |]

| [removed: 2.500%] [added: 2.5%] Notes due 2030 | | [added: | | | |] MA30 | | [added: | | | |] New York Stock Exchange | [added: | |]

| | [added: | |] Securities registered pursuant to Section 12(g) of the Act: | | | | | | [added: | | | | | | | | | | | |]

| | [added: | |] Class B common stock, par value $0.0001 per share | | | | | | [added: | | | | | | | | | | | |]

| Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. | | | | [added: | | | | | | | |] Yes | [added: | |] ☒ | [added: | |] No | [added: | |] ☐ | [added: | |]

| Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. | | | | [added: | | | | | | | |] Yes | [added: | |] ☐ | [added: | |] No | [added: | |] ☒ | [added: | |]

| Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. | | | | [added: | | | | | | | |] Yes | [added: | |] ☒ | [added: | |] No | [added: | |] ☐ | [added: | |]

| Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such [removed: files)] [added: files).] | | | | [added: | | | | | | | |] Yes | [added: | |] ☒ | [added: | |] No | [added: | |] ☐ | [added: | |]

| Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check One): | | | | | | | | [added: | | | | | | | | | | | | | | | |]

| Large accelerated filer | [added: | |] ☒ | | [added: | | | |] Accelerated filer | [added: | |] ☐ | | | | [added: | | | | | | | |]

| Non-accelerated filer | [added: | |] ☐ | [added: | |] (do not check if a smaller reporting company) | [added: | |] Smaller reporting company | [added: | |] ☐ | | | | [added: | | | | | | | |]

| | | | [added: | | | | | |] Emerging growth company | [added: | |] ☐ | | | | [added: | | | | | | | |]

| If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13 (a) of the Exchange Act. | | | | | | | [added: | | | | | | | | | | | | | |] ☐ | [added: | |]

| Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). | | | | [added: | | | | | | | |] Yes | [added: | |] ☐ | [added: | |] No | [added: | |] ☒ | [added: | |]

The aggregate market value of the registrant’s Class A common stock, par value $0.0001 per share, held by non-affiliates (using the New York Stock Exchange closing price as of June [removed: 28, 2019,] [added: 30, 2020,] the last business day of the registrant’s most recently completed second fiscal quarter) was approximately [removed: $235.9] [added: $261.3] billion.

As of February [removed: 11, 2020,] [added: 9, 2021,] there were [removed: 994,281,310] [added: 985,146,914] shares outstanding of the registrant’s Class A common stock, par value $0.0001 per share and [removed: 10,827,654] [added: 8,215,424] shares outstanding of the registrant’s Class B common stock, par value $0.0001 per share.

| Portions of the registrant’s definitive proxy statement for the [removed: 2020] [added: 2021] Annual Meeting of Stockholders are incorporated by reference into Part III hereof. | [added: | |]

[removed: ][added: ]

MASTERCARD INCORPORATED FISCAL YEAR [removed: 2019] [added: 2020] FORM 10-K ANNUAL REPORT

| | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | |

| Or | | | | | |

| | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. | | | | | | | | | | | | | | | | | | | | | ☒ | | |

| | | |

| --- | --- | --- |

| | | |

| | | |

| | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | |

| | | | | | | | | | | | |

| | | | | | | | | | | | |

| | | | | | | | | | | | |

| | | | | | | | | | | | |

| | | | | | | | | | | | |

| | | | | | | | | | | | |

| | | | | | | | | | | | |

- the impact of the global coronavirus (COVID-19) pandemic and containment measures taken in response

| | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | |

| | | | | | |

| | |

| --- | --- |

| Or | |

| | | | | | | |

| --- | --- | --- | --- | --- | --- | --- |

| | | | | |

| --- | --- | --- | --- | --- |

| | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- |

| |

| --- |

| | | | |

| --- | --- | --- | --- |

| | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| $16.9B | | | | $8.1B | | | | $7.94 | |

| up 13% | | | | up 39% | | | | up 42% | |

| $16.9B | | | | $7.9B | | | | $7.77 | |

| up 16% | | | | up 20% | | | | up 23% | |

| $7.8B | | | | $6.5B | Repurchased shares | | | $8.2B | |

| | $6.5T | | | | up 16% | | | | 87.3B |

| | up 13% | | | | | | | up 19% | |

| 2 | Growth rates normalized to eliminate the effects of differing switching and carryover days between periods. Carryover days are those where transactions and volumes from days where the company does not clear and settle are processed. |

| | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Consumer Credit | | $ | 2,670 | | | 10 | % | | 41 | % | | 882 | | | 8 | % |

| • | We offer a platform that enables consumers, businesses, governments and merchants to send and receive money beyond borders with greater speed and ease. |

We also have acquired a loyalty platform that enables stronger relationships with retailers,

Increasingly, we have been helping financial institutions, retailers and governments innovate.

Our products are designed to address needs of consumers with a focus on reducing complexity and delivering on experience.

In 2019, we:

| • | reinforced our support for contactless payments across all markets, including launching tap-and-go payments for transit systems in multiple cities globally (including New York City, Miami, Portland and Mexico City), which is creating the foundations for increased adoption of this technology to deliver a faster in-person payment experience. |

| • | announced Mastercard Track, our B2B payment ecosystem which represents a collection of products and services aimed at improving the way businesses pay and get paid. The Track suite of products aims to introduce Mastercard Track Business Payment Service™, an open-loop commercial service built to simplify and automate payments between suppliers and buyers. |

| • | extended our support for commercial cards by adding new partners to our virtual card program, with a focus on helping to make virtual cards a preferred tool with straight-through (automated) acceptance and processing. |

| • | signed new agreements to bring our real-time payments infrastructure to more markets, including our relationship with P27 Nordic Payments Platform that will help deliver one real-time and batch payments solution across the Nordic markets. This solution uses the same technology that powers the ability for consumers and businesses in the U.S. to send and receive immediate payments through the Clearing House platform. We were also selected to enhance the InstaPay real-time retail payment system in the Philippines, including operating the infrastructure for and providing anti-money laundering tools to the national clearing switch in the Philippines. |

| • | enhanced Mastercard Bill Pay Exchange™ with the acquisition of Transactis, a platform that makes it easier for consumers to view, manage and pay their bills either with cards or real-time and batch ACH payments from their bank accounts. |

| • | acquired Transfast, enabling us to continue servicing the growing needs of consumers and businesses, as well as governments and merchants, to send and receive money beyond borders with greater speed and ease. When combined with our proprietary Mastercard Send™ assets, we have greatly extended our network reach. |

| • | acquired Session M, a loyalty platform that enables stronger relationships with retailers, restaurants, airlines and consumer packaged goods companies by creating experiences that drive loyalty and impactful consumer engagement. |

| • | In 2019, we continued to implement our shift to a symbol brand by dropping our name from our logo, and debuted our sonic brand identity, comprised of a comprehensive sound architecture featuring a distinctive melody that will be employed in physical, digital and voice environments where consumers engage with Mastercard across the globe. |

As of December 31, [removed: 2019,] [added: 2020,] Mastercard and its subsidiaries owned or leased commercial properties throughout the U.S. and other countries around the world, consisting of corporate and regional offices, as well as our operations centers.

MASTERCARD [removed: 2019] [added: 2020] FORM 10-K [removed: 31][added: 33]

| Name Current Position | | [added: | | | |] Age | | [added: | | | |] Previous Mastercard Experience | | [added: | | | |] Previous Business Experience | [added: | |]

| Ajay [removed: Banga*President &Chief] [added: Banga] Executive [removed: Officer*since July 2010] [added: Chairmansince January 2021] | | [removed: 60] | | [added: | | 61 | | | | | | Chief Executive Officer (2020)] President and [added: Chief Executive Officer (2010-2020) President and] COO (2009-2010) | | [removed: Executive] [added: | | | | Several executive] positions at [removed: Citigroup (1996-2009),] [added: Citigroup,] including CEO, Asia Pacific [removed: region;] [added: region and] Chairman and CEO, International Global Consumer [removed: Group; Executive Vice President, Global Consumer Group; President, Retail Banking, North America; and business head for CitiFinancial and the U.S. Consumer Assets Division] [added: Group] Previous [added: senior leadership] experience at Nestlé India and PepsiCo [removed: totaling 15 years,] in roles of increasing responsibility | [added: | |]

| Ajay Bhalla*President, Cyber andIntelligence Solutions*since November 2018 | | [removed: 54] | | [added: | | 55 | | | | | |] President, Enterprise Security Solutions [removed: (2014- 2018)] [added: (2014-2018)] President, Digital Gateway Services (2011-2013) President, South Asia and Southeast Asia (2008-2011) [added: Various senior leadership positions, including] President, Southeast [removed: Asia (2002-2007)] [added: Asia;] Country Manager, Singapore and Head of Marketing, Southeast [removed: Asia (1997-2002)] [added: Asia;] Vice President [removed: (1993-1997)] | | [added: | | | |] Various leadership positions at HSBC and Xerox Corporation [removed: (1988-1993)] | [added: | |]

| Ann Cairns*Vice Chairman*since June 2018 | | [removed: 63] | | [added: | | 64 | | | | | |] President, International (2011-2018) | | [added: | | | |] Managing director, Alvarez & Marsal [removed: (led the European team managing the estate of Lehman Brothers Holdings International through the Chapter 11 process in Europe) (2002-2008)] CEO, ABN AMRO Senior corporate and investment banking roles at Citigroup [removed: Research scientist and engineer for British Gas] | [added: | |]

| Gilberto Caldart*President, International*since June 2018 | | [removed: 60] | | [added: | | 61 | | | | | |] President, Latin America and Caribbean region (2013-2018) Division President, South Latin America/Brazil (2008-2013) | | [added: | | | |] Various leadership positions at Citigroup, including Country Business Manager, Brazil [removed: (2002-2008)] | [added: | |]

| Michael Fraccaro*Chief People Officer*since July 2016 | | [removed: 54] | | [added: | | 55 | | | | | |] Executive Vice President, Human Resources, Global Products and Solutions (2014-2016) Senior Vice President, Human Resources, Global Products and Solutions (2012-2014) | | [added: | | | |] Various executive-level human resources positions at HSBC Group, Hong [removed: Kong, a banking and financial services firm] [added: Kong] (2000-2012) [removed: Prior] [added: Various] senior human resources positions in banking and financial services in Australia and the Middle East | [added: | |]

[removed: 32] [added: 34] MASTERCARD [removed: 2019] [added: 2020] FORM 10-K

| Michael [removed: Froman*Vice] [added: Froman *Vice] Chairman and President, Strategic Growth* since April 2018 | | [removed: 57] | | [added: | | 58 | | | | | |] Mr. Froman joined the Company in [removed: April] 2018 in his current role | | [added: | | | |] U.S. Trade Representative in the Executive Office of President Obama (2013-2017) Assistant to the President and Deputy National Security Advisor for International Economic Policy (2009-2013) Various [removed: executive] [added: senior leadership] positions at [removed: Citigroup (1999-2009),] [added: Citigroup,] including CEO, CitiInsurance and COO of Citigroup’s alternative investments business | [added: | |]

| Edward McLaughlin*President, Operations and Technology*since May 2017 | | [removed: 54] | | [added: | | 55 | | | | | |] Chief Information Officer (2016-2017) Chief Emerging Payments Officer (2010-2015) [added: Various senior leadership roles, including] Chief Franchise Development Officer [removed: (2009-2010)] [added: and] Senior Vice President, Bill Payment and Healthcare [removed: (2005-2009)] | | [added: | | | |] Group Vice President, Product and Strategy, Metavante Corporation [removed: (financial services technology company) (2002-2005)] Co-Founder and CEO, Paytrust, Inc. [removed: (online payments company acquired by Metavante Corporation in 2002) (1998-2002)] | [added: | |]

| Sachin Mehra*Chief Financial Officer*since April 2019 | | [removed: 49] | | [added: | | 50 | | | | | |] Chief Financial Operations Officer (2018-2019) Executive Vice President, Commercial Products (2015-2018) Executive Vice President and Business Financial Officer, North America (2013-2015) Corporate Treasurer (2010-2013) | | [removed: Vice President and Treasurer,] [added: | | | | Various senior positions at] Hess [removed: Corporation (2008-2010)] [added: Corporation, including] Vice President and [removed: Deputy Treasurer, Hess Corporation (2007-2008)] [added: Treasurer] Various [added: senior] treasury and finance [removed: positions of increasing responsibility,] [added: positions,] General Motors Corporation and GMAC [removed: (1996-2007)] | [added: | |]

| Michael [removed: Miebach*Chief Product Officer*since] [added: Miebach *President and Chief Executive Officer* since] January [removed: 2016] [added: 2021] | | [removed: 52] | | [added: | | 53 | | | | | | President (2020) Chief Product Officer (2016-2020)] President, Middle East and Africa (2010-2015) | | [added: | | | |] Managing Director, Middle East and North [removed: Africa, Barclays Bank PLC (2008-2010)] [added: Africa and] Managing Director, Sub-Saharan Africa, Barclays Bank PLC [removed: (2007-2008)] Various executive positions at Citigroup in Germany, Austria, U.K. and Turkey [removed: (1994-2007)] | [added: | |]

| Tim Murphy*General Counsel*since April 2014 | | [removed: 52] | | [added: | | 53 | | | | | |] Chief Product Officer (2009-2014) [added: Various senior leadership roles, including] President, U.S. [removed: Region (2007-2009)] [added: Region;] Executive Vice President, Customer Business Planning and [removed: Analysis (2006- 2007)] [added: Analysis; and] Senior Vice President and Associate General Counsel [removed: (2002-2006)] | | [added: | | | |] Associate, Cleary, Gottlieb, Steen and Hamilton, New York and London | [added: | |]

| Raja Rajamannar*Chief Marketing and Communications Officer and President, Healthcare*since January 2016 | | [removed: 58] | | [added: | | 59 | | | | | |] Chief Marketing Officer (2013-2015) | | [added: | | | |] Executive Vice President-Senior Business and Chief Transformation Officer, Anthem (formerly, WellPoint, Inc.) (2012- 2013) Senior Vice President and Chief Innovation and Marketing Officer, Humana Inc. (2009-2012) Various management positions at [removed: Citigroup (1994-2009),] [added: Citigroup,] including Executive Vice President and Chief Marketing Officer-Citi Global Cards [removed: (2008-2009)] | [added: | |]

MASTERCARD [removed: 2019] [added: 2020] FORM 10-K [removed: 33][added: 35]

| Raj Seshadri*President, Data and Services*since January 2020 | | [removed: 54] | | [added: | | 55 | | | | | |] President, U.S. Issuers (2016-2019) | | [added: | | | |] Managing Director, Head of iShares U.S. Wealth Advisory business, BlackRock (2014-2016) [added: Managing Director, Global Marketing Officer of iShares, BlackRock, Inc. (2012-2014) Various leadership positions at Citigroup, U.S. Trust Company and McKinsey & Company, Inc.] | [added: | |]

| Kevin Stanton*Chief Transformation Officer*since January 2020 | | [removed: 58] | | [added: | | 59 | | | | | |] Chief Services Officer (2018-2019) President, Mastercard Advisors (2010-2017) [added: Various senior leadership roles, including] President, [removed: Canada (2004-2010)] [added: Canada;] Senior Vice President, Strategy and Market [removed: Development (2002-2004)] [added: Development; and] Vice President, Senior Counsel and North America Region Counsel [removed: (1995-2002)] | | | [added: | | | Vice President, Counsel, Shawmut National Corporation | | |]

| Craig [removed: Vosburg*President, North America*since] [added: Vosburg*Chief Product Officer*since] January [removed: 2016] [added: 2021] | | [removed: 52] | | [added: | | 53 | | | | | | President, North America (2016-2020)] Chief Product Officer (2014-2015) Executive Vice President, U.S. Market Development (2010-2014) [added: Various senior leadership roles, including] Head of Mastercard Advisors, U.S. and Canada [removed: (2008-2010)] [added: and] Head of Mastercard Advisors, Southeast Asia, Greater China and South Asia/Middle East/Africa [removed: (2006-2008)] | | [added: | | | |] Senior member-financial services practice, Bain & Company [removed: (2002-2006)] and A.T. Kearney [removed: (1997-2002)] Vice president, CoreStates Financial Corporation [removed: (1989-1995)] | [added: | |]

[removed: 34] [added: 36] MASTERCARD [removed: 2019] [added: 2020] FORM 10-K

| | | [added: | | | |] PART II | | | | [added: | | | | | | | |]

| | | [removed: [Item] [added: | | | | [Item] 5. Market for registrant’s common equity, related stockholder matters and issuer purchases of equity [removed: securities](#s4E973AFCD64B5A17B266FCD77BD0498F)] [added: securities](#ic14da07effa044f185a4e5e61b3e1ecd_40)] | | | | [added: | | | | | | | |]

| | | [removed: [Item] [added: | | | | [Item] 6. Selected financial [removed: data](#s095E228475FD5B3FA777FBD71CFB8B0E)] [added: data](#ic14da07effa044f185a4e5e61b3e1ecd_43)] | | | | [added: | | | | | | | |]

| | | [removed: [Item] [added: | | | | [Item] 7. Management’s discussion and analysis of financial condition and results of [removed: operations](#sC11BFAA60CCD562D89DB4FE4D3A7823B)] [added: operations](#ic14da07effa044f185a4e5e61b3e1ecd_46)] | | | | [added: | | | | | | | |]

| | | [removed: [Item] [added: | | | | [Item] 7A. Quantitative and qualitative disclosures about market [removed: risk](#sCD73AD819D695D308E4A4AAFE1F3288F)] [added: risk](#ic14da07effa044f185a4e5e61b3e1ecd_79)] | | | | [added: | | | | | | | |]

| | | [removed: [Item] [added: | | | | [Item] 8. Financial statements and supplementary [removed: data](#s6C55F283B11557BA8DB35B5EEF0A5897)] [added: data](#ic14da07effa044f185a4e5e61b3e1ecd_82)] | | | | [added: | | | | | | | |]

| | | [removed: [Item] [added: | | | | [Item] 9. Changes in and disagreements with accountants on accounting and financial [removed: disclosure](#sB7B8CF0ED8255EE59CB4BA9244450483)] [added: disclosure](#ic14da07effa044f185a4e5e61b3e1ecd_232)] | | | | [added: | | | | | | | |]

| | | [removed: [Item] [added: | | | | [Item] 9A. Controls and [removed: procedures](#sFADA779FBCFD568DA59C3D55D96A24CD)] [added: procedures](#ic14da07effa044f185a4e5e61b3e1ecd_235)] | | | | [added: | | | | | | | |]

| | | [removed: [Item] [added: | | | | [Item] 9B. Other [removed: information](#s0EDB262B954D508FB22E629C86FFF377)] [added: information](#ic14da07effa044f185a4e5e61b3e1ecd_238)] | | | | [added: | | | | | | | |]

At February [removed: 11, 2020,] [added: 9, 2021,] we had [removed: 68] [added: 73] stockholders of record for our Class A common stock.

There were approximately [removed: 271] [added: 257] holders of record of our non-voting Class B common stock as of February [removed: 11, 2020,] [added: 9, 2021,] constituting approximately [removed: 1.1%] [added: 0.8%] of our total outstanding equity.

The graph and table below compare the cumulative total stockholder return of Mastercard’s Class A common stock, the S&P 500 [removed: Financials] and the S&P 500 [removed: Index] [added: Financials] for the five-year period ended December 31, [removed: 2019.][added: 2020.]

[removed: ][added: ]

| | | [added: | | | |] Base period | | | | [added: | |] Indexed Returns | | | | | | | | | | | | | | | | | | | [added: | | | | | | | |]

| | | | [added: | | | | | |] For the Years Ended December 31, | | | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | |]

| Company/Index | | [removed: 2014] | | | | 2015 | | | | [added: | |] 2016 | | | | [added: | |] 2017 | | | | [added: | |] 2018 | | | | [added: | |] 2019 | | | [added: | | | 2020 | | |]

[removed: 36] [added: 38] MASTERCARD [removed: 2019] [added: 2020] FORM 10-K

(as of February 12, 2021)

| | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Name Current Position | | | | | | Age | | | | | | Previous Mastercard Experience | | | | | | Previous Business Experience | | |

| Linda Kirkpatrick *President, North America* since January 2021 | | | | | | 44 | | | | | | President, U.S. Issuers (2020) Executive Vice President, Merchants and Acceptance (2016-2020) Senior Vice President, Core Merchants (2013-2016) Senior Vice President, Franchise Development (2011-2013) Vice President, U.S. Region (2008-2011) Vice President, Investor Relations | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Name Current Position | | | | | | Age | | | | | | Previous Mastercard Experience | | | | | | Previous Business Experience | | |

| | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | |

(as of February 14, 2020)

| | | | | | | |

| --- | --- | --- | --- | --- | --- | --- |

| | | | | | |

| --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Mastercard | | $ | 100.00 | | | $ | 113.80 | | | $ | 121.67 | | | $ | 179.67 | | | $ | 225.17 | | | $ | 358.38 | |

| S&P 500 Financials | | 100.00 | | | | 98.47 | | | | 120.92 | | | | 147.75 | | | | 128.50 | | | | 169.78 | | |

| S&P 500 Index | | 100.00 | | | | 101.38 | | | | 113.51 | | | | 138.29 | | | | 132.23 | | | | 173.86 | | |

On December [removed: 3, 2019,] [added: 8, 2020,] our Board of Directors declared a quarterly cash dividend of [removed: $0.40] [added: $0.44] per share paid on February [removed: 7, 2020] [added: 9, 2021] to holders of record on January [removed: 9, 2020] [added: 8, 2021] of our Class A common stock and Class B common stock.

On February [removed: 4, 2020,] [added: 8, 2021,] our Board of Directors declared a quarterly cash dividend of [removed: $0.40] [added: $0.44] per share payable on May [removed: 8, 2020] [added: 7, 2021] to holders of record on April 9, [removed: 2020] [added: 2021] of our Class A common stock and Class B common stock.

During the fourth quarter of [removed: 2019,] [added: 2020,] we repurchased a total of approximately [removed: 3.6] [added: 3.1] million shares for [removed: $994 million] [added: $1.03 billion] at an average price of [removed: $275.00] [added: $330.34] per share of Class A common stock.

[removed: Our] [added: The following table presents our] repurchase activity [added: on a cash basis] during the fourth quarter of [removed: 2019 consisted of open market share repurchases and is summarized in the following table:][added: 2020:]

| Period | | [added: | | | |] Total [removed: Number of Shares Purchased] [added: Number of Shares Purchased] | | | [added: | | |] Average [removed: Price Paid] [added: Price Paid] per [removed: Share (including commission] [added: Share (including commission] cost) | | | | [added: | |] Total Number [removed: of Shares] [added: of Shares] Purchased [removed: as Part] [added: as Part] of [removed: Publicly Announced] [added: Publicly Announced] Plans [removed: or Programs] [added: or Programs] | | | [added: | | |] Dollar Value of Shares that may yet be Purchased under the Plans or Programs 1 | | |

[removed: | 1 | Dollar] [added: 1Dollar] value of shares that may yet be purchased under the [removed: 2018 Share Repurchase Program and the 2019 Share Repurchase Program] [added: share repurchase programs] are as of the end of each period presented. [removed: |]

MASTERCARD [removed: 2019] [added: 2020] FORM 10-K [removed: 37][added: 39]

See Note 16 (Stockholders' Equity) to the consolidated financial statements included in Part II, Item 8 for further discussion with respect to our share repurchase programs.

| | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| October 1 – 31 | | | | | | 1,552,273 | | | | | | $ | 335.39 | | | | | 1,552,273 | | | | | | $ | 4,340,730,451 | |

| November 1 – 30 | | | | | | 779,892 | | | | | | 314.13 | | | | | | 779,892 | | | | | | 4,095,745,017 | | |

| December 1 – 31 | | | | | | 785,846 | | | | | | 336.44 | | | | | | 785,846 | | | | | | 9,831,351,292 | | |

| Total | | | | | | 3,118,011 | | | | | | 330.34 | | | | | | 3,118,011 | | | | | | | | |

On December 4, 2018, our Board of Directors approved a share repurchase program authorizing us to repurchase up to $6.5 billion of our Class A common stock (the “2018 Share Repurchase Program”).

This program became effective in January 2019.

On December 3, 2019, our Board of Directors approved a share repurchase program authorizing us to repurchase up to $8.0 billion of our Class A common stock (the “2019 Share Repurchase Program”).

This program became effective in January 2020.

| | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| October 1 – 31 | | 2,128,776 | | | $ | 271.55 | | | 2,128,776 | | | $ | 719,951,874 | |

| November 1 – 30 | | 1,363,616 | | | 278.93 | | | | 1,363,616 | | | 339,605,253 | | |

| December 1 – 31 | | 121,837 | | | 291.38 | | | | 121,837 | | | 8,304,104,890 | | |

| Total | | 3,614,229 | | | 275.00 | | | | 3,614,229 | | | | | |

| | |

| --- | --- |

The statement of operations data and the cash dividends declared per share [removed: presented below] for the years ended December 31, [removed: 2019, 2018] [added: 2020, 2019] and [removed: 2017,] [added: 2018,] and the balance sheet data as of December 31, [removed: 2019] [added: 2020] and [removed: 2018, were derived from] [added: 2019, are presented in] the audited consolidated financial statements of Mastercard Incorporated included in Part II, Item 8.

The statement of operations data and the cash dividends declared per share [removed: presented below] for the years ended December 31, [removed: 2016] [added: 2017] and [removed: 2015,] [added: 2016,] and the balance sheet data as of December 31, [removed: 2017, 2016] [added: 2018, 2017] and [removed: 2015, were derived from audited consolidated financial statements] [added: 2016, are] not included in this [removed: Report.][added: Report, and are provided in Part II, Item 8 of our Annual Reports on Form 10-K for the years ended December 31, 2018, 2017 and 2016.]

| | | [removed: Years] [added: | | | | For the Years] Ended December 31, | | | | | | | | | | | | | | | | | | [added: Increase (Decrease)] | [added: | | | | | | | |]

| | | [removed: (in] [added: | | | | ($ in] millions, except per share data) | | | | | | | | | | | | | | | | | | | [added: | | | | | | | |]

| Net revenue | | [added: | | | |] $ | [added: 15,301 | | | | | $ |] 16,883 | | | [added: | |] $ | 14,950 | | | [removed: $] | [removed: 12,497] | [added: (9)%] | | [removed: $] | [removed: 10,776] | | | [removed: $] [added: 13%] | [removed: 9,667] | |

| Operating expenses | | [added: | | | | $ | 7,220 | | | | | $ |] 7,219 | | | | [removed: 7,668] | [added: $] | [added: 7,668] | | [removed: 5,875] | | | [added: —%] | [removed: 5,015] | | | | [removed: 4,589] | [added: (6)%] | | [added: |]

| Operating income | | [added: | | | | $ | 8,081 | | | | | $ |] 9,664 | | | | [removed: 7,282] | [added: $] | [added: 7,282] | | [removed: 6,622] | | | [added: (16)%] | [removed: 5,761] | | | | [removed: 5,078] | [added: 33%] | | [added: |]

| Net income | | [added: | | | | $ | 6,411 | | | | | $ |] 8,118 | | | | [removed: 5,859] | [added: $] | [added: 5,859] | | [removed: 3,915] | | | [added: (21)%] | [removed: 4,059] | | | | [removed: 3,808] | [added: 39%] | | [added: |]

| Diluted earnings per share | | [added: | | | | $ | 6.37 | | | | | $ |] 7.94 | | | | [removed: 5.60] | [added: $] | [added: 5.60] | | [removed: 3.65] | | | [added: (20)%] | [removed: 3.69] | | | | [removed: 3.35] | [added: 42%] | | [added: |]

[removed: 38] [added: 40] MASTERCARD [removed: 2019] [added: 2020] FORM 10-K

For discussion related to the results of operations for the year ended December 31, [removed: 2018] [added: 2019] compared to the year ended December 31, [removed: 2017,] [added: 2018,] please see Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, [removed: 2018.][added: 2019.]

We [removed: are] [added: operate] a multi-rail network that offers customers one partner to turn to for their domestic and cross-border payment needs.

We also provide integrated value-added offerings such as cyber and intelligence products, information and analytics services, consulting, loyalty and reward [removed: programs] [added: programs, processing] and [removed: processing.][added: open banking.]

In most cases, account holder relationships belong to, and are managed by, our [removed: financial institution] customers.

| | | [added: | | | |] Year ended December 31, | | | | | | | | | | | | [added: | | | | | | 2020 Increase/ (Decrease) | | | | | |] 2019 [removed: Increase/ (Decrease)] [added: Increase/ (Decrease)] | | [removed: 2018 Increase/ (Decrease)] |

| | | [added: | | | | 2020 | | | | | |] 2019 | | | | [added: | |] 2018 | | | | [removed: 2017] | | | | | | | [added: | | | |]

| | | [added: | | | |] ($ in millions, except per share data) | | | | | | | | | | | | | | | [added: | | | | | | | | | | | | | | | | | | | | | | | |]

| Net revenue | | [added: | | | |] $ | [added: 15,301 | | | | | $ |] 16,883 | | | [added: | |] $ | 14,950 | | | [removed: $] | [removed: 12,497] | [added: (9)%] | | [added: | | | |] 13% | | [removed: 20%] |

| Operating margin | | [added: | | | | 52.8 | | % | | | |] 57.2 | | % | | [added: | |] 48.7 | | % | | [removed: 53.0] | | [removed: %] [added: (4.4) ppt] | | [added: | | | |] 8.5 ppt | | [removed: (4.3) ppt] |

| Income tax expense | | [added: | | | |] $ | [added: 1,349 | | | | | $ |] 1,613 | | | [added: | |] $ | 1,345 | | | [removed: $] | [removed: 2,607] | [added: (16)%] | | [added: | | | |] 20% | | [removed: (48)%] |

| Effective income tax rate | | [added: | | | | 17.4 | | % | | | |] 16.6 | | % | | [added: | |] 18.7 | | % | | [removed: 40.0] | | [removed: %] [added: 0.8 ppt] | | [added: | | | |] (2.1) ppt | | [removed: (21.3) ppt] |

| Diluted weighted-average shares outstanding | | [added: | | | | 1,006 | | | | | |] 1,022 | | | | [removed: 1,047] | | [added: 1,047] | | [removed: 1,072] | | | | (2)% | | [added: | | | |] (2)% | [added: | |]

MASTERCARD [removed: 2019] [added: 2020] FORM 10-K [removed: 39][added: 41]

The following table provides a summary of [added: our] key non-GAAP operating results1, [removed: 2,] adjusted to exclude the impact of gains and losses on our equity investments, special items (which represent litigation judgments and settlements and certain one-time items) and the related tax impacts on our non-GAAP adjustments.

| | | [added: | | | |] Year ended December 31, | | | | | | | | | | | | [removed: 2019 Increase/(Decrease)] | | | | [removed: 2018 Increase/(Decrease)] | | [added: 2020 Increase/(Decrease)] | [added: | | | | | | | | | | | 2019 Increase/(Decrease) | | | | | | | | |]

| | | [added: | | | | 2020 | | | | | |] 2019 | | | | [removed: 2018] | | [added: 2018] | | [removed: 2017] | | | | As adjusted | | [added: | | | |] Currency-neutral | | [added: | | | |] As adjusted | | [added: | | | |] Currency-neutral | [added: | |]

| | | [added: | | | |] ($ in millions, except per share data) | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | | | | | |]

| Net revenue | | [added: | | | |] $ | [added: 15,301 | | | | | $ |] 16,883 | | | [added: | |] $ | 14,950 | | | [removed: $] | [removed: 12,497] | [added: (9)%] | | [added: | | | | (8)% | | | | | |] 13% | | [removed: 16%] | | [removed: 20%] | | [removed: 20%] [added: 16%] | [added: | |]

| Adjusted operating expenses | | [added: | | | |] $ | [added: 7,147 | | | | | $ |] 7,219 | | | [added: | |] $ | 6,540 | | | [removed: $] | [removed: 5,693] | [added: (1)%] | | [added: | | | | (1)% | | | | | |] 10% | | [removed: 12%] | | [removed: 15%] | | [removed: 15%] [added: 12%] | [added: | |]

| Adjusted operating margin | | [removed: 57.2] | | [added: | | 53.3 | |] % | | [removed: 56.2] | | [added: 57.2 | |] % | | [removed: 54.4] | | [added: 56.2 | |] % | | [removed: 1.0] [added: | | (4.0)] ppt | | [removed: 1.3] [added: | | | | (3.7)] ppt | | [removed: 1.8] [added: | | | | 1.0] ppt | | [removed: 1.8] [added: | | | | 1.3] ppt | [added: | |]

| Adjusted effective income tax [removed: rate2] [added: rate] | | [removed: 17.0] | | [added: | | 17.2 | |] % | | [removed: 18.5] | | [added: 17.0 | |] % | | [removed: 26.8] | | [added: 18.5 | |] % | | [removed: (1.5)] [added: | | 0.2] ppt | | [removed: (1.3)] [added: | | | | 0.3] ppt | | [removed: (8.3)] [added: | | | | (1.5)] ppt | | [removed: (8.2)] [added: | | | | (1.3)] ppt | [added: | |]

| Adjusted net [removed: income2] [added: income] | | [added: | | | |] $ | [added: 6,463 | | | | | $ |] 7,937 | | | [added: | |] $ | 6,792 | | | [removed: $] | [removed: 4,906] | [added: (19)%] | | [added: | | | | (17)% | | | | | |] 17% | | [removed: 20%] | | [removed: 38%] | | [removed: 38%] [added: 20%] | [added: | |]

| Adjusted diluted earnings per [removed: share2] [added: share] | | [added: | | | |] $ | [added: 6.43 | | | | | $ |] 7.77 | | | [added: | |] $ | 6.49 | | | [removed: $] | [removed: 4.58] | [added: (17)%] | | [added: | | | | (16)% | | | | | |] 20% | | [removed: 23%] | | [removed: 42%] | | [removed: 41%] [added: 23%] | [added: | |]

[removed: |] 1 [removed: |] See “Non-GAAP Financial Information” for further information on our non-GAAP adjustments and the reconciliation to GAAP reported amounts. [removed: |]

[removed: | 2 | For] [added: 1In] 2019 we updated our non-GAAP methodology to [added: prospectively] exclude the impact of gains and losses on our equity investments. [removed: Prior year periods were not restated as the impact of the change was immaterial in relation to our non-GAAP results. |]

Key highlights for [removed: 2019] [added: 2020] as compared to [removed: 2018] [added: 2019] were as follows:

| Net revenue | | | | [added: | | | | | | | |]

[removed: | GAAP | | Non-GAAP (currency-neutral) |] Net revenue [removed: increased 16%] [added: decreased 9%, or 8%] on a currency-neutral basis, [removed: which included growth of approximately] [added: including] 1 percentage point [removed: from acquisitions. The primary drivers] of [added: growth from] our [removed: |][added: acquisitions.]

| [removed: | \-] Gross dollar volume [removed: growth of 13% on a local] [added: (local] currency [removed: basis] [added: basis)] | | | [added: | | | 8 | | % | | | | (10) | | % | | | | 1 | | % | | | | 1 | | % | | | | — | | % |]

| [added: Cross-border volume (local currency basis)] | | | [removed: \- Cross-border growth of 16% on a local currency basis] | [added: | | (1) | | % | | | | (45) | | % | | | | (36) | | % | | | | (29) | | % | | | | (29) | | % |]

COVID-19

The coronavirus (“COVID-19”) pandemic has spread rapidly across the globe and has had significant negative effects on the global economy.

This outbreak has affected business activity, adversely impacting consumers, our customers, suppliers and business partners, as well as our workforce.

We continue to monitor the effects of the pandemic and actions taken by governments as they relate to travel restrictions, social distancing measures and restrictions on business operations, as well as the continued impact of these actions on consumers and businesses.

While some of these measures have eased in certain jurisdictions, others have remained in place.

The extent to which current measures are removed or new measures are put in place will depend upon how the pandemic evolves, as well as the progress of the global roll-out of vaccines.

The COVID-19 outbreak affected our 2020 performance, during which we noted unfavorable trends compared to historical periods.

The following table provides a summary of trends in our key metrics for 2020 as compared to the respective periods in 2019:

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | March 31 | | | | | | June 30 | | | | | | September 30 | | | | | | December 31 | | | | | | | | |

The impact of this outbreak started in the first quarter of 2020 as we experienced declines in our key metrics compared to historical periods, primarily due to travel restrictions and stay-at-home orders implemented by governments in many regions and countries across the globe.

Our key metrics continued to be impacted throughout 2020 as follows:

- Gross dollar volumes were flat in 2020 as compared to 2019, recovering gradually in the second half of the year from a decline during the second quarter in part due to the global relaxation of both restrictions on business operations and social distancing measures.

- Cross-border volumes were negatively impacted by the pandemic during 2020 due to a significant decrease in global travel as a result of compliance with travel restrictions and quarantine requirements.

While cross-border volumes are still lower compared to prior year periods, these volumes have improved throughout the second half of 2020.

- Switched transactions were negatively impacted by the pandemic primarily in the second quarter.

Subsequently, switched transactions improved during the third quarter in part due to the global relaxation of both restrictions on business operations and social distancing measures.

During the fourth quarter, switched transactions growth slowed slightly as compared to the third quarter.

The full extent to which the pandemic, and measures taken in response, affect our business, results of operations and financial condition will depend on future developments, including the duration of the pandemic and its impact on the global economy, which are uncertain, and cannot be predicted at this time.

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| GAAP | | | | | | Non-GAAP (currency-neutral) | | | Net revenue decreased 8% on a currency-neutral basis due to COVID-19 impacts, and includes a 1 percentage point benefit from acquisitions. Gross dollar volume was flat on a local currency basis. The primary drivers of net revenue were: | | |

| | | | \- Cross-border volume decline of 29% on a local currency basis | | | | | | | | |

| | | | | | | | | | \- Rebates and incentives growth of 3%, or 4% on a currency-neutral basis | | |

| | | | | | | | | | These decreases to net revenue were partially offset by: | | |

| | | | | | | | | | | | |

| | | | | | | | | | \- Other revenues growth of 14%, or 15% on a currency-neutral basis, which | | |

| | | | | | | | | | | | |

The data set forth below should be read in conjunction with, and are qualified by reference to, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 and our consolidated financial statements and notes thereto included in Part II, Item 8.

| | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | 2019 | | | | 2018 | | | | 2017 | | | | 2016 | | | | 2015 | | |

| Statement of Operations Data: | | | | | | | | | | | | | | | | | | | | |

| Basic earnings per share | | 7.98 | | | | 5.63 | | | | 3.67 | | | | 3.70 | | | | 3.36 | | |

| Balance Sheet Data: | | | | | | | | | | | | | | | | | | | | |

| Total assets | | $ | 29,236 | | | $ | 24,860 | | | $ | 21,329 | | | $ | 18,675 | | | $ | 16,250 | |

| Long-term debt | | 8,527 | | | | 5,834 | | | | 5,424 | | | | 5,180 | | | | 3,268 | | |

| Total equity | | 5,917 | | | | 5,418 | | | | 5,497 | | | | 5,684 | | | | 6,062 | | |

| Cash dividends declared per share | | $ | 1.39 | | | $ | 1.08 | | | $ | 0.91 | | | $ | 0.79 | | | $ | 0.67 | |

PART II

ITEM 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

| | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Operating expenses | | $ | 7,219 | | | $ | 7,668 | | | $ | 5,875 | | | (6)% | | 31% |

| Operating income | | $ | 9,664 | | | $ | 7,282 | | | $ | 6,622 | | | 33% | | 10% |

| Net income | | $ | 8,118 | | | $ | 5,859 | | | $ | 3,915 | | | 39% | | 50% |

| Diluted earnings per share | | $ | 7.94 | | | $ | 5.60 | | | $ | 3.65 | | | 42% | | 53% |

| | |

| --- | --- |

| | | | |

| --- | --- | --- | --- |

| up 13% | | up 16% | net revenue growth were 1: |

| | | | \- Other revenues growth of 23%, or 24% on a currency-neutral basis. This |

| | | | growth was primarily driven by our Cyber & Intelligence and Data & Services |

| | | | solutions. |

| | | | \- These increases were partially offset by higher rebates and incentives, which |

| | | | increased 18%, or 20% on a currency-neutral basis, primarily due to the |

| | | | impact from new and renewed agreements and increased volumes. |

| 1 | The cross-border volume and switched transactions growth rates have been normalized to eliminate the effects of differing switching and carryover days between periods. Carryover days are those where transactions and volumes from days where the company does not clear and settle are processed. |

| GAAP | | Non-GAAP (currency-neutral) | Adjusted operating expenses on a currency-neutral basis included growth of approximately 2 percentage points from acquisitions and 1 percentage point related to the differential in hedging gains and losses versus the year-ago period. The remaining 9 percentage points of growth was primarily related to our continued investment in strategic initiatives. |

| GAAP | | Non-GAAP (currency-neutral) | Adjusted effective income tax rate of 17.0% primarily attributable to a more favorable geographic mix of earnings and discrete tax benefits including a favorable court ruling in the current period. |

| 16.6% | | 17.0% | |

| • | We completed debt offerings for an aggregate principal amount of $2.8 billion and separately repaid $500 million of principal that matured related to our 2014 USD Notes. |

| • | During 2017, we recorded additional tax expense of $873 million ($0.81 per diluted share) which included $825 million of provisional charges attributable to the Transition Tax, the remeasurement of our net deferred tax asset in the U.S. and the recognition of a deferred tax liability related to a change in assertion regarding reinvestment of foreign earnings, as well as $48 million additional tax expense related to a foregone foreign tax credit benefit on 2017 repatriations. |

*Venezuela charge*

| • | During 2017, we recorded a pre-tax charge of $167 million ($108 million after tax, or $0.10 per diluted share) in general and administrative expenses related to the deconsolidation of our Venezuelan subsidiaries. |

| | | | | | | | | | | | | | | | | | | | | | | |

[added: The court] granted final approval of the settlement in December 2013, and objectors to the settlement appealed that decision to the U.S. Court of Appeals for the Second Circuit.

As of December 31, [removed: 2019] [added: 2020] and [removed: 2018,] [added: 2019,] Mastercard had accrued a liability of [removed: $914] [added: $783] million [added: and $914 million, respectively,] as a reserve for both the Damages Class litigation and the [removed: filed and anticipated] opt-out merchant cases.

As of December 31, [removed: 2019] [added: 2020] and [removed: 2018,] [added: 2019,] Mastercard had [removed: $584] [added: $586] million and [removed: $553] [added: $584] million, respectively, in a qualified cash settlement fund related to the Damages Class litigation and classified as restricted cash on its consolidated balance sheet.