Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes the unrealized gains and losses included in the carrying value of the Company’s Measurement alternative investments and Marketable securities for the years ended December 31:


	2025		2024		2023
	(in millions)
Measurement alternative investments:
Upward adjustments	$	31	$	11	$	7
Downward adjustments (including impairment)	(32)		(9)		(145)
Marketable securities:
Unrealized gains (losses), net	(84)		(34)		97

Note 6. Fair Value Measurements

The Company’s financial instruments are carried at fair value, cost or amortized cost on the consolidated balance sheets. The Company classifies its fair value measurements of financial instruments into a three-level hierarchy (the “Valuation Hierarchy”).

Financial Instruments - Carried at Fair Value

Financial instruments carried at fair value are categorized for fair value measurement purposes as recurring or non-recurring in nature.

Recurring Measurements

The distribution of the Company’s financial instruments measured at fair value on a recurring basis within the Valuation Hierarchy was as follows:


	December 31, 2025								December 31, 2024
	Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total		Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
	(in millions)
Assets
Investment securities:




Available-for-sale securities 1	$	20	$	299	$	—	$	319	$	36	$	256	$	—	$	292
Derivative instruments 2:
Foreign exchange contracts	—		35		—		35		—		206		—		206

Marketable securities 3:
Equity securities	203		—		—		203		237		—		—		237



Liabilities
Derivative instruments 2:
Foreign exchange contracts	$	—	$	160	$	—	$	160	$	—	$	36	$	—	$	36
Interest rate contracts	—		27		—		27		—		63		—		63

1The Company’s U.S. government securities are classified within Level 1 of the Valuation Hierarchy as the fair values are based on unadjusted quoted prices for identical assets in active markets. The fair value of the Company’s available-for-sale non-U.S. government and agency securities, corporate and asset-backed securities are based on observable inputs such as quoted prices, benchmark yields and issuer spreads for similar assets in active markets and are therefore included in Level 2 of the Valuation Hierarchy.

2The Company’s foreign exchange and interest rate derivative asset and liability contracts measured at fair value are based on observable inputs such as broker quotes for similar derivative instruments. See Note 21 (Derivative and Hedging Instruments) for further details.

3The Company’s Marketable securities are publicly held and fair values are based on unadjusted quoted prices in their respective active markets.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Nonrecurring Measurements

Nonmarketable Securities

The Company’s Nonmarketable securities are recorded at fair value on a nonrecurring basis in periods after initial recognition under the equity method or measurement alternative method. Nonmarketable securities are classified within Level 3 of the Valuation Hierarchy due to the absence of quoted market prices, the inherent lack of liquidity and unobservable inputs used to measure fair value that require management’s judgment. The Company uses discounted cash flows and market assumptions to estimate the fair value of its Nonmarketable securities when certain events or circumstances indicate that impairment may exist. Observable price changes in orderly transactions for identical or similar investments of the same issuer could also result in fair value adjustments. See Note 5 (Investments) for further details.

Financial Instruments - Not Carried at Fair Value

Debt

Debt instruments are carried on the consolidated balance sheets at amortized cost. The Company estimates the fair value of its debt based on either market quotes or observable market data. Debt is classified as Level 2 of the Valuation Hierarchy as it is generally not traded in active markets. At December 31, 2025, the carrying value and fair value of debt was $19.0 billion and $18.0 billion, respectively. At December 31, 2024, the carrying value and fair value of debt was $18.2 billion and $16.8 billion, respectively. See Note 13 (Debt) for further details.

Other Financial Instruments

Certain other financial instruments are carried on the consolidated balance sheets at cost or amortized cost basis, which approximates fair value due to their short-term, highly liquid nature. These instruments include cash and cash equivalents, restricted cash and restricted cash equivalents, restricted security deposits held for customers, time deposits, accounts receivable, settlement assets, accounts payable, settlement obligations and other accrued liabilities.

Note 7. Prepaid Expenses and Other Assets

Prepaid expenses and other current assets consisted of the following at December 31:


	2025		2024
	(in millions)
Customer incentives	$	2,531	$	1,854
Other	1,212		1,138
Total prepaid expenses and other current assets	$	3,743	$	2,992

Other assets consisted of the following at December 31:


	2025		2024
	(in millions)
Customer incentives	$	7,870	$	6,550
Equity investments	1,705		1,607
Income taxes receivable	1,101		1,002
Other	939		800
Total other assets	$	11,615	$	9,959

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 8. Property, Equipment and Right-of-Use Assets

Property, equipment and right-of-use assets consisted of the following at December 31:


	2025		2024
	(in millions)
Buildings, building equipment and land	$	744	$	709
Equipment	2,347		2,118
Furniture and fixtures	105		101
Leasehold improvements	497		436
Operating lease right-of-use assets	1,366		1,167
Property, equipment and right-of-use assets	5,059		4,531
Less: Accumulated depreciation and amortization	(2,756)		(2,393)
Property, equipment and right-of-use assets, net	$	2,303	$	2,138

Depreciation and amortization expense for the above property, equipment and right-of-use assets was $544 million, $519 million and $482 million for 2025, 2024 and 2023, respectively.

Operating lease ROU assets and operating lease liabilities are recorded on the consolidated balance sheets as follows at December 31:


	2025		2024
	(in millions)
Balance sheet location
Property, equipment and right-of-use assets, net	$	750	$	681
Other current liabilities	157		133
Other liabilities	676		627

Operating lease amortization expense was $161 million, $145 million and $141 million for 2025, 2024 and 2023, respectively. As of December 31, 2025 and 2024, the weighted-average remaining lease term of operating leases was 7.2 and 8.0 years, respectively, and the weighted-average discount rate for operating leases was 3.6% and 3.5%, respectively.

The useful lives of the Company’s assets are as follows:


Asset Category						Estimated Useful Life
Buildings						30 years
Building equipment						10 - 15 years
Equipment and furniture and fixtures						2 - 6 years
Leasehold improvements						Shorter of life of improvement or lease term
Right-of-use assets						Shorter of life of the asset or lease term

The following table summarizes the maturity of the Company’s operating lease liabilities at December 31, 2025 based on lease term:


	(in millions)
2026	$	187
2027	151
2028	126
2029	101
2030	87
Thereafter	306
Total operating lease payments	958
Less: Interest	(125)
Present value of operating lease liabilities	$	833

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 9. Goodwill

The changes in the carrying amount of goodwill for the years ended December 31 were as follows:


	2025		2024
	(in millions)
Beginning balance	$	9,193	$	7,660
Additions	—		1,736
Foreign currency translation	367		(203)

Ending balance	$	9,560	$	9,193

The Company performed its annual qualitative assessment of goodwill during the fourth quarter of 2025 and determined a quantitative assessment was not necessary. The Company concluded that goodwill was not impaired and had no accumulated impairment losses at December 31, 2025.

Note 10. Other Intangible Assets

The following table sets forth net intangible assets, other than goodwill, at December 31:


	2025						2024
	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
	(in millions)
Finite-lived intangible assets
Capitalized software 1	$	5,415	$	(2,110)	$	3,305	$	4,797	$	(1,640)	$	3,157
Customer relationships	2,967		(942)		2,025		2,804		(720)		2,084
Other	96		(44)		52		99		(40)		59
Total	8,478		(3,096)		5,382		7,700		(2,400)		5,300
Indefinite-lived intangible assets
Customer relationships	172		—		172		153		—		153
Total	$	8,650	$	(3,096)	$	5,554	$	7,853	$	(2,400)	$	5,453

1Includes technology acquired in business combinations.

The increase in the gross carrying amount of finite-lived intangible assets in 2025 was primarily related to software additions to support the continued growth of the Company. Certain intangible assets are denominated in foreign currencies. As such, the change in intangible assets includes a component attributable to foreign currency translation. Based on the qualitative assessment performed in 2025, it was determined that the Company’s indefinite-lived intangible assets were not impaired.

Amortization on the finite-lived intangible assets above amounted to $760 million, $523 million and $457 million in 2025, 2024 and 2023, respectively. The following table sets forth the estimated future amortization expense on finite-lived intangible assets on the consolidated balance sheets at December 31, 2025:


	(in millions)
2026	$	801
2027	765
2028	692
2029	647
2030	569
Thereafter	1,908
Total	$	5,382

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 11. Accrued Expenses

Accrued expenses consisted of the following at December 31:


	2025		2024
	(in millions)
Customer incentives	$	9,958	$	7,627
Personnel costs	1,716		1,681
Income and other taxes	914		454
Other	684		631
Total accrued expenses	$	13,272	$	10,393

As of December 31, 2025 and 2024, long-term customer incentives included in other liabilities were $3,041 million and $2,820 million, respectively.

Note 12. Pension, Postretirement and Savings Plans

The Company and certain of its subsidiaries maintain various pension and other postretirement plans that cover substantially all employees worldwide.

Defined Contribution Plans

The Company sponsors defined contribution retirement plans. The primary plan is the Mastercard Savings Plan, a 401(k) plan for substantially all of the Company’s U.S. employees, which is subject to the provisions of the Employee Retirement Income Security Act of 1974, as amended. In addition, the Company has several defined contribution plans outside of the U.S. The Company’s total expense for its defined contribution plans was $302 million, $287 million and $253 million in 2025, 2024 and 2023, respectively.

Defined Benefit and Other Postretirement Plans

The Company sponsors pension and postretirement plans for certain non-U.S. employees (the “non-U.S. Plans”) that cover various benefits specific to their country of employment. Additionally, the Company sponsors a defined benefit pension plan in the United Kingdom (the “U.K. Plan”) which was permanently closed to new entrants and future accruals as of July 21, 2013, however, plan participants’ obligations are adjusted for future salary changes. The term “Pension Plans” includes the non-U.S. Plans and the U.K. Plan.

The Company maintains a postretirement plan providing health coverage and life insurance benefits for substantially all of its U.S. employees hired before July 1, 2007 (the “Postretirement Plan”).

The Company uses a December 31 measurement date for the Pension Plans and its Postretirement Plan. The benefit obligation associated with the Postretirement Plan is immaterial. The following table sets forth the components of the Pension Plans recognized on the Company’s consolidated balance sheets at December 31:


	2025		2024
	(in millions)
Fair value of plan assets	$	499	$	454
Projected benefit obligation	452		410
Accumulated benefit obligation	450		408
Funded Status	47		44

As of December 31, 2025 and 2024, the amount recognized in accumulated other comprehensive income (loss), before tax, for the Postretirement Plan was $3 million and $10 million, respectively. As of December 31, 2025 and 2024, the amount recognized in accumulated other comprehensive income (loss), before tax, for the Pension Plans was $(15) million, and $(14) million, respectively.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 13. Debt

Debt consisted of the following at December 31:


				2025		2024		Effective Interest Rate
				(in millions)
Senior Notes
2025 USD Notes	Floating Rate		Senior Notes due March 2028	$	300	$	—	**
	4.550	%	Senior Notes due March 2028	450		—		4.727	%
	4.950	%	Senior Notes due March 2032	500		—		5.063	%

2024 USD Notes	4.100	%	Senior Notes due January 2028	750		750		4.262	%
	4.350	%	Senior Notes due January 2032	1,150		1,150		4.446	%
	4.550	%	Senior Notes due January 2035	1,100		1,100		4.633	%
	4.875	%	Senior Notes due May 2034	1,000		1,000		5.047	%

2023 USD Notes	4.875	%	Senior Notes due March 2028	750		750		5.003	%
	4.850	%	Senior Notes due March 2033	750		750		4.923	%

2022 EUR Notes	1.000	%	Senior Notes due February 2029	882		781		1.138	%

2021 USD Notes	2.000	%	Senior Notes due November 2031	750		750		2.112	%
	1.900	%	Senior Notes due March 2031	600		600		1.981	%
	2.950	%	Senior Notes due March 2051	700		700		3.013	%

2020 USD Notes	3.300	%	Senior Notes due March 2027	1,000		1,000		3.420	%
	3.350	%	Senior Notes due March 2030	1,500		1,500		3.430	%
	3.850	%	Senior Notes due March 2050	1,500		1,500		3.896	%

2019 USD Notes	2.950	%	Senior Notes due June 2029	1,000		1,000		3.030	%
	3.650	%	Senior Notes due June 2049	1,000		1,000		3.689	%
	2.000	%	Senior Notes due March 2025	—		750		2.147	%

2018 USD Notes	3.500	%	Senior Notes due February 2028	500		500		3.598	%
	3.950	%	Senior Notes due February 2048	500		500		3.990	%

2016 USD Notes	2.950	%	Senior Notes due November 2026	750		750		3.044	%
	3.800	%	Senior Notes due November 2046	600		600		3.893	%

2015 EUR Notes	2.100	%	Senior Notes due December 2027	941		833		2.189	%
	2.500	%	Senior Notes due December 2030	176		156		2.562	%







				19,149		18,420
Less: Unamortized discount and debt issuance costs				(122)		(131)
Less: Cumulative hedge accounting fair value adjustments 1				(27)		(63)
Total debt outstanding				19,000		18,226
Less: Short-term debt 2				(749)		(750)
Long-term debt				$	18,251	$	17,476

**The $300 million of Senior Notes due March 2028 are Floating Rate Notes that bear interest at a floating rate, reset quarterly, equal to the Compounded Secured Overnight Financing Rate (“SOFR”) plus 0.44%.

1The Company has an interest rate swap that is accounted for as a fair value hedge. See Note 21 (Derivative and Hedging Instruments) for additional information.

2As of December 31, 2025, the 2016 USD Notes due November 2026 were classified as short-term debt, net of unamortized discount and debt issuance costs, on the consolidated balance sheets. As of December 31, 2024, the 2019 USD Notes due March 2025 were classified as short-term debt, net of unamortized discount and debt issuance costs, on the consolidated balance sheets.

For the years ended December 31, 2025, 2024 and 2023, interest paid on the Company’s debt was $680 million, $571 million and $477 million, respectively.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Scheduled annual maturities of the principal portion of debt outstanding at December 31, 2025 are summarized below.


	(in millions)
2026	$	750
2027	1,941
2028	2,750
2029	1,882
2030	1,676
Thereafter	10,150
Total	$	19,149

Senior Notes

In February 2025, the Company issued $300 million principal amount of Floating Rate Notes due March 2028, $450 million principal amount of 4.550% notes due March 2028 and $500 million principal amount of 4.950% notes due March 2032 (collectively, the “2025 USD Notes”). The net proceeds from the issuance of the 2025 USD Notes, after deducting the original issue discount, underwriting discount and offering expenses, were $1.242 billion.

During 2024, the Company issued a total of $4 billion of debt, as follows:

In May 2024, the Company issued $1 billion principal amount of notes due May 2034
In September 2024, the Company issued $750 million principal amount of notes due January 2028, $1,150 million principal amount of notes due January 2032 and $1,100 million principal amount of notes due January 2035

The issuances in 2024 are collectively referred to as the “2024 USD Notes”. The net proceeds from the issuance of the 2024 USD Notes, after deducting the original issue discount, underwriting discount and offering expenses, were $3.96 billion.

In March 2023, the Company issued $750 million principal amount of notes due March 2028 and $750 million principal amount of notes due March 2033 (collectively the “2023 USD Notes”). The net proceeds from the issuance of the 2023 USD Notes, after deducting the original issue discount, underwriting discount and offering expenses, were $1.489 billion.

The Senior Notes described above are not subject to any financial covenants and may be redeemed in whole, or in part, at the Company’s option at any time for a specified make-whole amount. These notes are senior unsecured obligations and would rank equally with any future unsecured and unsubordinated indebtedness.

Indian Rupee (“INR”) Term Loan

In April 2023, the Company entered into an unsecured INR4.97 billion term loan, due July 2023 (the “April 2023 INR Term Loan”). The net proceeds of the April 2023 INR Term Loan, after deducting issuance costs, were INR4.96 billion ($61 million as of the date of settlement). In July 2023, the Company modified and combined the April 2023 INR Term Loan with a separate INR22.6 billion term loan entered into in 2022 (collectively, the “2023 INR Term Loan”), increasing the total unsecured loans to INR28.1 billion ($342 million as of the date of settlement). The 2023 INR Term Loan matured in July 2024.

The Company obtained the INR Term Loans to serve as economic hedges to offset possible changes in the value of INR-denominated monetary assets due to foreign exchange fluctuations.

Commercial Paper Program and Credit Facility

As of December 31, 2025, the Company has a commercial paper program (the “Commercial Paper Program”) under which the Company is authorized to issue up to $8 billion in unsecured commercial paper notes with maturities of up to 397 days from the date of issuance. The Commercial Paper Program is available in U.S. dollars.

In conjunction with the Commercial Paper Program, the Company has a committed five-year unsecured $8 billion revolving credit facility (the “Credit Facility”). The Credit Facility, which previously was set to expire on November 7, 2029, was amended and extended and now expires on November 7, 2030. Borrowings under the Credit Facility are available in U.S. dollars and/or euros. The facility fee under the Credit Facility is determined according to the Company’s credit rating and is payable on the average daily commitment, regardless of usage, per annum. In addition to the facility fee, interest rates on borrowings under the Credit Facility would be based on prevailing market interest rates plus applicable margins that fluctuate based on the Company’s credit rating. The Credit Facility contains customary representations, warranties, affirmative and negative covenants, events of default and

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

indemnification provisions. The Company was in compliance in all material respects with the covenants of the Credit Facility at December 31, 2025 and 2024.

Borrowings under the Commercial Paper Program and the Credit Facility are to be used to provide liquidity for general corporate purposes, including providing liquidity in the event of one or more settlement failures by the Company’s customers. The Company may borrow and repay amounts under the Commercial Paper Program and Credit Facility for business continuity purposes. The Company had no borrowings under the Credit Facility or the Commercial Paper Program at December 31, 2025 and 2024.

Note 14. Stockholders' Equity

Classes of Capital Stock

Mastercard’s amended and restated certificate of incorporation authorizes the following classes of capital stock:


Class	Par Value Per Share	Authorized Shares (in millions)	Dividend and Voting Rights
A	$0.0001	3,000	One vote per share Dividend rights
B	$0.0001	1,200	Non-voting Dividend rights
Preferred	$0.0001	300	No shares issued or outstanding at December 31, 2025 and 2024. Dividend and voting rights are to be determined by the Board of Directors of the Company upon issuance.

Dividends

The Company declared a quarterly cash dividend on its Class A and Class B Common Stock during each of the four quarters of 2025, 2024 and 2023. The total per share dividends declared during the years ended December 31 are summarized below:


	2025		2024		2023
	(in millions, except per share data)
Dividends declared per share	$	3.15	$	2.74	$	2.37
Total dividends declared	$	2,840	$	2,526	$	2,231

Ownership and Governance Structure

Equity ownership and voting power of the Company’s shares were allocated as follows as of December 31:


	2025				2024
	Equity Ownership		General Voting Power		Equity Ownership		General Voting Power
Class A stockholders	99.3	%	100.0	%	99.3	%	100.0	%

Class B stockholders (Principal or Affiliate Customers)	0.7	%	—	%	0.7	%	—	%

Note: Table may not sum due to rounding.

Class B Common Stock Conversions

Shares of Class B common stock are convertible on a one-for-one basis into shares of Class A common stock. Entities eligible to hold Mastercard’s Class B common stock are defined in the Company’s amended and restated certificate of incorporation (generally the Company’s principal or affiliate customers), and they are restricted from retaining ownership of shares of Class A common stock. Class B stockholders are required to subsequently sell or otherwise transfer any shares of Class A common stock received pursuant to such a conversion.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Common Stock Activity

The following table presents the changes in the Company’s outstanding Class A and Class B common stock:


	Outstanding Shares
	Class A	Class B
	(in millions)
Balance at December 31, 2022	948.4	7.6
Purchases of treasury stock	(23.8)	—
Share-based payments	2.3	—
Conversion of Class B to Class A common stock	0.4	(0.4)
Balance at December 31, 2023	927.3	7.2
Purchases of treasury stock	(23.0)	—
Share-based payments	1.9	—
Conversion of Class B to Class A common stock	0.4	(0.4)
Balance at December 31, 2024	906.6	6.8
Purchases of treasury stock	(21.1)	—
Share-based payments	1.6	—
Conversion of Class B to Class A common stock	0.2	(0.2)
Balance at December 31, 2025	887.3	6.6

The Company’s Board of Directors has approved programs authorizing the Company to repurchase shares of its Class A common stock. The following table summarizes the Company’s share repurchase authorizations of its Class A common stock for the years ended December 31:


	2025		2024		2023
	(In millions, except per share data)
Board authorization	$	14,000	$	12,000	$	11,000
Dollar-value of shares repurchased	$	11,727	$	10,954	$	9,032
Shares repurchased	21.1		23.0		23.8
Average price paid per share	$	555.78	$	475.35	$	379.49

As of December 31, 2025, the remaining authorization under the share repurchase programs approved by the Company’s Board of Directors was $17.5 billion.

The Company repurchased an additional $1.1 billion dollar-value of shares in 2026, through February 6, 2026. As of February 6, 2026, the remaining authorization under the share repurchase programs approved by the Company’s Board of Directors was $16.3 billion.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 15. Accumulated Other Comprehensive Income (Loss)

The changes in the balances of each component of accumulated other comprehensive income (loss), net of tax, for the years ended December 31, 2025 and 2024 were as follows:


	December 31, 2024		Increase / (Decrease)		Reclassifications		December 31, 2025
	(in millions)
Foreign currency translation adjustments 1	$	(1,558)	$	524	$	—	$	(1,034)
Translation adjustments on net investment hedges 2	295		(169)		—		126
Cash flow hedges

Foreign exchange contracts 3	(51)		(281)		378		46
Interest rate contracts	(113)		—		6		(107)
Defined benefit pension and other postretirement plans	(6)		(6)		—		(12)
Investment securities available-for-sale	—		—		—		—
Accumulated other comprehensive income (loss)	$	(1,433)	$	68	$	384	$	(981)


	December 31, 2023		Increase / (Decrease)		Reclassifications		December 31, 2024
	(in millions)
Foreign currency translation adjustments 1	$	(1,119)	$	(439)	$	—	$	(1,558)
Translation adjustments on net investment hedges 2	181		114		—		295
Cash flow hedges
Foreign exchange contracts 3	(17)		149		(183)		(51)
Interest rate contracts	(118)		—		5		(113)
Defined benefit pension and other postretirement plans	(25)		19		—		(6)
Investment securities available-for-sale	(1)		1		—		—
Accumulated other comprehensive income (loss)	$	(1,099)	$	(156)	$	(178)	$	(1,433)

1During 2025, the decrease in the accumulated other comprehensive loss related to foreign currency translation adjustments was driven primarily by the appreciation of the euro and British pound against the U.S. dollar. During 2024, the increase in the accumulated other comprehensive loss related to foreign currency translation adjustments was driven primarily by the depreciation of the euro, Brazilian real, and British pound against the U.S. dollar.

2During 2025, the decrease in the accumulated other comprehensive income related to the net investment hedges was driven by the appreciation of the euro against the U.S. dollar. During 2024, the increase in the accumulated other comprehensive income related to the net investment hedges was driven by the depreciation of the euro and British pound against the U.S. dollar. See Note 21 (Derivative and Hedging Instruments) for additional information.

3Certain foreign exchange derivative contracts are designated as cash flow hedging instruments. Gains and losses resulting from changes in the fair value of these contracts are deferred in accumulated other comprehensive income (loss) and subsequently reclassified to the consolidated statements of operations when the underlying hedged transactions impact earnings. See Note 21 (Derivative and Hedging Instruments) for additional information.

Note 16. Share-Based Payments

In May 2006, the Company granted the following awards under the Mastercard Incorporated 2006 Long Term Incentive Plan, which was amended and restated as of June 22, 2021 (the “LTIP”). The LTIP is a stockholder-approved plan that permits the grant of various types of equity awards to employees. The Company has granted Options, RSUs and PSUs under the LTIP. The Company uses the straight-line method of attribution for expensing all equity awards. Compensation expense is recorded net of estimated forfeitures, with estimates adjusted as appropriate.

There are approximately 116 million shares of Class A common stock authorized for equity awards under the LTIP. Although the LTIP permits the issuance of shares of Class B common stock, no such shares have been authorized for issuance. Shares issued as a result of Option exercises and the conversions of RSUs and PSUs were funded primarily with the issuance of new shares of Class A common stock.

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Stock Options

Options expire ten years from the date of grant and vest ratably over three years. For Options granted, a participant’s unvested awards are forfeited upon termination; however, in the event a participant terminates employment due to disability or retirement more than seven months after receiving the award, the participant retains all of their awards without providing additional service to the Company. Retirement eligibility is dependent upon age and years of service. Compensation expense is recognized over the vesting period as stated in the LTIP.

The fair value of each Option is estimated on the date of grant using a Black-Scholes option pricing model. The following table presents the weighted-average assumptions used in the valuation and the resulting weighted-average fair value per Option granted for the years ended December 31:


	2025			2024			2023
Risk-free rate of return	4.1		%	4.2		%	4.2		%
Expected term (in years)	6.00			6.00			6.00
Expected volatility	27.4		%	28.7		%	29.5		%
Expected dividend yield	0.5		%	0.6		%	0.6		%
Weighted-average fair value per Option granted	$	192.87		$	164.66		$	123.22

The risk-free rate of return was based on the U.S. Treasury yield curve in effect on the date of grant. The expected term and the expected volatility were based on historical Mastercard information. The expected dividend yields were based on the Company’s expected annual dividend rate on the date of grant.

The following table summarizes the Company’s Option activity for the year ended December 31, 2025:


	Options	Weighted-Average Exercise Price		Weighted-Average Remaining Contractual Term	Aggregate Intrinsic Value
	(in millions)			(in years)	(in millions)
Outstanding at January 1, 2025	2.1	$	273
Granted	0.2	$	574
Exercised	(0.5)	$	196
Forfeited	—	$	453

Outstanding at December 31, 2025	1.8	$	325	5.2	$	432
Exercisable at December 31, 2025	1.4	$	274	4.2	$	403
Options vested and expected to vest at December 31, 2025	1.8	$	325	5.2	$	432

As of December 31, 2025, there was $14 million of total unrecognized compensation cost related to non-vested Options. The cost is expected to be recognized over a weighted-average period of 1.7 years.

Restricted Stock Units

RSUs generally vest ratably over three years. A participant’s unvested awards are forfeited upon termination of employment; however, in the event of termination due to job elimination (as defined by the Company), a participant will retain a pro-rata portion of the unvested awards for services performed through the date of termination. In the event a participant terminates employment due to disability or retirement more than seven months after receiving the award, the participant retains all of their awards without providing additional service to the Company. Compensation expense is recognized over the shorter of the vesting periods stated in the LTIP or the date the individual becomes eligible to retire but not less than seven months.

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The following table summarizes the Company’s RSU activity for the year ended December 31, 2025:


	Units	Weighted-Average Grant-Date Fair Value		Aggregate Intrinsic Value
	(in millions)			(in millions)
Outstanding at January 1, 2025	2.1	$	403
Granted	1.0	$	566
Converted	(1.1)	$	385
Forfeited	(0.1)	$	470
Outstanding at December 31, 2025	1.9	$	498	$	1,070
RSUs expected to vest at December 31, 2025	1.8	$	498	$	1,032

The fair value of each RSU is the closing stock price on the New York Stock Exchange of the Company’s Class A common stock on the date of grant, adjusted for the exclusion of dividend equivalents. Upon vesting, a portion of the RSU award may be withheld to satisfy the minimum statutory withholding taxes. The remaining RSUs will be settled in shares of the Company’s Class A common stock after the vesting period. As of December 31, 2025, there was $465 million of total unrecognized compensation cost related to non-vested RSUs. The cost is expected to be recognized over a weighted-average period of 1.8 years.

Performance Stock Units

PSUs vest after three years and are subject to a mandatory one-year post-vest hold, during which they are eligible for dividend equivalents. A participant’s unvested awards are forfeited upon termination of employment; however, in the event of termination due to job elimination (as defined by the Company), a participant will retain a pro-rata portion of the unvested awards for services performed through the date of termination. In the event a participant terminates employment due to disability or retirement more than seven months after receiving the award, the participant retains all of their awards without providing additional service to the Company.

The following table summarizes the Company’s PSU activity for the year ended December 31, 2025:


	Units	Weighted-Average Grant-Date Fair Value		Aggregate Intrinsic Value
	(in millions)			(in millions)
Outstanding at January 1, 2025	0.6	$	396
Granted	0.2	$	608
Converted	(0.2)	$	335
Other	—	$	364
Outstanding at December 31, 2025	0.6	$	472	$	335
PSUs expected to vest at December 31, 2025	0.6	$	472	$	331

Since 2013, PSUs containing performance and market conditions have been issued. Performance measures used to determine the actual number of shares that vest after three years include net revenue growth, EPS growth and relative total shareholder return (“TSR”). Relative TSR is considered a market condition, while net revenue and EPS growth are considered performance conditions. The Monte Carlo simulation valuation model is used to determine the grant-date fair value.

Compensation expense for PSUs is recognized over the requisite service period, or the date the individual becomes eligible to retire but not less than seven months, if it is probable that the performance target will be achieved and subsequently adjusted if the probability assessment changes. As of December 31, 2025, there was $31 million of total unrecognized compensation cost related to non-vested PSUs. The cost is expected to be recognized over a weighted-average period of 1.6 years.

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Additional Information

The following table includes additional share-based payment information for each of the years ended December 31:


	2025		2024		2023
	(in millions, except weighted-average fair value)
Share-based compensation expense	$	597	$	526	$	460
Income tax benefit recognized for equity awards	128		111		99
Income tax benefit realized related to Options exercised	26		77		95

Options
Total intrinsic value of Options exercised	180		354		487
RSUs
Weighted-average grant-date fair value of awards granted	566		472		350
Total grant-date fair value of awards vested	421		340		235
Total intrinsic value of RSUs converted into shares of Class A common stock	622		477		253
PSUs
Weighted-average grant-date fair value of awards granted	608		512		365
Total grant-date fair value of awards vested	79		99		12
Total intrinsic value of PSUs converted into shares of Class A common stock	135		122		14

Note 17. Commitments

At December 31, 2025, the Company had the following future minimum payments due under noncancelable agreements, primarily related to sponsorships to promote the Mastercard brand and licensing arrangements. The amount accrued related to these future payments as of December 31, 2025 was not material.


	(in millions)
2026	$	714
2027	581
2028	291
2029	131
2030	115
Thereafter	201
Total	$	2,033

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Note 18. Income Taxes

Components of Income and Income Tax Expense

The domestic and foreign components of income before income taxes for the years ended December 31 were as follows:


	2025		2024		2023
	(in millions)
United States	$	6,652	$	6,168	$	4,506
Foreign	11,926		9,086		9,133
Income before income taxes	$	18,578	$	15,254	$	13,639

The total income tax provision for the years ended December 31 was comprised of the following components:


	2025		2024		2023
	(in millions)
Current
Federal	$	1,265	$	1,093	$	991
State and local	(198)		144		127
Foreign	2,486		1,670		1,563
Total current	3,553		2,907		2,681

Deferred
Federal	(173)		(197)		(180)
State and local	32		(14)		(18)
Foreign	198		(316)		(39)
Total deferred	57		(527)		(237)

Income tax expense	$	3,610	$	2,380	$	2,444

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Effective Income Tax Rate

A reconciliation of the effective income tax rate to the U.S. federal statutory income tax rate for the years ended December 31, was as follows:


	2025				2024				2023
	Amount		Percent		Amount		Percent		Amount		Percent
	($ in millions)
Income before income taxes	$	18,578			$	15,254			$	13,639

Federal statutory tax	3,901		21.0	%	3,203		21.0	%	2,864		21.0	%
Foreign tax effects
Singapore
Statutory tax rate difference between Singapore and U.S.	(161)		(0.9)	%	(162)		(1.1)	%	(147)		(1.1)	%
Singapore tax incentive	(330)		(1.8)	%	(644)		(4.2)	%	(571)		(4.2)	%
Pillar 2 Rules	233		1.3	%	—		—	%	—		—	%
Other foreign jurisdictions	408		2.2	%	240		1.6	%	374		2.7	%
Effects of cross border tax laws
Foreign-derived intangible income deduction	(204)		(1.1)	%	(195)		(1.3)	%	(144)		(1.1)	%
U.S. foreign tax credits	(259)		(1.4)	%	(224)		(1.5)	%	73		0.5	%
Other	140		0.8	%	77		0.5	%	110		0.8	%

Effects of changes in tax law	—		—	%	—		—	%	(688)		(5.0)	%
Valuation allowance	76		0.4	%	113		0.7	%	644		4.7	%
Other, net	$	(194)	(1.0)	%	(28)		(0.2)	%	(71)		(0.5)	%
Income tax expense	$	3,610	19.4	%	$	2,380	15.6	%	$	2,444	17.9	%

Note: Table may not sum due to rounding.

As of January 1, 2025, the Company adopted new FASB guidance related to income tax disclosures on a retrospective basis.

The effective income tax rates for the years ended December 31, 2025, 2024 and 2023 were 19.4%, 15.6% and 17.9%, respectively. The effective income tax rate for 2025 was higher than the effective income tax rate for 2024, primarily due to a change in the net tax effect of the Company’s Singapore operations, which includes the 15% global minimum tax (Pillar 2 Rules) that took effect in 2025. Additionally, a change in the Company’s geographic mix of earnings contributed to the higher effective income tax rate, partially offset by net discrete tax benefits.

The effective income tax rate for 2024 was lower than the effective income tax rate for 2023, primarily due to the 2023 foreign tax legislation enacted in Brazil and Notice 2023-55 (the “Notice”), released by the U.S. Department of Treasury (“Treasury”) in 2023. The foreign tax legislation and the Notice changed the treatment of foreign taxes paid under the U.S. tax regulations published in 2022, resulting in an expense in 2023 to establish a valuation allowance against the U.S. foreign tax credit carryforward deferred tax asset. The expense is partially offset by the Company’s ability to claim more U.S. foreign tax credits generated in 2022 and 2023. Additionally, a change in the Company’s geographic mix of earnings in 2024 contributed to the lower effective income tax rate compared to the prior year.

Singapore Income Tax Rate

In connection with the expansion of the Company’s operating headquarters in Singapore, the Company received in 2010 a tax incentive from the Singapore Ministry of Finance, which had been set to expire on December 31, 2025. Effective January 1, 2025, the Company received a new tax incentive from the ministry, which replaced the expiring tax incentive and continues through December 31, 2029. The tax incentive provides the Company with, among other benefits, a reduced income tax rate from the 17% Singapore statutory income tax rate. For 2025, 2024 and 2023, the impacts of the tax incentives received from the ministry resulted in a reduction of the Company’s income tax liability of $330 million, or $0.36 per diluted share, $644 million, or $0.69 per diluted share, and $571 million, or $0.60 per diluted share, respectively. The Pillar 2 Rules that took effect in 2025 in Singapore largely offsets the reduction to the Company’s effective income tax rate resulting from the tax incentive.

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Income Taxes Paid

The Company paid income taxes, net of refunds, by jurisdiction for the years ended December 31, as follows:


	2025		2024		2023
	(in millions)
Federal	$	1,359	$	1,279	$	1,194
State	95		155		133
Foreign
Belgium	668		562		516
United Kingdom	330		592		429
Brazil	168		333		254
Other	400		331		220
Total	$	3,020	$	3,252	$	2,746

Income taxes paid are not directly linked to the income tax expense recognized in the consolidated statements of operations, as cash payments reflect the timing of estimated payments, refunds, audit settlements and the utilization of tax attributes rather than the current period tax provision.

Deferred Income Taxes

Deferred tax assets and liabilities represent the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of assets and liabilities. The components of deferred tax assets and liabilities at December 31 were as follows:


	2025		2024
	(in millions)
Deferred tax assets
Accrued liabilities	$	1,079	$	939
Compensation and benefits	408		371
Net operating losses	221		468
U.S. foreign tax credits	802		736
Property and equipment	482		432
Intangible assets	169		160
Lease liabilities	143		134
Other items	246		236
Less: Valuation allowance	(974)		(871)
Total deferred tax assets	2,576		2,605

Deferred tax liabilities
Prepaid expenses and other accruals	280		195
Gains on equity investments	111		112
Goodwill and intangible assets	718		760
Right-of-use lease assets	124		116
Other items	83		125
Total deferred tax liabilities	1,316		1,308

Net deferred tax assets	$	1,260	$	1,297

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The changes in the Company’s valuation allowance on deferred tax assets were as follows:


	Balance at December 31, 2022		Changes to Related Gross Deferred Tax Assets		Change/(Release)		Balance at December 31, 2023		Changes to Related Gross Deferred Tax Assets		Change/(Release)		Balance at December 31, 2024		Changes to Related Gross Deferred Tax Assets		Change/(Release)		Balance at December 31, 2025
	(in millions)
U.S. foreign tax credit carryforward 1	$	—	$	308	$	327	$	635	$	101	$	—	$	736	$	66	$	—	$	802
Net operating and capital losses 2	114		12		(3)		123		11		1		135		34		3		172
Total	$	114	$	320	$	324	$	758	$	112	$	1	$	871	$	100	$	3	$	974

1The 2023 activity resulted in the establishment of the valuation allowance associated with the U.S. foreign tax credit carryforward due to foreign tax legislation enacted in Brazil and the Notice released by Treasury.

2Capital losses are included within other items in the deferred tax assets section of the components of the Deferred Income Taxes table above.

The recognition of foreign tax credits is dependent upon the realization of future foreign source income in the appropriate foreign tax credit basket in accordance with U.S. federal income tax law. The recognition of the net operating and capital losses is dependent on the timing and character of future taxable income in the applicable jurisdictions. As of December 31, 2025, the Company had a foreign tax credit carryforward and tax effected net operating loss carryforwards of $802 million and $221 million, respectively. The foreign tax credits begin to expire in 2029 and the majority of the net operating losses can be carried forward indefinitely.

A reconciliation of the beginning and ending balance for the Company’s unrecognized tax benefits for the years ended December 31, was as follows:


	2025		2024		2023
	(in millions)
Beginning balance	$	304	$	431	$	414
Additions:
Current year tax positions	38		37		23
Prior year tax positions 1	68		34		16
Reductions:
Prior year tax positions 1	(93)		(189)		(7)
Settlements with tax authorities	—		—		—
Expired statute of limitations	(6)		(9)		(15)
Ending balance	$	311	$	304	$	431

1Includes immaterial translational impact of currency.

As of December 31, 2025, the amount of unrecognized tax benefit was $311 million. This amount, if recognized, would reduce income tax expense by $252 million.

The Company is subject to tax in the United States, Belgium, Singapore, the United Kingdom and various other foreign jurisdictions, as well as state and local jurisdictions. Uncertain tax positions are reviewed on an ongoing basis and are adjusted after considering facts and circumstances, including progress of tax audits, developments in case law and closing of statutes of limitation. Within the next twelve months, the Company believes that the resolution of certain federal, foreign and state and local examinations is reasonably possible and that a change in estimate, reducing unrecognized tax benefits, may occur. While such a change may be significant, it is not possible to provide a range of the potential change until the examinations progress further or the related statutes of limitation expire. The Company has effectively settled its U.S. federal income tax obligations through 2014. With limited exception, the Company is no longer subject to state and local or foreign examinations by tax authorities for years before 2014.

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Note 19. Legal and Regulatory Proceedings

Mastercard is a party to legal and regulatory proceedings with respect to a variety of matters in the ordinary course of business. Some of these proceedings are based on complex claims involving substantial uncertainties and unascertainable damages. Accordingly, it is not possible to determine the probability of loss or estimate damages, and therefore, Mastercard has not established liabilities for any of these proceedings, except as discussed below. When the Company determines that a loss is both probable and reasonably estimable, Mastercard records a liability and discloses the amount of the liability if it is material. When a material loss contingency is only reasonably possible, Mastercard does not record a liability, but instead discloses the nature and the amount of the claim, and an estimate of the loss or range of loss, if such an estimate can be made. Unless otherwise stated below with respect to these matters, Mastercard cannot provide an estimate of the possible loss or range of loss based on one or more of the following reasons: (1) actual or potential plaintiffs have not claimed an amount of monetary damages or the amounts are unsupportable or exaggerated, (2) the matters are in early stages, (3) there is uncertainty as to the outcome of pending appeals or motions, (4) there are significant factual issues to be resolved, (5) the proceedings involve multiple defendants or potential defendants whose share of any potential financial responsibility has yet to be determined and/or (6) there are novel legal issues presented. Furthermore, except as identified with respect to the matters below, Mastercard does not believe that the outcome of any individual existing legal or regulatory proceeding to which it is a party will have a material adverse effect on its results of operations, financial condition and overall business. However, an adverse judgment or other outcome or settlement with respect to any proceedings discussed below could result in fines or payments by Mastercard and/or could require Mastercard to change its business practices. In addition, an adverse outcome in a regulatory proceeding could lead to the filing of civil damage claims and possibly result in significant damage awards. Any of these events could have a material adverse effect on Mastercard’s results of operations, financial condition and overall business.

Cash paid for legal settlements for the years ended December 31, 2025, 2024 and 2023 was $647 million, $496 million and $929 million, respectively.

Interchange Litigation and Regulatory Proceedings

Mastercard’s interchange fees and other practices are subject to regulatory, legal review and/or challenges in a number of jurisdictions, including the proceedings described below. When taken as a whole, the resulting decisions, regulations and legislation with respect to interchange fees and acceptance practices may have a material adverse effect on the Company’s prospects for future growth and its overall results of operations and financial condition.

United States

In 2005, the first of a series of complaints were filed on behalf of merchants (the majority of the complaints were styled as class actions, although a few complaints were filed on behalf of individual merchant plaintiffs) against Mastercard International, Visa U.S.A., Inc., Visa International Service Association and a number of financial institutions. Taken together, the claims in the complaints were generally brought under both Sections 1 and 2 of the Sherman Act, which prohibit monopolization and attempts or conspiracies to monopolize a particular industry, and some of these complaints contain unfair competition law claims under state law. The complaints allege, among other things, that Mastercard, Visa, and certain financial institutions conspired to set the price of interchange fees, enacted point-of-sale acceptance rules (including the “no surcharge” rule) in violation of antitrust laws and engaged in unlawful tying and bundling of certain products and services, resulting in merchants paying excessive costs for the acceptance of Mastercard and Visa credit and debit cards. The cases were consolidated for pre-trial proceedings in the U.S. District Court for the Eastern District of New York in MDL No. 1720 (the “U.S. MDL Litigation Cases”). The plaintiffs filed a consolidated class action complaint seeking treble damages.

In 2006, the group of purported merchant class plaintiffs filed a supplemental complaint alleging that Mastercard’s initial public offering of its Class A Common Stock in May 2006 (the “IPO”) and certain purported agreements entered into between Mastercard and financial institutions in connection with the IPO: (1) violate U.S. antitrust laws and (2) constituted a fraudulent conveyance because the financial institutions allegedly attempted to release, without adequate consideration, Mastercard’s right to assess them for Mastercard’s litigation liabilities. The class plaintiffs sought treble damages and injunctive relief including, but not limited to, an order reversing and unwinding the IPO.

In 2011, Mastercard and Mastercard International entered into each of: (1) an omnibus judgment sharing and settlement sharing agreement with Visa Inc., Visa U.S.A. Inc. and Visa International Service Association and a number of financial institutions; and (2) a Mastercard settlement and judgment sharing agreement with a number of financial institutions. The agreements provide for the apportionment of certain costs and liabilities which Mastercard, the Visa parties and the financial institutions may incur, jointly and/or severally, in the event of an adverse judgment or settlement of one or all of the U.S. MDL Litigation Cases. Among a number of scenarios addressed by the agreements, in the event of a global settlement involving the Visa parties, the financial institutions and Mastercard, Mastercard would pay 12% of the monetary portion of the settlement. In the event of a settlement involving only

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Mastercard and the financial institutions with respect to their issuance of Mastercard cards, Mastercard would pay 36% of the monetary portion of such settlement.

In 2012, the parties entered into a definitive settlement agreement with respect to the U.S. MDL Litigation Cases (including with respect to the claims related to the IPO) and the defendants separately entered into a settlement agreement with the individual merchant plaintiffs. The settlements included cash payments that were apportioned among the defendants pursuant to the omnibus judgment sharing and settlement sharing agreement described above. Mastercard also agreed to provide class members with a short-term reduction in default credit interchange rates and to modify certain of its business practices, including its no surcharge rule. The court granted final approval of the settlement in 2013. Following an appeal by objectors and as a result of a reversal of the settlement approval by the U.S. Court of Appeals for the Second Circuit, the case was sent back to the district court for further proceedings. The court divided the merchants’ claims into two separate classes - monetary damages claims (the “Damages Class”) and claims seeking changes to business practices (the “Rules Relief Class”). The court appointed separate counsel for each class.

In 2018, the parties to the Damages Class litigation entered into a class settlement agreement to resolve the Damages Class claims, with merchants representing slightly more than 25% of the Damages Class interchange volume choosing to opt out of the settlement. The Damages Class settlement agreement became final in 2023.

Prior to the fourth quarter of 2025, Mastercard had reached settlements with over 250 opt-out merchants. In the fourth quarter of 2025, Mastercard reached settlements or agreements in principle to settle with the vast majority of the remaining individual opt-out merchants. The opt-out merchant settlements, along with the Damages Class settlement, represent over 90% of Mastercard’s U.S. interchange volume.

Mastercard continues to litigate with two groups of remaining opt-out merchants. The first group includes seven opt-out merchants seeking aggregate single damages in excess of $1 billion with respect to their Mastercard purchase volume. A trial involving Circle K Stores is scheduled to commence in April 2026 and a trial involving the remaining six opt-out merchants is scheduled to commence in September 2026. The second group of opt-out merchants consists of Block and Intuit, each of whom are seeking damages for purchase volume in which they acted as a merchant, as well as the purchase volume associated with smaller merchants for whom they acted as payment facilitators. Discovery with respect to the second group is scheduled to be completed in the first quarter of 2026, and the exchange of expert reports and summary judgment briefing are expected to occur over the course of 2026.

In 2024, the parties to the Rules Relief Class litigation entered into a settlement agreement to resolve the Rules Relief Class claims, which was subsequently denied by the court. In November 2025, the parties reached a revised settlement agreement that, if approved by the court, would resolve the litigation. Briefing on preliminary approval of the settlement has been completed and the parties await the court’s decision.

As of December 31, 2025 and 2024, Mastercard accrued a liability of $637 million and $559 million, respectively, for the U.S. MDL Litigation Cases. The liability as of December 31, 2025 represents Mastercard’s best estimate of its probable liabilities in these matters and does not represent an estimate of a loss, if any, if the matters were litigated to a final outcome. Mastercard cannot estimate the potential liability if that were to occur.

Europe

Since 2012, a number of United Kingdom (“U.K.”) merchants filed claims or threatened litigation against Mastercard seeking damages for excessive costs paid for acceptance of Mastercard credit and debit cards arising out of alleged anti-competitive conduct with respect to, among other things, Mastercard’s cross-border interchange fees and its U.K. and Ireland domestic interchange fees (the “U.K. Merchant claimants”). In addition, Mastercard has faced similar filed or threatened litigation by merchants with respect to interchange rates in other countries in Europe (the “Pan-European Merchant claimants”). Mastercard has resolved a substantial amount of these damages claims through settlement or judgment. Following these settlements, approximately £0.3 billion (approximately $0.4 billion as of December 31, 2025) of unresolved damages claims remain. Mastercard continues to litigate with the remaining U.K. and Pan-European Merchant claimants and it has submitted statements of defense disputing liability and damages claims. A number of those matters are now progressing with motion practice and discovery. Hearings involving both liability and damages issues involving multiple merchant cases have been completed. In June 2025, the trial court in the U.K. merchant action decided against Mastercard on certain liability issues. This decision, which Mastercard is seeking to appeal, does not determine the outcome of these claims. The court must still determine additional liability and damages issues, some of which have yet to be tried.

Additional United Kingdom matters. Mastercard and Visa were served with a proposed collective action complaint in the U.K. on behalf of merchants seeking damages for commercial card transactions in both the U.K. and the European Union. In 2023, the plaintiffs filed a revised collective action application claiming damages against Mastercard in excess of £1 billion (approximately $1.3 billion as of December 31, 2025). In June 2024, the court granted the plaintiffs’ collective action application. Mastercard’s request

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for permission to appeal this ruling was denied. Liability and damages issues in this claim are now being tried in the same court proceedings as the U.K. and Pan-European merchant cases.

In 2016, a proposed collective action was filed in the U.K. on behalf of U.K. consumers seeking damages for intra-European Economic Area (“EEA”) and domestic U.K. interchange fees that were allegedly passed on to consumers by merchants between 1992 and 2008. The complaint, which sought to leverage the European Commission’s 2007 decision on intra-EEA interchange fees, claimed damages in an amount that exceeded £10 billion (approximately $13 billion as of December 31, 2025). In 2021, the trial court issued a decision in which it granted class certification to the plaintiffs but narrowed the scope of the class. Since January 2023, the trial court has held hearings on various issues, including whether any causal connection existed between the levels of Mastercard’s intra-EEA interchange fees and U.K. domestic interchange fees and regarding Mastercard’s request to narrow the number of years of damages sought by the plaintiffs on statute of limitations grounds. In February 2024, the trial court ruled in Mastercard’s favor, finding no causal connection between the levels of Mastercard’s intra-EEA interchange fees and U.K. domestic interchange fees. In June 2024, the trial court ruled in Mastercard’s favor with respect to its request to dismiss five years of the plaintiffs’ damages claims on statute of limitations grounds. The plaintiffs’ request for permission to appeal this ruling was granted. In December 2024, the parties entered into a settlement agreement to resolve this matter and in May 2025, the trial court issued their written approval of the settlement. Following the trial court’s written approval, Mastercard paid the previously agreed upon settlement amount of £200 million ($263 million as of the date of payment), which was originally accrued in December 2024. The litigation funder for this claim is seeking permission to appeal (by way of judicial review) the trial court’s allocation of the settlement amount, including the allocation between the class and the funder. The funder is not seeking permission to appeal the trial court’s approval of the settlement itself.

Portugal. Mastercard has been named as a defendant in a proposed consumer collective action filed in Portugal on behalf of Portuguese consumers. The complaint, which seeks to leverage the 2019 resolution of the European Commission’s investigation of Mastercard’s central acquiring rules and interregional interchange fees, claims damages of approximately €0.4 billion (approximately $0.5 billion as of December 31, 2025) for interchange fees that were allegedly passed on to consumers by Portuguese merchants for a period of approximately 20 years. Mastercard has submitted a statement of defense that disputes both liability and damages.

Netherlands. In July 2025, Mastercard and Visa were served with a proposed collective action in the Netherlands on behalf of Dutch merchants. The complaint, which relates to interregional interchange fees covering the period from 1992 and ongoing, seeks declaratory relief and damages estimated in excess of €0.3 billion (approximately $0.4 billion as of December 31, 2025).

Australia

In 2022, the Australian Competition & Consumer Commission (“ACCC”) filed a complaint targeting certain agreements entered into by Mastercard and certain Australian merchants related to Mastercard’s debit program. The ACCC alleges that by entering into such agreements, Mastercard engaged in conduct with the purpose of substantially lessening competition in the supply of debit card acceptance services. The ACCC seeks both declaratory relief and monetary fines and costs. A hearing on liability issues is scheduled for April 2026.

ATM Non-Discrimination Rule Surcharge Complaints

In 2011, a trade association of independent ATM operators and 13 independent ATM operators filed a complaint styled as a class action lawsuit in the U.S. District Court for the District of Columbia against both Mastercard and Visa (the “ATM Operators Class Complaint”). Plaintiffs seek to represent a class of non-bank operators of ATM terminals that operate in the United States with the discretion to determine the price of the ATM access fee for the terminals they operate. Plaintiffs allege that Mastercard and Visa have violated Section 1 of the Sherman Act by imposing rules that require ATM operators to charge non-discriminatory ATM surcharges for transactions processed over Mastercard’s and Visa’s respective networks that are not greater than the surcharge for transactions over other networks accepted at the same ATM. Plaintiffs seek both injunctive and monetary relief equal to treble the damages they claim to have sustained as a result of the alleged violations and their costs of suit, including attorneys’ fees.

Subsequently, multiple related complaints were filed in the U.S. District Court for the District of Columbia alleging both federal antitrust and multiple state unfair competition, consumer protection and common law claims against Mastercard and Visa on behalf of different putative classes of users of ATM services. The claims in these actions largely mirrored the allegations made in the ATM Operators Class Complaint, although these complaints sought damages on behalf of consumers of ATM services who paid allegedly inflated ATM fees at both bank (“Bank ATM Consumer Class Complaint”) and non-bank (“Non-bank ATM Consumer Class Complaint”) ATM operators as a result of the defendants’ ATM rules. Plaintiffs sought both injunctive and monetary relief equal to treble the damages they claimed to have sustained as a result of the alleged violations and their costs of suit, including attorneys’ fees.

In 2023, the D.C. Circuit Court affirmed the district court’s previous order granting class certification to the plaintiffs in all three class complaints.

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In 2024, Mastercard executed a settlement agreement with the class lawyers representing the plaintiffs in the Bank ATM Consumer Class Complaint, subject to court approval, and recorded an accrual of $93 million in connection with this matter. In June 2025, the court issued a decision approving the settlement.

In August 2025, Mastercard executed a settlement agreement with the class lawyers representing the plaintiffs in the Non-bank ATM Consumer Class Complaint, subject to court approval. During the second quarter of 2025, Mastercard recorded an accrual of $79 million in connection with this matter.

The litigation with respect to the ATM Operators Class Complaint is ongoing. The plaintiffs in this class complaint allege over $1 billion in single damages against all of the defendants.

U.S. Liability Shift Litigation

In 2016, a proposed U.S. merchant class action complaint was filed in federal court in California alleging that Mastercard, Visa, American Express and Discover (the “Network Defendants”), EMVCo, and a number of issuing banks (the “Bank Defendants”) engaged in a conspiracy to shift fraud liability for card present transactions from issuing banks to merchants not yet in compliance with the standards for EMV chip cards in the United States (the “EMV Liability Shift”), in violation of the Sherman Act and California law. Plaintiffs alleged damages equal to the value of all chargebacks for which class members became liable as a result of the EMV Liability Shift on October 1, 2015. The plaintiffs sought treble damages, attorney’s fees and costs and an injunction against future violations of governing law. The district court denied the Network Defendants’ motion to dismiss the complaint, but granted such a motion for EMVCo and the Bank Defendants. In 2017, the district court transferred the case to New York so that discovery could be coordinated with the U.S. MDL Litigation Cases described above. In 2020, the district court issued an order granting the plaintiffs’ request for class certification. The plaintiffs submitted expert reports that allege aggregate single damages in excess of $1 billion against the four Network Defendants. The Network Defendants submitted expert reports rebutting both liability and damages. In September 2024, the district court denied the Network Defendants’ motion for summary judgment. In September 2025, Mastercard executed a settlement agreement with the class lawyers to resolve the matter, subject to court approval. During the third quarter of 2025, Mastercard recorded an accrual of $80 million in connection with this matter.

Telephone Consumer Protection Class Action

Mastercard is a defendant in a Telephone Consumer Protection Act (“TCPA”) class action pending in Florida. The plaintiffs are individuals and businesses who allege that approximately 381,000 unsolicited faxes were sent to them advertising a Mastercard co-brand card issued by First Arkansas Bank (“FAB”). The TCPA provides for uncapped statutory damages of $500 per fax. Mastercard has asserted various defenses to the claims, and has notified FAB of an indemnity claim that it has (which FAB has disputed). In 2019, the Federal Communications Commission (“FCC”) issued a declaratory ruling clarifying that the TCPA does not apply to faxes sent to online fax services that are received online via email. In 2021, the trial court granted plaintiffs’ request for class certification, but narrowed the scope of the class to stand alone fax recipients only. Mastercard’s request to appeal that decision was denied. Briefing on plaintiffs’ motion to amend the class definition and Mastercard’s cross-motion to decertify the stand alone fax recipient class was completed in April 2023 and the parties await the court’s decision.

U.S. Department of Justice Investigation

In 2023, Mastercard received a Civil Investigative Demand (“CID”) from the U.S. Department of Justice Antitrust Division (“DOJ”) seeking documents and information regarding a potential violation of Sections 1 or 2 of the Sherman Act. The CID focuses on Mastercard’s U.S. debit program and competition with other payment networks and technologies. Mastercard is cooperating with the DOJ in connection with the CID.

European Commission Investigation

In 2024, Mastercard received a formal request for information from the European Commission seeking documents and information in connection with an investigation into alleged anti-competitive behavior of certain card scheme services in the European Union/EEA. The request focuses on Mastercard’s practices regarding network fees related to acquirers. Mastercard is cooperating with the European Commission in connection with the request.

Note 20. Settlement and Other Risk Management

Mastercard’s rules guarantee the settlement of many of the payment network transactions between its customers (“settlement risk”). Settlement exposure is the settlement risk to customers under Mastercard’s rules due to the difference in timing between the payment transaction date and subsequent settlement. For those transactions the Company guarantees, the guarantee will cover the full amount of the settlement obligation to the extent the settlement obligation is not otherwise satisfied. The duration of the settlement exposure is short-term and generally limited to a few days.

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Gross settlement exposure is estimated using the average daily payment volume for the three months prior to period end multiplied by the estimated number of days of exposure. The Company has global risk management policies, procedures and standards that provide a framework for managing the Company’s settlement risk and exposure. In the event of failed settlement by a customer, Mastercard may pursue one or more remedies available under the Company’s rules to recover potential losses. Historically, the Company has experienced a low level of losses from customer settlement failures.

As part of its policies, Mastercard requires certain customers that do not meet the Company’s risk standards to enter into risk mitigation arrangements, including cash collateral and/or forms of credit enhancement such as letters of credit and guarantees. This requirement is based on a review of the individual risk circumstances for each customer. Mastercard monitors its credit risk portfolio and the adequacy of its risk mitigation arrangements on a regular basis. Additionally, the Company periodically reviews its risk management methodology and standards. The amounts of estimated settlement exposure are revised as necessary.

The Company’s estimated settlement exposure was as follows at December 31:


	2025		2024
	(in millions)
Gross settlement exposure	$	89,599	$	78,385
Risk mitigation arrangements applied to settlement exposure	(16,722)		(13,466)
Net settlement exposure	$	72,877	$	64,919

Mastercard also provides guarantees to customers and certain other counterparties indemnifying them from losses stemming from failures of third parties to perform duties. This includes guarantees of Mastercard-branded travelers cheques issued, but not yet cashed. In addition, the Company enters into agreements in the ordinary course of business under which the Company agrees to indemnify third parties against damages, losses and expenses incurred in connection with legal and other proceedings arising from relationships or transactions with the Company. Certain indemnifications do not provide a stated maximum exposure. As the extent of the Company’s obligations under these agreements depends entirely upon the occurrence of future events, the Company’s potential future liability under these agreements is not determinable. Historically, payments made by the Company under these types of contractual arrangements have not been material.

Note 21. Derivative and Hedging Instruments

The Company monitors and manages its foreign currency and interest rate exposures as part of its overall risk management program which focuses on the unpredictability of financial markets and seeks to reduce the potentially adverse effects that the volatility of these markets may have on its operating results. A primary objective of the Company’s risk management strategies is to reduce the financial impact that may arise from volatility in foreign currency exchange rates. The Company uses both foreign exchange derivative contracts (when the hedge costs are economically justified) and foreign currency denominated debt to manage its currency exposure. In addition, the Company may enter into interest rate derivative contracts to manage the effects of interest rate movements on the Company’s aggregate liability portfolio, including potential future debt issuances. The Company does not enter into derivatives for speculative purposes.

The Company’s derivative financial instruments are subject to both market and counterparty credit risk. Market risk is the potential for economic losses to be incurred on market risk sensitive instruments arising from adverse changes in market factors such as foreign currency exchange rates, interest rates and other related variables. Counterparty credit risk is the risk of loss due to failure of the counterparty to perform its obligations in accordance with contractual terms. To mitigate counterparty credit risk, the Company enters into derivative contracts with a diversified group of selected financial institutions based upon their credit ratings and other factors. Generally, the Company does not obtain collateral related to derivatives because of the high credit ratings of the counterparties. The Company’s derivative contracts are subject to enforceable master netting arrangements, which contain various netting and setoff provisions. However, the Company has elected to present derivative assets and liabilities on a gross basis on the consolidated balance sheets.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes the fair value of the Company’s derivative financial instruments and the related notional amounts at December 31:


	2025						2024
	Notional		Derivative assets		Derivative liabilities		Notional		Derivative assets		Derivative liabilities
	(in millions)
Derivatives designated as hedging instruments
Foreign exchange contracts in a cash flow hedge 1	$	5,050	$	16	$	142	$	3,951	$	135	$	6
Interest rate contracts in a fair value hedge 2	1,000		—		27		1,000		—		63
Foreign exchange contracts in a net investment hedge 1	—		—		—		2,511		54		—
Derivatives not designated as hedging instruments
Foreign exchange contracts 1	4,866		19		18		2,741		17		30
Total	$	10,916	$	35	$	187	$	10,203	$	206	$	99

1Foreign exchange derivative assets and liabilities are included within prepaid expenses and other current assets, other assets, other current liabilities and other liabilities on the consolidated balance sheets.

2Interest rate derivative liabilities are included within other current liabilities and other liabilities on the consolidated balance sheets.

Cash Flow Hedges

The Company may enter into foreign exchange derivative contracts, including forwards and options, to manage the impact of foreign currency variability on anticipated revenues and expenses, which fluctuate based on currencies other than the functional currency of the entity. The objective of these hedging activities is to reduce the effect of movement in foreign exchange rates for a portion of revenues and expenses forecasted to occur. As these contracts are designated as cash flow hedging instruments, gains and losses resulting from changes in fair value of these contracts are deferred in accumulated other comprehensive income (loss) and are subsequently reclassified to the consolidated statements of operations when the underlying hedged transactions impact earnings. The terms of these contracts are generally less than 18 months.

In April 2024, the Company entered into foreign exchange derivative contracts to hedge its exposure to variability in cash flows related to foreign denominated assets. Gains and losses resulting from changes in fair value of these contracts are deferred in accumulated other comprehensive income (loss) and are subsequently reclassified to the consolidated statements of operations when the hedged transactions impact earnings. Forward points are excluded from the effectiveness assessment and are amortized to general and administrative expenses on the consolidated statements of operations over the hedge period. The maximum term of these contracts was approximately 7 years.

The pre-tax gain (loss) related to the Company's foreign exchange derivative contracts designated as cash flow hedging instruments for the years ended December 31 were as follows:


	Gain (Loss) Recognized in Other Comprehensive Income (Loss)						Location of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) into Earnings		Gain (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss)
	2025		2024		2023			2025			2024			2023
	(in millions)							(in millions)
Foreign exchange contracts 1	$	(301)	$	161	$	(41)	Net revenue		$	(45)		$	8		$	(29)
							General and administrative 2		$	(343)		$	177		$	—

1Includes immaterial amounts excluded from the effectiveness assessment recognized in other comprehensive income (loss).

2Includes immaterial amounts excluded from the effectiveness assessment recognized in earnings.

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In addition, the Company may enter into interest rate derivative contracts to manage the effects of interest rate movements on the Company’s aggregate liability portfolio, including potential future debt issuances, and designate such derivatives as hedging instruments in a cash flow hedging relationship. Gains and losses resulting from changes in fair value of these contracts are deferred in accumulated other comprehensive income (loss) and are subsequently reclassified as an adjustment to interest expense over the respective terms of the hedged debt issuances. For the years ended December 31, 2025, 2024 and 2023 the Company recorded losses of $7 million, $7 million and $6 million, respectively, from accumulated other comprehensive income (loss) to interest expense.

The Company estimates that the pre-tax amount of the net deferred loss on cash flow hedges recorded in accumulated other comprehensive income (loss) at December 31, 2025 that will be reclassified into the consolidated statements of operations within the next 12 months is not material.

Fair Value Hedges

The Company may enter into interest rate derivative contracts, including interest rate swaps, to manage the effects of interest rate movements on the fair value of the Company's fixed-rate debt and designate such derivatives as hedging instruments in a fair value hedging relationship. Changes in fair value of these contracts and changes in fair value of fixed-rate debt attributable to changes in the hedged benchmark interest rate generally offset each other and are recorded in interest expense on the consolidated statements of operations. Gains and losses related to the net settlements of interest rate swaps are also recorded in interest expense on the consolidated statements of operations. The periodic cash settlements are included in operating activities on the consolidated statements of cash flows.

The Company has an interest rate swap designated as a fair value hedge related to fixed interest rate Senior Notes. In effect, the interest rate swap synthetically converts the fixed interest rate on this debt to a variable interest rate based on the SOFR Overnight Index Swap Rate. The net impact to interest expense for the years ended December 31, 2025, 2024 and 2023 was not material.

Net Investment Hedges

The Company may use foreign currency denominated debt and/or foreign exchange derivative contracts to hedge a portion of its net investment in foreign subsidiaries against adverse movements in exchange rates. The effective portion of the net investment hedge is recorded as a currency translation adjustment in accumulated other comprehensive income (loss). Forward points are excluded from the effectiveness assessment and are amortized to general and administrative expenses on the consolidated statements of operations over the hedge period. The amounts recognized in earnings related to forward points for the years ended December 31, 2025, 2024 and 2023 were not material.

The pre-tax gain (loss) recognized in other comprehensive income (loss) related to the Company's derivative financial instruments designated as net investment hedging instruments for the years ended December 31 were as follows:


	2025		2024		2023
	(in millions)
Foreign exchange contracts	$	12	$	43	$	(98)

As of December 31, 2025 and 2024, the Company had €1.7 billion and €1.3 billion euro-denominated debt outstanding designated as hedges of a portion of its net investment in its European operations. In December 2024, the Company de-designated €400 million of the euro-denominated debt as net investment hedges to effectively manage changes in its net investment exposures in foreign subsidiaries. The euro-denominated debt was subsequently re-designated as a net investment hedge effective March 2025. For the years ended December 31, 2025, 2024 and 2023 the Company recorded pre-tax net foreign currency gains (losses) of $(227) million, $104 million and $(67) million, respectively, in other comprehensive income (loss).

As of December 31, 2025 and 2024, the Company had net foreign currency gains of $126 million and $295 million, after tax, respectively, in accumulated other comprehensive income (loss) associated with this hedging activity.

Non-designated Derivatives

The Company may also enter into foreign exchange derivative contracts to serve as economic hedges, such as to offset possible changes in the value of monetary assets and liabilities due to foreign exchange fluctuations, without designating these derivative contracts as hedging instruments. In addition, the Company is subject to foreign exchange risk as part of its daily settlement activities. This risk is typically limited to a few days between when a payment transaction takes place and the subsequent settlement with customers. To manage this risk, the Company may enter into short duration foreign exchange derivative contracts based upon anticipated receipts and disbursements for the respective currency position. The objective of these activities is to reduce the Company’s exposure to volatility arising from gains and losses resulting from fluctuations of foreign currencies against its

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functional currencies. Gains and losses resulting from changes in fair value of these contracts are recorded net in general and administrative expenses on the consolidated statements of operations, along with the foreign currency gains and losses on monetary assets and liabilities.

The amount of gain recognized on the consolidated statements of operations for non-designated derivative contracts for the years ended December 31 were as follows:


	2025		2024		2023
	(in millions)
Foreign exchange contracts
General and administrative	$	64	$	32	$	42

Note 22. Segment Reporting

Mastercard has concluded it has one reportable operating segment, “Payment Solutions.” The Payment Solutions segment derives its revenues from a wide range of payments solutions provided to customers. Revenue is generated from providing customers continuous access to Mastercard’s global payments network, as well as by providing value-added services and solutions, whether integrated and sold with the payment network or on a stand-alone basis. All of the segment’s activities are interrelated, and each activity is dependent upon and supportive of the other. Accordingly, all significant operating decisions are based upon analysis of Mastercard at the consolidated level. The accounting policies of the Payment Solutions segment are the same as those described in Note 1 (Summary of Significant Accounting Policies).

Mastercard’s Chief Executive Officer has been identified as the chief operating decision-maker (“CODM”). The CODM assesses performance for the Payment Solutions segment and decides how to allocate resources, including whether to reinvest profits into the Payment Solutions segment or into other business activities such as for acquisitions, to pay dividends or for share repurchases, based on net income as reported on the consolidated statements of operations (“Consolidated Net Income”). The CODM uses Consolidated Net Income and other measures for internal planning and forecasting purposes and in the calculation of performance-based compensation.

The following represents the selected financial information regularly reviewed by the CODM to assess performance of the Payment Solutions segment for the years ended December 31:


	2025		2024		2023
	(in millions)
Net revenue	$	32,791	$	28,167	$	25,098
Less:
Personnel	7,251		6,673		6,022
Professional Fees	537		549		495
Data processing and telecommunications	1,272		1,119		1,008
Foreign exchange activity	113		65		83
Advertising and marketing	929		815		825
Depreciation and amortization	1,143		897		799
Provision for litigation	504		680		539
Investment Income	(325)		(327)		(274)
(Gains) losses on equity investments, net	88		29		61
Interest expense	722		646		575
Other (income) expense, net	(166)		(20)		7
Income tax expense	3,610		2,380		2,444
Other segment items 1	2,145		1,787		1,319
Consolidated Net Income	$	14,968	$	12,874	$	11,195

1Includes fulfillment costs, occupancy costs, travel and meeting expenses, and other overhead expenses.

Revenue by geographic market is based on the location of the Company’s customer that issued the card, the location of the merchant acquirer where the card is being used or the location of the customer receiving services. Revenue generated in the U.S.

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was approximately 29% of net revenue in 2025, 30% in 2024 and 30% in 2023. No individual country, other than the U.S., generated more than 10% of net revenue in those periods. Mastercard did not have any individual customer that generated greater than 10% of net revenue in 2025, 2024 or 2023.

The following table reflects the geographical location of the Company’s property, equipment and right-of-use assets, net, as of December 31:


	2025		2024		2023
	(in millions)
United States	$	1,168	$	1,095	$	1,027
Other countries	1,135		1,043		1,034
Total	$	2,303	$	2,138	$	2,061

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Previous: Item 7A. Quantitative and qualitative disclosures about market risk · Next: Item 9. Changes in and disagreements with accountants on accounting and financial disclosure