Mastercard Inc (Form: 10-Q, Received: 04/29/2021 10:13:58)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number: 001-32877

Mastercard Incorporated

(Exact name of registrant as specified in its charter)


Delaware		13-4172551
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification Number)

2000 Purchase Street		10577
Purchase,	NY	(Zip Code)
(Address of principal executive offices)

(914) 249-2000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol

Name of each exchange of which registered

Class A Common Stock, par value $0.0001 per share

New York Stock Exchange

1.1% Notes due 2022

MA22

New York Stock Exchange

2.1% Notes due 2027

MA27

New York Stock Exchange

2.5% Notes due 2030

MA30

New York Stock Exchange

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.

Yes

☒

☐

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 during the preceding 12 months (or for such shorter period that the registrant was required to submit such files)

Yes

☒

☐

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):

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

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.

☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act)

Yes

☐

☒

As of April 26, 2021, there were 982,905,062 shares outstanding of the registrant’s Class A common stock, par value $0.0001 per share; and 8,142,424 shares outstanding of the registrant’s Class B common stock, par value $0.0001 per share.

MASTERCARD INCORPORATED FORM 10-Q

TABLE OF CONTENTS



PART I	5	Item 1.	Consolidated financial statements (unaudited)
	29	Item 2.	Management’s discussion and analysis of financial condition and results of operations
	39	Item 3.	Quantitative and qualitative disclosures about market risk
	40	Item 4.	Controls and procedures


PART II	42	Item 1.	Legal proceedings
	42	Item 1A.	Risk factors
	42	Item 2.	Unregistered sales of equity securities and use of proceeds
	42	Item 5.	Other information
	42	Item 6.	Exhibits
	44	-	Signatures

2 MASTERCARD MARCH 31, 2021 FORM 10-Q

In this Report on Form 10-Q (“Report”), references to the “Company,” “Mastercard,” “we,” “us” or “our” refer to the business conducted by Mastercard Incorporated and its consolidated subsidiaries, including our operating subsidiary, Mastercard International Incorporated, and to the Mastercard brand.

Forward-Looking Statements

This Report contains forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts may be forward-looking statements. When used in this Report, the words “believe”, “expect”, “could”, “may”, “would”, “will”, “trend” and similar words are intended to identify forward-looking statements. Examples of forward-looking statements include, but are not limited to, statements that relate to the Company’s future prospects, developments and business strategies.

Many factors and uncertainties relating to our operations and business environment, all of which are difficult to predict and many of which are outside of our control, influence whether any forward-looking statements can or will be achieved. Any one of those factors could cause our actual results to differ materially from those expressed or implied in writing in any forward-looking statements made by Mastercard or on its behalf, including, but not limited to, the following factors:

•regulation directly related to the payments industry (including regulatory, legislative and litigation activity with respect to interchange rates and surcharging)

•the impact of preferential or protective government actions

•regulation of privacy, data, security and the digital economy

•regulation that directly or indirectly applies to us based on our participation in the global payments industry (including anti-money laundering, counter financing of terrorism, economic sanctions and anti-corruption; account-based payment systems; and issuer practice regulation)

•the impact of changes in tax laws, as well as regulations and interpretations of such laws or challenges to our tax positions

•potential or incurred liability and limitations on business related to any litigation or litigation settlements

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

•the impact of competition in the global payments industry (including disintermediation and pricing pressure)

•the challenges relating to rapid technological developments and changes

•the challenges relating to operating a real-time account-based payment system and to working with new customers and end users

•the impact of information security incidents, account data breaches or service disruptions

•issues related to our relationships with our stakeholders (including loss of substantial business from significant customers, competitor relationships with our customers, banking industry consolidation, merchants’ continued focus on acceptance costs and unique risks from our work with governments)

•exposure to loss or illiquidity due to our role as guarantor and other contractual obligations

•the impact of global economic, political, financial and societal events and conditions, including adverse currency fluctuations and foreign exchange controls

•reputational impact, including impact related to brand perception and lack of visibility of our brands in products and services

•the inability to attract, hire and retain a highly qualified and diverse workforce, or maintain our corporate culture

•issues related to acquisition integration, strategic investments and entry into new businesses

•issues related to our Class A common stock and corporate governance structure

Please see a complete discussion of these risk factors in Part I, Item 1A - Risk Factors of the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. We caution you that the important factors referenced above may not contain all of the factors that are important to you. Our forward-looking statements speak only as of the date of this Report or as of the date they are made, and we undertake no obligation to update our forward-looking statements.

MASTERCARD MARCH 31, 2021 FORM 10-Q 3

PART I

Item 1. Consolidated financial statements (unaudited)

Item 2. Management’s discussion and analysis of financial condition and results of operations

Item 3. Quantitative and qualitative disclosures about market risk

Item 4. Controls and procedures

PART I

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Item 1. Consolidated financial statements (unaudited)

Mastercard Incorporated

Index to consolidated financial statements (unaudited)


						Page
Consolidated Statement of Operations — Three Months Ended March 31 , 202 1 and 2020						6
Consolidated Statement of Comprehensive Income — Three Months Ended March 31, 2021 and 2020						7
Consolidated Balance Sheet — March 31, 2021 and December 31, 2020						8
Consolidated Statement of Changes in Equity - Three Months Ended March 31, 2021 and 2020						9
Consolidated Statement of Cash Flows — Three Months Ended March 31, 2021 and 2020						10
Notes to consolidated financial statements						11

MASTERCARD MARCH 31, 2021 FORM 10-Q 5

PART I

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


Consolidated Statement of Operations (Unaudited)
	Three Months Ended March 31,
		2021		2020
		(in millions, except per share data)
Net Revenue		$	4,155	$	4,009
Operating Expenses
General and administrative		1,676		1,494
Advertising and marketing		119		154
Depreciation and amortization		163		144
Provision for litigation		—		6
Total operating expenses		1,958		1,798
Operating income		2,197		2,211
Other Income (Expense)
Investment income		1		16
Gains (losses) on equity investments, net		94		(174)
Interest expense		(107)		(69)
Other income (expense), net		5		3
Total other income (expense)		(7)		(224)
Income before income taxes		2,190		1,987
Income tax expense		362		294
Net Income		$	1,828	$	1,693
Basic Earnings per Share		$	1.84	$	1.68
Basic weighted-average shares outstanding		994		1,005
Diluted Earnings per Share		$	1.83	$	1.68
Diluted weighted-average shares outstanding		998		1,010

The accompanying notes are an integral part of these consolidated financial statements.

6 MASTERCARD MARCH 31, 2021 FORM 10-Q

PART I

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


Consolidated Statement of Comprehensive Income (Unaudited)
	Three Months Ended March 31,
		2021		2020
		(in millions)
Net Income		$	1,828	$	1,693
Other comprehensive income (loss):
Foreign currency translation adjustments		(198)		(281)
Income tax effect		33		14
Foreign currency translation adjustments, net of income tax effect		(165)		(267)
Translation adjustments on net investment hedges		133		20
Income tax effect		(30)		(4)
Translation adjustments on net investment hedge, net of income tax effect		103		16
Cash flow hedges		3		(189)
Income tax effect		(1)		39
Reclassification adjustments for cash flow hedges		1		—
Income tax effect		—		—
Cash flow hedges, net of income tax effect		3		(150)





Investment securities available-for-sale		1		(7)
Income tax effect		—		2
Investment securities available-for-sale, net of income tax effect		1		(5)
Other comprehensive income (loss), net of tax		(58)		(406)
Comprehensive Income		$	1,770	$	1,287

The accompanying notes are an integral part of these consolidated financial statements.

MASTERCARD MARCH 31, 2021 FORM 10-Q 7

PART I

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


Consolidated Balance Sheet (unaudited)
	March 31, 2021		December 31, 2020
	(in millions, except per share data)
Assets
Current assets:
Cash and cash equivalents	$	7,246	$	10,113
Restricted cash for litigation settlement	586		586
Investments	489		483
Accounts receivable	2,648		2,646
Settlement due from customers	1,678		1,706
Restricted security deposits held for customers	1,759		1,696
Prepaid expenses and other current assets	1,999		1,883
Total current assets	16,405		19,113
Property, equipment and right-of-use assets, net of accumulated depreciation and amortization of $1,441 and $1,390, respectively	1,850		1,902
Deferred income taxes	459		491
Goodwill	7,051		4,960
Other intangible assets, net of accumulated amortization of $1,551 and $1,489, respectively	3,321		1,753
Other assets	5,714		5,365
Total Assets	$	34,800	$	33,584
Liabilities, Redeemable Non-controlling Interests and Equity
Current liabilities:
Accounts payable	$	476	$	527
Settlement due to customers	1,297		1,475
Restricted security deposits held for customers	1,759		1,696
Accrued litigation	841		842
Accrued expenses	5,200		5,430
Current portion of long-term debt	649		649
Other current liabilities	1,253		1,228
Total current liabilities	11,475		11,847
Long-term debt	13,221		12,023
Deferred income taxes	391		86
Other liabilities	3,260		3,111
Total Liabilities	28,347		27,067
Commitments and Contingencies
Redeemable Non-controlling Interests	28		29
Stockholders’ Equity
Class A common stock, $0.0001 par value; authorized 3,000 shares, 1,397 and 1,396 shares issued and 984 and 987 shares outstanding, respectively	—		—
Class B common stock, $0.0001 par value; authorized 1,200 shares, 8 shares issued and outstanding	—		—
Additional paid-in-capital	4,949		4,982
Class A treasury stock, at cost, 413 and 409 shares, respectively	(38,024)		(36,658)
Retained earnings	40,140		38,747
Accumulated other comprehensive income (loss)	(738)		(680)
Mastercard Incorporated Stockholders' Equity	6,327		6,391
Non-controlling interests	98		97
Total Equity	6,425		6,488
Total Liabilities, Redeemable Non-controlling Interests and Equity	$	34,800	$	33,584

The accompanying notes are an integral part of these consolidated financial statements.

8 MASTERCARD MARCH 31, 2021 FORM 10-Q

PART I

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


	Three Months Ended March 31, 2021
	Stockholders’ Equity
	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
	Class A		Class B
	(in millions)
Balance at December 31, 2020	$	—	$	—	$	4,982	$	(36,658)	$	38,747	$	(680)	$	6,391	$	97	$	6,488
Net income	—		—		—		—		1,828		—		1,828		—		1,828
Activity related to non-controlling interests	—		—		—		—		—		—		—		1		1
Redeemable non-controlling interest adjustments	—		—		—		—		(1)		—		(1)		—		(1)
Other comprehensive income (loss)	—		—		—		—		—		(58)		(58)		—		(58)
Dividends	—		—		—		—		(434)		—		(434)		—		(434)
Purchases of treasury stock	—		—		—		(1,370)		—		—		(1,370)		—		(1,370)
Share-based payments	—		—		(33)		4		—		—		(29)		—		(29)
Balance at March 31, 2021	$	—	$	—	$	4,949	$	(38,024)	$	40,140	$	(738)	$	6,327	$	98	$	6,425


	Three Months Ended March 31, 2020
	Stockholders’ Equity
	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
	Class A		Class B
	(in millions)
Balance at December 31, 2019	$	—	$	—	$	4,787	$	(32,205)	$	33,984	$	(673)	$	5,893	$	24	$	5,917
Net income	—		—		—		—		1,693		—		1,693		—		1,693
Activity related to non-controlling interests	—		—		—		—		—		—		—		1		1
Redeemable non-controlling interest adjustments	—		—		—		—		(2)		—		(2)		—		(2)
Other comprehensive income (loss)	—		—		—		—		—		(406)		(406)		—		(406)
Dividends	—		—		—		—		(402)		—		(402)		—		(402)
Purchases of treasury stock	—		—		—		(1,330)		—		—		(1,330)		—		(1,330)
Share-based payments	—		—		(52)		4		—		—		(48)		—		(48)
Balance at March 31, 2020	$	—	$	—	$	4,735	$	(33,531)	$	35,273	$	(1,079)	$	5,398	$	25	$	5,423

The accompanying notes are an integral part of these consolidated financial statements.

MASTERCARD MARCH 31, 2021 FORM 10-Q 9

PART I

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


Consolidated Statement of Cash Flows (Unaudited)
	Three Months Ended March 31,
	2021		2020
	(in millions)
Operating Activities
Net income	$	1,828	$	1,693
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of customer and merchant incentives	338		237
Depreciation and amortization	163		144
(Gains) losses on equity investments, net	(94)		174
Share-based compensation	65		52
Deferred income taxes	33		26
Other	11		20
Changes in operating assets and liabilities:
Accounts receivable	(70)		(3)

Settlement due from customers	28		1,831
Prepaid expenses	(562)		(331)
Accrued litigation and legal settlements	(2)		(62)
Restricted security deposits held for customers	63		148
Accounts payable	(15)		(102)
Settlement due to customers	(178)		(1,564)

Accrued expenses	(163)		(622)
Net change in other assets and liabilities	18		218
Net cash provided by operating activities	1,463		1,859
Investing Activities
Purchases of investment securities available-for-sale	(155)		(74)
Purchases of investments held-to-maturity	(38)		(45)
Proceeds from sales of investment securities available-for-sale	72		179
Proceeds from maturities of investment securities available-for-sale	23		64
Proceeds from maturities of investments held-to-maturity	79		65
Purchases of property and equipment	(65)		(131)
Capitalized software	(79)		(78)
Purchases of equity investments	(42)		(135)
Acquisition of businesses, net of cash acquired	(3,364)		—
Settlement of interest rate derivative contracts	—		(175)
Other investing activities	9		(177)
Net cash used in investing activities	(3,560)		(507)
Financing Activities
Purchases of treasury stock	(1,356)		(1,383)
Dividends paid	(439)		(403)
Proceeds from debt, net	1,282		3,959



Tax withholdings related to share-based payments	(121)		(131)
Cash proceeds from exercise of stock options	23		31
Other financing activities	5		27
Net cash (used in) provided by financing activities	(606)		2,100
Effect of exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents	(101)		(88)
Net increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents	(2,804)		3,364
Cash, cash equivalents, restricted cash and restricted cash equivalents - beginning of period	12,419		8,969
Cash, cash equivalents, restricted cash and restricted cash equivalents - end of period	$	9,615	$	12,333

The accompanying notes are an integral part of these consolidated financial statements.

10 MASTERCARD MARCH 31, 2021 FORM 10-Q

PART I

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Notes to consolidated financial statements (unaudited)

Note 1. Summary of Significant Accounting Policies

Organization

Mastercard Incorporated and its consolidated subsidiaries, including Mastercard International Incorporated (“Mastercard International” and together with Mastercard Incorporated, “Mastercard” or the “Company”), is a technology company in the global payments industry that connects consumers, financial institutions, merchants, governments, digital partners, businesses and other organizations worldwide, enabling them to use electronic forms of payment instead of cash and checks.

Consolidation and Basis of Presentation

The consolidated financial statements include the accounts of Mastercard and its majority-owned and controlled entities, including any variable interest entities (“VIEs”) for which the Company is the primary beneficiary. Investments in VIEs for which the Company is not considered the primary beneficiary are not consolidated and are accounted for as equity method or measurement alternative method investments and recorded in other assets on the consolidated balance sheet. At March 31, 2021 and December 31, 2020, there were no significant VIEs which required consolidation and the investments were not considered material to the consolidated financial statements. The Company consolidates acquisitions as of the date in which the Company has obtained a controlling financial interest. Intercompany transactions and balances have been eliminated in consolidation. The Company follows accounting principles generally accepted in the United States of America (“GAAP”).

The balance sheet as of December 31, 2020 was derived from the audited consolidated financial statements as of December 31, 2020. The consolidated financial statements for the three months ended March 31, 2021 and 2020 and as of March 31, 2021 are unaudited, and in the opinion of management, include all normal recurring adjustments that are necessary to present fairly the results for interim periods. The results of operations for the three months ended March 31, 2021 are not necessarily indicative of the results to be expected for the full year.

The accompanying unaudited consolidated financial statements are presented in accordance with the U.S. Securities and Exchange Commission (“SEC”) requirements for Quarterly Reports on Form 10-Q. Reference should be made to the Mastercard’s Annual Report on Form 10-K for the year ended December 31, 2020 for additional disclosures, including a summary of the Company’s significant accounting policies.

Note 2. Acquisitions

On March 5, 2021, Mastercard acquired a majority of the Corporate Services business of Nets Denmark A/S for €3.0 billion (approximately $3.6 billion as of the date of acquisition) in cash consideration based on a €2.85 billion enterprise value, adjusted for cash and net working capital at closing. The business acquired is primarily comprised of clearing and instant payment services and e-billing solutions.

In relation to this acquisition, the Company’s preliminary estimate of net assets acquired has been recorded and primarily relates to intangible assets, including goodwill of $2.1 billion, of which $0.8 billion is expected to be deductible for local tax purposes. The goodwill arising from the acquisition is primarily attributable to the synergies expected to arise through geographic, product and customer expansion, the underlying technology and workforce acquired. Refer to Note 1 (Summary of Significant Accounting Policies) to the consolidated financial statements included in Part II, Item 8 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 for the valuation techniques Mastercard utilizes to fair value the respective components of business combinations.

MASTERCARD MARCH 31, 2021 FORM 10-Q 11

PART I

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Company is in the process of obtaining additional information necessary to finalize the valuation of the acquired assets and liabilities assumed as of the acquisition date. Therefore, the preliminary fair values set forth below use information available as of March 31, 2021 and are subject to adjustment as additional information is obtained and the valuations are completed. The initial purchase price allocation, as of the acquisition date, is noted below:


	(in millions)






Assets:
Cash and cash equivalents	$	203
Other current assets	15
Other intangible assets	1,622
Goodwill	2,116


Total assets	3,956

Liabilities:

Other current liabilities	70
Deferred income taxes	319

Total liabilities	389

Net assets acquired	$	3,567

The following table summarizes the identified intangible assets acquired during the three months ended March 31, 2021:


	Acquisition Date Fair Value		Weighted-Average Useful Life
	(in millions)		(in years)
Developed technologies	$	208	14.7
Customer relationships	1,393		19.5
Other	21		8.0
Other intangible assets	$	1,622	18.7

Proforma information related to the acquisition was not included because the impact on the Company’s consolidated results of operations was not considered to be material.

In 2020, the Company acquired several businesses in separate transactions for total consideration of $1.1 billion. As of March 31, 2021, the Company had finalized the purchase accounting for $185 million of the businesses acquired and is evaluating and finalizing the purchase accounting for the remainder of businesses acquired during 2020. For the preliminary estimated and final fair values of the purchase price allocations, as of the acquisition dates, refer to Note 2 (Acquisitions) to the consolidated financial statements included in Part II, Item 8 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.

Pending Acquisition

In April 2021, Mastercard entered into a definitive agreement to acquire Ekata, Inc. for $850 million. The acquisition will advance our digital identity verification capabilities. Subject to regulatory review and other customary closing conditions, the acquisition is expected to close within the next six months.

12 MASTERCARD MARCH 31, 2021 FORM 10-Q

PART I

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 3. Revenue

The Company’s disaggregated net revenue by source and geographic region were as follows:


	Three Months Ended March 31,
		2021		2020
		(in millions)
Revenue by source:
Domestic assessments		$	1,798	$	1,683
Cross-border volume fees		932		1,217
Transaction processing		2,351		2,200
Other revenues		1,347		1,062
Gross revenue		6,428		6,162
Rebates and incentives (contra-revenue)		(2,273)		(2,153)
Net revenue		$	4,155	$	4,009
Net revenue by geographic region:
North American Markets		$	1,491	$	1,334
International Markets		2,618		2,633
Other 1		46		42
Net revenue		$	4,155	$	4,009

1 Includes revenues managed by corporate functions.

The Company’s customers are generally billed weekly, however, the frequency is dependent upon the nature of the performance obligation and the underlying contractual terms. The Company does not typically offer extended payment terms to customers. The following table sets forth the location of the amounts recognized on the consolidated balance sheet from contracts with customers:


	March 31, 2021		December 31, 2020
	(in millions)
Receivables from contracts with customers
Accounts receivable	$	2,480	$	2,505
Contract assets
Prepaid expenses and other current assets	72		59
Other assets	269		245
Deferred revenue 1
Other current liabilities	432		355
Other liabilities	169		143

1 Revenue recognized from performance obligations satisfied during the three months ended March 31, 2021 and 2020 was $180 million and $189 million, respectively.

MASTERCARD MARCH 31, 2021 FORM 10-Q 13

PART I

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 4. Earnings Per Share

The components of basic and diluted earnings per share (“EPS”) for common shares were as follows:


	Three Months Ended March 31,
		2021		2020
		(in millions, except per share data)
Numerator
Net income		$	1,828	$	1,693
Denominator
Basic weighted-average shares outstanding		994		1,005
Dilutive stock options and stock units		4		5
Diluted weighted-average shares outstanding 1		998		1,010
Earnings per Share
Basic		$	1.84	$	1.68
Diluted		$	1.83	$	1.68

1 For the periods presented, the calculation of diluted EPS excluded a minimal amount of anti-dilutive share-based payment awards.

Note 5. Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents

The following table provides a reconciliation of cash, cash equivalents, restricted cash and restricted cash equivalents reported on the consolidated balance sheet that total to the amounts shown on the consolidated statement of cash flows.


	March 31, 2021		December 31, 2020
	(in millions)
Cash and cash equivalents	$	7,246	$	10,113
Restricted cash and restricted cash equivalents
Restricted cash for litigation settlement	586		586
Restricted security deposits held for customers	1,759		1,696
Prepaid expenses and other current assets	24		24

Cash, cash equivalents, restricted cash and restricted cash equivalents	$	9,615	$	12,419

Note 6. Investments

The Company’s investments on the consolidated balance sheet include both available-for-sale and held-to-maturity securities (see Investments section below). The Company classifies its investments in equity securities of publicly traded and privately held companies within other assets on the consolidated balance sheet (see Equity Investments section below).

Investments

Investments on the consolidated balance sheet consisted of the following:


	March 31, 2021		December 31, 2020
	(in millions)
Available-for-sale securities	$	371	$	321
Held-to-maturity securities	118		162
Total investments	$	489	$	483

14 MASTERCARD MARCH 31, 2021 FORM 10-Q

PART I

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Available-for-Sale-Securities

The major classes of the Company’s available-for-sale investment securities and their respective amortized cost basis and fair values were as follows:


	March 31, 2021								December 31, 2020
	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss		Fair Value		Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss		Fair Value
	(in millions)
Municipal securities	$	9	$	—	$	—	$	9	$	10	$	—	$	—	$	10
Government and agency securities	124		—		—		124		64		—		—		64
Corporate securities	237		1		—		238		246		1		—		247

Total	$	370	$	1	$	—	$	371	$	320	$	1	$	—	$	321

The Company’s corporate and municipal available-for-sale investment securities held at March 31, 2021 and December 31, 2020 primarily carried a credit rating of A- or better. Corporate securities are comprised of commercial paper and corporate bonds. Municipal securities are comprised of state tax-exempt bonds and are diversified across states and sectors. Government and agency securities include U.S. government bonds, U.S. government sponsored agency bonds and foreign government bonds which are denominated in the national currency of the issuing country. Unrealized gains and losses are recorded as a separate component of other comprehensive income (loss) on the consolidated statement of comprehensive income.

The maturity distribution based on the contractual terms of the Company’s investment securities at March 31, 2021 was as follows:


	Available-For-Sale
	Amortized Cost		Fair Value
	(in millions)
Due within 1 year	$	180	$	180
Due after 1 year through 5 years	190		191

Total	$	370	$	371

Investment income on the consolidated statement of operations primarily consists of interest income generated from cash, cash equivalents, time deposits, and realized gains and losses on the Company’s investment securities. The realized gains and losses from the sales of available-for-sale securities for the three months ended March 31, 2021 and 2020 were not significant.

Held-to-Maturity Securities

The Company classifies time deposits with maturities greater than three months but less than one year as held-to-maturity. Time deposits are carried at amortized cost on the consolidated balance sheet and are intended to be held until maturity. The cost of these securities approximates fair value.

Equity Investments

Included in other assets on the consolidated balance sheet are equity investments with readily determinable fair values (“Marketable securities”) and equity investments without readily determinable fair values (“Nonmarketable securities”). Marketable securities are publicly traded companies and are measured using unadjusted quoted prices in their respective active markets. Nonmarketable securities that do not qualify for equity method accounting are measured at cost, less any impairment and adjusted for changes resulting from observable price changes in orderly transactions for the identical or similar investments of the same issuer (“measurement alternative”).

The following table is a summary of the activity related to the Company’s equity investments:


	Balance at December 31, 2020		Purchases (Sales), net		Changes in Fair Value 1		Other 2		Balance at March 31, 2021
	(in millions)
Marketable securities	$	476	$	—	$	54	$	2	$	532
Nonmarketable securities	696		40		40		(3)		773
Total equity investments	$	1,172	$	40	$	94	$	(1)	$	1,305

1Recorded in gains (losses) on equity investments, net on the consolidated statement of operations.

2Includes translational impact of currency.

MASTERCARD MARCH 31, 2021 FORM 10-Q 15

PART I

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table sets forth the components of our Nonmarketable securities:


	March 31, 2021		December 31, 2020
	(in millions)
Measurement alternative 1	$	606	$	539
Equity method	167		157
Total Nonmarketable securities	$	773	$	696

1 Cumulative impairments and downward fair value adjustments on measurement alternative investments were $14 million and cumulative upward fair value adjustments were $117 million as of March 31, 2021.

Note 7. Fair Value Measurements

The Company classifies its fair value measurements of financial instruments into a three-level hierarchy (the “Valuation Hierarchy”). Financial instruments are categorized for fair value measurement purposes as recurring or non-recurring in nature. There were no transfers made among the three levels in the Valuation Hierarchy for the three months ended March 31, 2021.

Financial Instruments - Recurring Measurements

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


	March 31, 2021								December 31, 2020
	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 1:
Municipal securities	$	—	$	9	$	—	$	9	$	—	$	10	$	—	$	10
Government and agency securities	36		88		—		124		26		38		—		64
Corporate securities	—		238		—		238		—		247		—		247


Derivative instruments 2:
Foreign exchange contracts	—		56		—		56		—		19		—		19
Marketable securities 3:
Equity securities	532		—		—		532		476		—		—		476
Deferred compensation plan 4:
Deferred compensation assets	80		—		—		80		78		—		—		78

Liabilities
Derivative instruments 2:
Foreign exchange derivative liabilities	$	—	$	(7)	$	—	$	(7)	$	—	$	(28)	$	—	$	(28)

Deferred compensation plan 5:
Deferred compensation liabilities	(79)		—		—		(79)		(81)		—		—		(81)

16 MASTERCARD MARCH 31, 2021 FORM 10-Q

PART I

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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 municipal securities, non-U.S. government and agency securities and corporate 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 derivative asset and liability contracts have been classified within Level 2 of the Valuation Hierarchy as the fair value is based on observable inputs such as broker quotes relating to foreign exchange for similar derivative instruments. See Note 17 (Derivative and Hedging Instruments) for further details.

3The Company’s Marketable securities are publicly held and classified within Level 1 of the Valuation Hierarchy as the fair values are based on unadjusted quoted prices in their respective active markets.

4The Company has a nonqualified deferred compensation plan where assets are invested primarily in mutual funds held in a rabbi trust, which is restricted for payments to participants of the plan. The Company has elected to use the fair value option for these mutual funds, which are measured using quoted prices of identical instruments in active markets and are included in prepaid expenses and other current assets on the consolidated balance sheet.

5The deferred compensation liabilities are measured at fair value based on the quoted prices of identical instruments to the investment vehicles selected by the participants. These are included in other liabilities on the consolidated balance sheet.

Financial Instruments - Non-Recurring Measurements

Nonmarketable Securities

The Company’s Nonmarketable securities are recorded at fair value on a non-recurring 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. See Note 6 (Investments) for further details.

Debt

The Company estimates the fair value of its long-term debt based on market quotes. These debt securities are classified as Level 2 of the Valuation Hierarchy as they are not traded in active markets. At March 31, 2021, the carrying value and fair value of total long-term debt (including the current portion) was $13.9 billion and $15.1 billion, respectively. At December 31, 2020, the carrying value and fair value of long-term debt (including the current portion) was $12.7 billion and $14.8 billion, respectively. See Note 10 (Debt) for further details.

Other Financial Instruments

Certain other financial instruments are carried on the consolidated balance sheet 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, time deposits, accounts receivable, settlement due from customers, restricted security deposits held for customers, accounts payable, settlement due to customers and other accrued liabilities.

Note 8. Prepaid Expenses and Other Assets

Prepaid expenses and other current assets consisted of the following:


	March 31, 2021		December 31, 2020
	(in millions)
Customer and merchant incentives	$	1,148	$	1,086
Prepaid income taxes	59		78
Other	792		719
Total prepaid expenses and other current assets	$	1,999	$	1,883

MASTERCARD MARCH 31, 2021 FORM 10-Q 17

PART I

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Other assets consisted of the following:


	March 31, 2021		December 31, 2020
	(in millions)
Customer and merchant incentives	$	3,413	$	3,220
Equity investments	1,305		1,172
Income taxes receivable	559		553
Other	437		420
Total other assets	$	5,714	$	5,365

Customer and merchant incentives represent payments made to customers and merchants under business agreements. Costs directly related to entering into such an agreement are generally deferred and amortized over the life of the agreement.

Note 9. Accrued Expenses and Accrued Litigation

Accrued expenses consisted of the following:


	March 31, 2021		December 31, 2020
	(in millions)
Customer and merchant incentives	$	3,952	$	3,998
Personnel costs	441		727
Income and other taxes	296		208
Other	511		497
Total accrued expenses	$	5,200	$	5,430

Customer and merchant incentives represent amounts to be paid to customers under business agreements. As of March 31, 2021 and December 31, 2020, the Company’s provision for litigation was $841 million and $842 million, respectively. These amounts are not included in the accrued expenses table above and are separately reported as accrued litigation on the consolidated balance sheet. See Note 15 (Legal and Regulatory Proceedings) for additional information regarding the Company’s accrued litigation.

18 MASTERCARD JUNE 30, 2020 FORM 10-Q

PART I

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 10. Debt

Long-term debt consisted of the following:


				March 31, 2021		December 31, 2020		Effective Interest Rate
				(in millions)
2021 USD Notes	1.900	%	Senior Notes due March 2031	$	600	$	—	1.981	%
	2.950	%	Senior Notes due March 2051	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		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	2.000	%	Senior Notes due November 2021	650		650		2.236	%
	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 1	1.100	%	Senior Notes due December 2022	822		859		1.265	%
	2.100	%	Senior Notes due December 2027	940		982		2.189	%
	2.500	%	Senior Notes due December 2030	176		184		2.562	%

2014 USD Notes	3.375	%	Senior Notes due April 2024	1,000		1,000		3.484	%

				13,988		12,775
Less: Unamortized discount and debt issuance costs				(118)		(103)
Total debt outstanding				13,870		12,672
Less: Current portion2				(649)		(649)
Long-term debt				$	13,221	$	12,023

1€1.650 billion euro-denominated debt issued in December 2015.

22016 USD Notes due in November 2021 are classified on the consolidated balance sheet as current portion of long-term debt.

In March 2021, the Company issued $600 million principal amount of notes due March 2031 and $700 million principal amount of notes due March 2051 (collectively the “2021 USD Notes”). The net proceeds from the issuance of the 2021 USD Notes, after deducting the original issue discount, underwriting discount and offering expenses, were $1.282 billion.

The outstanding debt described above is not subject to any financial covenants and it 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.

Note 11. Stockholders' Equity

The Company declared quarterly cash dividends on its Class A and Class B Common Stock during the three months ended March 31, 2021 and 2020 as summarized below:


	Three Months Ended March 31,
		2021		2020
		(in millions, except per share data)
Dividends declared per share		$	0.44	$	0.40
Total dividends declared		$	434	$	402

The Company’s Board of Directors has approved share repurchase programs authorizing the Company to repurchase shares of its Class A Common Stock. These programs become effective after the completion of the previously authorized share repurchase program.

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The following table summarizes the Company’s share repurchase authorizations of its Class A common stock through March 31, 2021, as well as historical purchases:


Board authorization dates	December 2020		December 2019		December 2018
Date program became effective	Not yet effective		January 2020		January 2019		Total
	(in millions, except average price data)
Board authorization	$	6,000	$	8,000	$	6,500	$	20,500
Dollar value of shares repurchased during the three months ended March 31, 2020	$	—	$	1,079	$	304	$	1,383
Remaining authorization at December 31, 2020	$	6,000	$	3,831	$	—	$	9,831
Dollar value of shares repurchased during the three months ended March 31, 2021	$	—	$	1,356	$	—	$	1,356
Remaining authorization at March 31, 2021	$	6,000	$	2,475	$	—	$	8,475
Shares repurchased during the three months ended March 31, 2020	—		3.7		1.0		4.7
Average price paid per share during the three months ended March 31, 2020	$	—	$	290.86	$	304.89	$	293.83
Shares repurchased during the three months ended March 31, 2021	—		3.9		—		3.9
Average price paid per share during the three months ended March 31, 2021	$	—	$	346.49	$	—	$	346.49
Cumulative shares repurchased through March 31, 2021	—		17.2		25.8		43.0
Cumulative average price paid per share	$	—	$	320.81	$	251.72	$	279.36

The following table presents the changes in the Company’s outstanding Class A and Class B common stock for the three months ended March 31, 2021:


	Outstanding Shares
	Class A	Class B
	(in millions)
Balance at December 31, 2020	986.9	8.3
Purchases of treasury stock	(3.9)	—
Share-based payments	0.8	—
Conversion of Class B to Class A common stock	0.1	(0.1)
Balance at March 31, 2021	983.9	8.2

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Note 12. Accumulated Other Comprehensive Income (Loss)

The changes in the balances of each component of accumulated other comprehensive income (loss), net of tax, for the three months ended March 31, 2021 and 2020 were as follows:


	December 31, 2020		Increase / (Decrease)		Reclassifications		March 31, 2021
	(in millions)
Foreign currency translation adjustments 1	$	(352)	$	(165)	$	—	$	(517)
Translation adjustments on net investment hedges 2	(175)		103		—		(72)
Cash flow hedges
Foreign exchange contracts 3	—		2		—		2
Interest rate contracts 4	(133)		—		1		(132)
Defined benefit pension and other postretirement plans	(20)		—		—		(20)
Investment securities available-for-sale	—		1		—		1
Accumulated Other Comprehensive Income (Loss)	$	(680)	$	(59)	$	1	$	(738)


	December 31, 2019		Increase / (Decrease)		Reclassifications		March 31, 2020
	(in millions)
Foreign currency translation adjustments1	$	(638)	$	(267)	$	—	$	(905)
Translation adjustments on net investment hedges 2	(38)		16		—		(22)
Cash flow hedges

Interest rate contracts 4	11		(150)		—		(139)
Defined benefit pension and other postretirement plans	(9)		—		—		(9)
Investment securities available-for-sale	1		(5)		—		(4)
Accumulated Other Comprehensive Income (Loss)	$	(673)	$	(406)	$	—	$	(1,079)

1.During the three months ended March 31, 2021, the increase in the accumulated other comprehensive loss related for foreign currency translation adjustments was driven primarily by the depreciation of the euro against the U.S. dollar. During the three months ended March 31, 2020, the increase in the accumulated other comprehensive loss related to foreign currency translation adjustments was driven primarily by the depreciation of the euro, British pound and Brazilian real against the U.S. dollar.

2.During the three months ended March 31, 2021 and 2020, the decreases in the accumulated other comprehensive loss related to the net investment hedges were driven by the depreciation of the euro against the U.S. dollar. See Note 17 (Derivative and Hedging Instruments) for additional information.

3.Beginning in 2021, certain 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 statement of operations when the underlying hedged transactions impact earnings. See Note 17 (Derivative and Hedging Instruments) for additional information.

4.In 2019, the Company entered into treasury rate locks which are accounted for as cash flow hedges. In the first quarter of 2020, in connection with the issuance of the 2020 USD Notes, these contracts were settled for a loss of $175 million, or $136 million net of tax, recorded in accumulated other comprehensive income (loss). The cumulative loss will be reclassified as an adjustment to interest expense over the respective terms of the 2020 USD Notes. See Note 17 (Derivative and Hedging Instruments) for additional information.

Note 13. Share-Based Payments

During the three months ended March 31, 2021, the Company granted the following awards under the Mastercard Incorporated 2006 Long Term Incentive Plan, as amended and restated as of June 5, 2012 (the “LTIP”). The LTIP is a stockholder-approved plan that permits the grant of various types of equity awards to employees.


	Grants in 2021	Weighted-Average Grant-Date Fair Value
	(in millions)	(per option/unit)
Non-qualified stock options	0.3	$	92
Restricted stock units	0.7	358
Performance stock units	0.2	385

The Company used the Black-Scholes option pricing model to determine the grant-date fair value of stock options and calculated the expected life and the expected volatility based on historical Mastercard information. The expected life of stock options granted in 2021 was

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estimated to be six years, while the expected volatility was determined to be 26.1%. Stock options generally vest in four equal annual installments beginning one year after the date of grant and expire ten years from the date of grant.

The fair value of restricted stock units (“RSUs”) is determined and fixed on the grant date based on the Company’s Class A common stock price, adjusted for the exclusion of dividend equivalents. The shares underlying the RSUs will generally vest in four equal annual installments beginning one year after the date of grant.

The Company used the Monte Carlo simulation valuation model to determine the grant-date fair value of performance stock units (“PSUs”) granted. Shares underlying the PSUs will vest after three years from the date of grant and are subject to a mandatory one-year deferral period, during which vested PSUs are eligible for dividend equivalents.

Compensation expense is recorded net of estimated forfeitures over the shorter of the vesting period or the date the individual becomes eligible to retire under the LTIP. The Company uses the straight-line method of attribution over the requisite service period for expensing equity awards.

Note 14. Income Taxes

The effective income tax rates were 16.5% and 14.8% for the three months ended March 31, 2021 and 2020, respectively. The higher effective income tax rate for the three months ended March 31, 2021, versus the comparable period in 2020, was primarily due to lower discrete tax benefits related to share-based payments.

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 are 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 2011. With limited exception, the Company is no longer subject to state and local or foreign examinations by tax authorities for years before 2010.

Note 15. 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, except as discussed below, it is not possible to determine the probability of loss or estimate damages, and therefore, Mastercard has not established reserves for any of these proceedings. 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 existence in many such proceedings of 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 or 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.

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, financial position and cash flows.

United States. In June 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

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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 plaintiffs filed a consolidated class action complaint that seeks treble damages.

In July 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 February 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 merchant 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 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 October 2012, the parties entered into a definitive settlement agreement with respect to the merchant class litigation (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 December 2013, and objectors to the settlement appealed that decision to the U.S. Court of Appeals for the Second Circuit. In June 2016, the court of appeals vacated the class action certification, reversed the settlement approval and sent the case back to the district court for further proceedings. The court of appeals’ ruling was based primarily on whether the merchants were adequately represented by counsel in the settlement. As a result of the appellate court ruling, the district 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 September 2018, the parties to the Damages Class litigation entered into a class settlement agreement to resolve the Damages Class claims. The time period during which Damages Class members were permitted to opt out of the class settlement agreement ended in July 2019 with merchants representing slightly more than 25% of the Damages Class interchange volume choosing to opt out of the settlement. The district court granted final approval of the settlement in December 2019. The district court’s settlement approval order has been appealed. Mastercard has commenced settlement negotiations with a number of the opt-out merchants and has reached settlements and/or agreements in principle to settle a number of these claims. The Damages Class settlement agreement does not relate to the Rules Relief Class claims. Separate settlement negotiations with the Rules Relief Class are ongoing. In December 2020, the Rules Relief Class filed a motion for class certification. Briefing on summary judgment motions in the Rules Relief Class and opt-out merchant cases was completed in December 2020.

As of March 31, 2021 and December 31, 2020, Mastercard had accrued a liability of $783 million as a reserve for both the Damages Class litigation and the opt-out merchant cases. As of March 31, 2021 and December 31, 2020, Mastercard had $586 million in a qualified cash settlement fund related to the Damages Class litigation and classified as restricted cash on its consolidated balance sheet. The reserve as of March 31, 2021 for both the Damages Class litigation and the opt-out merchants represents Mastercard’s best estimate of its probable liabilities in these matters. The portion of the accrued liability relating to both the opt-out merchants and the Damages Class litigation settlement 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.

Canada. In December 2010, a proposed class action complaint was commenced against Mastercard in Quebec on behalf of Canadian merchants. The suit essentially repeated the allegations and arguments of a previously filed application by the Canadian Competition Bureau to the Canadian Competition Tribunal (dismissed in Mastercard’s favor) concerning certain Mastercard rules related to point-of-sale acceptance, including the “honor all cards” and “no surcharge” rules. The Quebec suit sought compensatory and punitive damages in unspecified amounts, as well as injunctive relief. In the first half of 2011, additional purported class action lawsuits were commenced in British Columbia and Ontario against Mastercard, Visa and a number of large Canadian financial institutions. The British Columbia suit sought compensatory damages in unspecified amounts, and the Ontario suit sought compensatory damages of $5 billion on the basis of alleged conspiracy and various alleged breaches of the Canadian Competition Act. Additional purported class action complaints were commenced in Saskatchewan and Alberta with claims that largely mirror those in the other suits. In June 2017, Mastercard entered into a

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class settlement agreement to resolve all of the Canadian class action litigation. The settlement, which required Mastercard to make a cash payment and modify its “no surcharge” rule, received court approval in each Canadian province. All appeals by objectors to the settlement have either been rejected by the Supreme Court or abandoned, and the settlement is now final.

Europe. Since May 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”). In aggregate, the alleged damages claims from the U.K. and Pan-European Merchant claimants were in the amount of approximately £3 billion (approximately $5 billion as of March 31, 2021). Mastercard has resolved over £2 billion (approximately $3 billion as of March 31, 2021) of these damages claims through settlement or judgment.

In January 2017, Mastercard received a liability judgment in its favor on all significant matters in a separate action brought by ten of the U.K. Merchant claimants. Three of the U.K. Merchant claimants appealed the judgment, and these appeals were combined with Mastercard’s appeal of a 2016 judgment in favor of one U.K. merchant. In July 2018, the U.K. appellate court heard the appeals of the four merchant and ruled against both Mastercard and Visa on two of the three legal issues being considered. The parties appealed the rulings to the U.K. Supreme Court. In June 2020, the U.K. Supreme Court ruled against Mastercard and Visa with respect to one of the liability issues being considered by the Court related to U.K. domestic interchange fees. Additionally, the U.K Supreme Court set out the legal standard that should be applied by lower trial courts with respect to determining whether interchange was exemptible under applicable law, and provided guidance to lower courts with regard to the legal standard that should be applied in assessing merchants’ damages claims. The U.K. Supreme Court sent one of the four merchant cases back to the trial court for a determination of liability and damages issues and sent the remaining three merchant cases back to the trial court for a determination of damages issues only. A hearing in one of these merchant cases on liability and damages issues is expected to be scheduled for the fourth quarter of 2021, while a trial on damages for the other three merchant claims is not expected to occur until 2023.

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. The majority of these merchant claims generally had been stayed pending the decision of the U.K. Supreme Court, and a number of those matters are now progressing with motion practice and discovery. In one of the actions involving multiple merchant plaintiff claims, the court has scheduled for May 2021 argument related to the plaintiffs’ motion for summary judgment on certain liability issues. Mastercard incurred charges of $22 million during the second quarter of 2020 to reflect both the estimated attorneys’ fees incurred by the four merchant claimants in the U.K. Supreme Court appeal, as well as settlements with a number of Pan-European merchants.

In September 2016, a proposed collective action was filed in the United Kingdom on behalf of U.K. consumers seeking damages for intra-EEA and domestic U.K. interchange fees that were allegedly passed on to consumers by merchants between 1992 and 2008. The complaint, which seeks to leverage the European Commission’s 2007 decision on intra-EEA interchange fees, claims damages in an amount that exceeds £14 billion (approximately $19 billion as of March 31, 2021). In July 2017, the trial court denied the plaintiffs’ application for the case to proceed as a collective action. In April 2019, the U.K. appellate court granted the plaintiffs’ appeal of the trial court’s decision and sent the case back to the trial court for a re-hearing on the plaintiffs’ collective action application. In December 2020, the U.K. Supreme Court rejected Mastercard’s appeal of this ruling. In March 2021, the trial court held a re-hearing on the plaintiffs’ collective action application.

ATM Non-Discrimination Rule Surcharge Complaints

In October 2011, a trade association of independent Automated Teller Machine (“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 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 putative classes of users of ATM services (the “ATM Consumer Complaints”). The claims in these actions largely mirror the allegations made in the ATM Operators Complaint, although these complaints seek damages on behalf of consumers of ATM services who pay allegedly inflated ATM fees at both bank and non-bank ATM operators as a result of the defendants’ ATM rules. 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.

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In January 2012, the plaintiffs in the ATM Operators Complaint and the ATM Consumer Complaints filed amended class action complaints that largely mirror their prior complaints. In February 2013, the district court granted Mastercard’s motion to dismiss the complaints for failure to state a claim. On appeal, the Court of Appeals reversed the district court’s order in August 2015 and sent the case back for further proceedings. In September 2019, the plaintiffs filed their motions for class certification in which the plaintiffs, in aggregate, allege over $1 billion in damages against all of the defendants. Mastercard intends to vigorously defend against both the plaintiffs’ liability and damages claims and has opposed class certification. Briefing on class certification is complete.

U.S. Liability Shift Litigation

In March 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 allege 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 seek treble damages, attorney’s fees and costs and an injunction against future violations of governing law, and the defendants have filed a motion to dismiss. In September 2016, the district court denied the Network Defendants’ motion to dismiss the complaint, but granted such a motion for EMVCo and the Bank Defendants. In May 2017, the district court transferred the case to New York so that discovery could be coordinated with the U.S. merchant class interchange litigation described above. In August 2020, the district court issued an order granting the plaintiffs’ request for class certification. In January 2021, the Network Defendants’ request for permission to appeal the district court’s certification decision to the appellate court was denied. The case is proceeding with substantive expert discovery. The plaintiffs’ have submitted expert reports that allege aggregate damages in excess of $1 billion against the four Network Defendants. The Network Defendants have submitted expert reports rebutting both liability and damages.

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 June 2018, the district court granted Mastercard’s motion to stay the proceedings until the Federal Communications Commission makes a decision on the application of the TCPA to online fax services. In December 2019, the FCC issued a declaratory ruling clarifying that the TCPA does not apply to faxes sent to online fax services that are received via e-mail. As a result of the ruling, the stay of the litigation was lifted in January 2020. In January 2021, the magistrate judge serving on the district court issued an opinion recommending that the district court judge deny plaintiffs’ class certification motion. In light of an appellate court decision, issued subsequent to the magistrate’s recommendation, the district court judge has instructed the parties to re-brief the motion for class certification.

U.S. Federal Trade Commission Investigation

In June 2020, the U.S. Federal Trade Commission’s Bureau of Competition (“FTC”) informed Mastercard that it has initiated a formal investigation into compliance with the Durbin Amendment to the Dodd-Frank Wall Street Reform and Consumer Protection Act. In particular, the investigation focuses on Mastercard’s compliance with the debit routing provisions of the Durbin Amendment. The FTC has issued a subpoena and Mastercard is cooperating with it in the investigation.

U.K. Prepaid Cards Matter

In 2019, Mastercard was informed by the U.K. Payment Systems Regulator (PSR) that Mastercard was a target of its confidential investigation into alleged anti-competitive conduct by public sector prepaid card program managers in the U.K. This matter focused exclusively on historic behavior. In March 2021, the PSR announced the resolution and settlement of this investigation. As part of the resolution, Mastercard has agreed to pay a maximum fine of £32 million. This matter has no prospective impact on Mastercard’s on-going business. In connection with this matter, in the fourth quarter of 2020, Mastercard recorded a litigation charge of $45 million.

Note 16. Settlement and Other Risk Management

Mastercard’s rules guarantee the settlement of many of the 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. While the term and amount of the guarantee are unlimited, the duration of settlement exposure is short term and typically limited to a few days.

Gross settlement exposure is estimated using the average daily payment volume during the three months prior to period end multiplied by the estimated number of days of exposure. The Company has global risk management policies and procedures, which include risk standards, to provide a framework for managing the Company’s settlement risk and exposure. In the event of a failed 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 failures.

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As part of its policies, Mastercard requires certain customers that are not in compliance with the Company’s risk standards to post collateral, such as cash, letters of credit, guarantees, or other risk mitigating arrangements. This requirement is based on a review of the individual risk circumstances for each customer. Mastercard monitors its credit risk portfolio on a regular basis and the adequacy of collateral on hand. Additionally, from time to time, the Company reviews its risk management methodology and standards. As such, the amounts of estimated settlement exposure are revised as necessary.

The Company’s estimated settlement exposure was as follows:


	March 31, 2021		December 31, 2020
	(in millions)
Gross settlement exposure	$	52,265	$	52,360
Collateral applied to settlement exposure	(6,128)		(6,021)
Net uncollateralized settlement exposure	$	46,137	$	46,339

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 of $368 million and $370 million at March 31, 2021 and December 31, 2020, respectively, of which $292 million and $294 million at March 31, 2021 and December 31, 2020, respectively, is mitigated by collateral arrangements. 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 17. 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 principally through the use of both foreign exchange derivative contracts and foreign currency denominated debt. 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.

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 subsequently reclassified to the consolidated statement of operations when the underlying hedged transactions impact earnings.

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. In 2019, the Company entered into treasury rate locks which are accounted for as cash flow hedges. In the first quarter of 2020, in connection with the issuance of the 2020 USD Notes, these contracts were settled at a loss of $136 million after tax, in accumulated other comprehensive income (loss). As of March 31, 2021, a cumulative loss of $132 million after tax, remains in accumulated other comprehensive income (loss) associated with these contracts and will be reclassified as an adjustment to interest expense over the respective terms of the 2020 USD Notes.

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 designated as an excluded component and recognized in general and administrative expenses on the consolidated statement of operations over the hedge period.

In 2015, the Company designated its €1.65 billion euro-denominated debt as a net investment hedge for a portion of its net investment in its European operations. As of March 31, 2021, the Company had a net foreign currency loss of $72 million after tax, in accumulated other comprehensive income (loss) associated with this hedging activity.

26 MASTERCARD MARCH 31, 2021 FORM 10-Q

PART I

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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


	March 31, 2021				December 31, 2020
	Notional		Fair Value		Notional		Fair Value
	(in millions)
Derivative assets:
Derivatives designated as hedging instruments
Foreign exchange contracts in a cash flow hedge 1	$	145	$	3	$	—	$	—
Foreign exchange contracts in a net investment hedge 1	$	1,812	$	47	$	—	$	—
Derivatives not designated as hedging instruments
Foreign exchange contracts 1	$	713	$	6	$	483	$	19
Total Derivative Assets	$	2,670	$	56	$	483	$	19

Derivative liabilities:
Derivatives designated as hedging instruments
Foreign exchange contracts in a cash flow hedge 2	$	52	$	—	$	—	$	—

Derivatives not designated as hedging instruments
Foreign exchange contracts 2	$	464	$	(7)	$	1,016	$	(28)
Total Derivative Liabilities	$	516	$	(7)	$	1,016	$	(28)

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

2.Foreign exchange derivative liabilities are included within other current liabilities on the consolidated balance sheet

The gain (loss) related to the Company's derivative financial instruments designated as hedging instruments are as follows:


	Unrealized Gain (Loss) Recognized in OCI					Realized Gain (Loss) Reclassified from AOCI
	Three Months Ended March 31,				Location of Gain (Loss) Reclassified from AOCI into Earnings	Three Months Ended March 31,
	2021		2020			2021		2020
	(in millions)					(in millions)
Derivative financial instruments in a cash flow hedge relationship:
Foreign exchange contracts	$	3	$	—	Net revenue	$	—	$	—
Interest rate contracts	$	—	$	(189)	Interest expense	$	(1)	$	—

Derivative financial instruments in a net investment hedge relationship:
Foreign exchange contracts 1	$	46	$	—

1.The amounts recognized in earnings related to forward points, the excluded component, was not material.

The Company estimates that $3 million, pre-tax, of the net deferred loss on cash flow hedges recorded in accumulated other comprehensive income (loss) at March 31, 2021 will be reclassified into the consolidated statement of operations within the next 12 months. The term of the foreign exchange derivative contracts designated in hedging relationships are generally less than 18 months.

MASTERCARD MARCH 31, 2021 FORM 10-Q 27

PART I

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The amount of gain (loss) recognized on the consolidated statement of operations for non-designated derivative contracts is summarized below:


	Three Months Ended March 31,
Derivatives not designated as hedging instruments:		2021		2020
		(in millions)
Foreign exchange derivative contracts
General and administrative		$	4	$	107

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. The Company’s derivative contracts are subject to enforceable master netting arrangements, which contain various netting and setoff provisions. 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.

28 MASTERCARD MARCH 31, 2021 FORM 10-Q

PART I

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Item 2. Management’s discussion and analysis of financial condition and results of operations

The following supplements management's discussion and analysis of Mastercard Incorporated for the year ended December 31, 2020 as contained in the Company's Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission on February 12, 2021. It also should be read in conjunction with the consolidated financial statements and notes of Mastercard Incorporated and its consolidated subsidiaries, including Mastercard International Incorporated (together, “Mastercard” or the “Company”), included elsewhere in this Report. Percentage changes provided throughout “Management’s Discussion and Analysis of Financial Condition and Results of Operations” were calculated on amounts rounded to the nearest thousand.

COVID-19

Since early 2020, 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 administration of vaccines.

The following table provides a summary of trends in our quarterly key metrics since early 2020 as compared to the respective year-ago periods to provide context of the effects of the pandemic:


	2020 Quarter Ended								2021 Quarter Ended
	March 31		June 30		September 30		December 31		March 31
	Increase/(Decrease)
Gross dollar volume (local currency basis)	8	%	(10)	%	1	%	1	%	8	%
Cross-border volume (local currency basis)	(1)	%	(45)	%	(36)	%	(29)	%	(17)	%
Switched transactions	13	%	(10)	%	5	%	4	%	9	%

While the COVID-19 outbreak has continued to affect our 2021 performance to date, growth rates for our key metrics continued to improve as we began to lap the initial effects of the pandemic in February 2021, as seen in the above table.

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 highly uncertain, and cannot be predicted at this time.

Financial Results Overview

The following table provides a summary of our key GAAP operating results, as reported:


	Three Months Ended March 31,						Increase/(Decrease)
		2021				2020
		($ in millions, except per share data)
Net revenue			$	4,155			$	4,009		4%
Operating expenses			$	1,958			$	1,798		9%
Operating income			$	2,197			$	2,211		(1)%
Operating margin			52.9		%		55.2		%	(2.3) ppt
Income tax expense			$	362			$	294		23%
Effective income tax rate			16.5		%		14.8		%	1.8 ppt
Net income			$	1,828			$	1,693		8%
Diluted earnings per share			$	1.83			$	1.68		9%
Diluted weighted-average shares outstanding			998				1,010			(1)%

MASTERCARD MARCH 31, 2021 FORM 10-Q 29

PART I

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following table provides a summary of our key non-GAAP operating results1, 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. In addition, we have presented growth rates, adjusted for the impact of currency:


	Three Months Ended March 31,		Increase/(Decrease)
			2021			2020			As adjusted	Currency-neutral
		($ in millions, except per share data)
Net revenue			$	4,155		$	4,009		4%	2%
Adjusted operating expenses			$	1,958		$	1,792		9%	7%
Adjusted operating margin			52.9		%	55.3		%	(2.4) ppt	(2.0) ppt
Adjusted effective income tax rate			16.9		%	14.9		%	2.0 ppt	2.0 ppt
Adjusted net income			$	1,741		$	1,844		(6)%	(6)%
Adjusted diluted earnings per share			$	1.74		$	1.83		(5)%	(5)%

Note: Tables may not sum due to rounding.

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

Key highlights for the three months ended March 31, 2021, versus the comparable period in 2020, were as follows:


Net revenue









Three Months Ended March 31, 2021		Net revenue increased 2% on a currency-neutral basis, and includes a 1 percentage point benefit from acquisitions. The primary drivers of net revenue were:
GAAP	Non-GAAP (currency-neutral)
up 4%	up 2%	- Gross dollar volume growth of 8% on a local currency basis
		- Switched transactions growth of 9%
		- Other revenues growth of 27% on both a reported and currency-neutral basis, which
		includes 3 percentage points of growth due to acquisitions. The remaining growth
		was driven primarily by our Cyber & Intelligence and Data & Services solutions.
		These increases to net revenue were partially offset by:
		- Cross-border volume decline of 17% on a local currency basis
		- Rebates and incentives growth of 6%, or 4% on a currency-neutral basis


Operating expenses	Adjusted operating expenses




Three Months Ended March 31, 2021		Adjusted operating expenses increased 7% on a currency-neutral basis, which included a 4 percentage point increase due to acquisitions and a 3 percentage point increase related to the differential in hedging gains and losses versus the prior period. Excluding these items, expenses were flat.
GAAP	Non-GAAP (currency-neutral)
up 9%	up 7%


Effective income tax rate	Adjusted effective income tax rate




Three Months Ended March 31, 2021		Adjusted effective income tax rate of 16.9% was higher than prior year primarily due to lower discrete benefits related to share-based payments.
GAAP	Non-GAAP (currency-neutral)
16.5%	16.9%

Other financial highlights for the three months ended March 31, 2021 were as follows:

•We generated net cash flows from operations of $1.5 billion.

•We completed the acquisition of a business for total consideration of $3.6 billion.

•We repurchased 3.9 million shares of our common stock for $1.4 billion and paid dividends of $0.4 billion.

•We completed a debt offering for an aggregate principal amount of $1.3 billion.

30 MASTERCARD MARCH 31, 2021 FORM 10-Q

PART I

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Non-GAAP Financial Information

Non-GAAP financial information is defined as a numerical measure of a company’s performance that excludes or includes amounts so as to be different than the most comparable measure calculated and presented in accordance with accounting principles generally accepted in the United States (“GAAP”). Our non-GAAP financial measures exclude the impact of gains and losses on our equity investments which primarily includes mark-to-market fair value adjustments, impairments and gains and losses upon disposition, as well as the related tax impacts. Our non-GAAP financial measures also exclude the impact of special items, where applicable, which represent litigation judgments and settlements and certain one-time items, as well as the related tax impacts (“Special Items”). Our non-GAAP financial measures for the comparable periods exclude the impact of the following:

Gains and Losses on Equity Investments

•In the three months ended March 31, 2021 and 2020, we recorded net gains of $94 million ($87 million after tax, or $0.09 per diluted share) and net losses of $174 million ($146 million after tax, or $0.14 per diluted share), respectively, primarily related to unrealized fair market value adjustments on marketable and non-marketable equity securities.

Special Items

Litigation provisions

•In the first quarter of 2020, we recorded pre-tax charges of $6 million ($5 million after tax, and an immaterial impact per diluted share) related to litigation settlements with U.K. merchants.

See Note 6 (Investments) and Note 15 (Legal and Regulatory Proceedings) to the consolidated financial statements included in Part I, Item 1 for further discussion. We excluded these items because management evaluates the underlying operations and performance of the Company separately from these recurring and nonrecurring items.

We believe that the non-GAAP financial measures presented facilitate an understanding of our operating performance and provide a meaningful comparison of our results between periods. We use non-GAAP financial measures to, among other things, evaluate our ongoing operations in relation to historical results, for internal planning and forecasting purposes and in the calculation of performance-based compensation.

Currency-neutral Growth Rates

We present growth rates adjusted for the impact of currency which is a non-GAAP financial measure. Currency-neutral growth rates are calculated by remeasuring the prior period’s results using the current period’s exchange rates for both the translational and transactional impacts on operating results as well as removing the related impact of our designated foreign exchange derivative contracts related to our cash flow hedging activities. The impact of currency translation represents the effect of translating operating results where the functional currency is different than our U.S. dollar reporting currency. The impact of the transactional currency represents the effect of converting revenue and expenses occurring in a currency other than the functional currency of the entity. The impact of the related realized gains and losses resulting from our designated cash flow foreign exchange derivative contracts is recognized in the respective financial statement line item on the statement of operations when the underlying forecasted transactions impact earnings. We believe the presentation of currency-neutral growth rates provides relevant information to facilitate an understanding of our operating results.

The translational and transactional impact of currency and the related impact of our designated foreign exchange cash flow hedging activities (“Currency impact”) has been excluded from our currency-neutral growth rates and has been identified in our drivers of change impact tables. See “Foreign Currency - Currency Impact” for further information on our currency impacts and “Financial Results - Revenue and Operating Expenses” for our drivers of change impact tables.

Net revenue, operating expenses, operating margin, other income (expense), effective income tax rate, net income and diluted earnings per share adjusted for the impact of gains and losses on our equity investments, Special Items and/or the impact of currency, are non-GAAP financial measures and should not be relied upon as substitutes for measures calculated in accordance with GAAP.

MASTERCARD MARCH 31, 2021 FORM 10-Q 31

PART I

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following tables reconcile our reported financial measures calculated in accordance with GAAP to the respective non-GAAP adjusted financial measures:


	Three Months Ended March 31, 2021
	Operating expenses		Operating margin		Other income (expense)		Effective income tax rate		Net income		Diluted earnings per share
	($ in millions, except per share data)
Reported - GAAP	$	1,958	52.9	%	$	(7)	16.5	%	$	1,828	$	1.83
(Gains) losses on equity investments	**		**		(94)		0.4	%	(87)		(0.09)

Non-GAAP	$	1,958	52.9	%	$	(101)	16.9	%	$	1,741	$	1.74


	Three Months Ended March 31, 2020
	Operating expenses		Operating margin		Other income (expense)		Effective income tax rate		Net income		Diluted earnings per share
	($ in millions, except per share data)
Reported - GAAP	$	1,798	55.2	%	$	(224)	14.8	%	$	1,693	$	1.68
(Gains) losses on equity investments	**		**		174		0.1	%	146		0.14
Litigation provisions	(6)		0.2	%	**		—	%	5		—
Non-GAAP	$	1,792	55.3	%	$	(50)	14.9	%	$	1,844	$	1.83

Note: Tables may not sum due to rounding.

** Not applicable

The following tables represent the reconciliation of our growth rates reported under GAAP to our non-GAAP growth rates:


	Three Months Ended March 31, 2021 as compared to the Three Months Ended March 31, 2020
	Increase/(Decrease)
	Net revenue	Operating expenses	Operating margin	Effective income tax rate	Net income	Diluted earnings per share
Reported - GAAP	4%	9%	(2.3) ppt	1.8 ppt	8%	9%
(Gains) losses on equity investments	**	**	**	0.3 ppt	(13)%	(13)%
Litigation provisions	**	—%	(0.2) ppt	— ppt	—%	(1)%
Non-GAAP	4%	9%	(2.4) ppt	2.0 ppt	(6)%	(5)%
Currency impact 1	(1)%	(3)%	0.5 ppt	— ppt	(1)%	(1)%
Non-GAAP - currency-neutral	2%	7%	(2.0) ppt	2.0 ppt	(6)%	(5)%

Note: Tables may not sum due to rounding.

** Not applicable

1 See “Non-GAAP Financial Information” for further information on Currency impact.

Key Metrics

In addition to the financial measures described above in “Financial Results Overview”, we review the following metrics to evaluate and identify trends in our business, measure our performance, prepare financial projections and make strategic decisions. We believe that the key metrics presented facilitate an understanding of our operating and financial performance and provide a meaningful comparison of our results between periods.

Gross Dollar Volume (“GDV”)1 measures dollar volume of activity on cards carrying our brands during the period, on a local currency basis and U.S. dollar-converted basis. GDV represents purchase volume plus cash volume and includes the impact of balance transfers and convenience checks; “purchase volume” means the aggregate dollar amount of purchases made with Mastercard-branded cards for the relevant period; and “cash volume” means the aggregate dollar amount of cash disbursements and includes the impact of balance transfers and convenience checks obtained with Mastercard-branded cards for the relevant period. Information denominated in U.S. dollars relating to GDV is calculated by applying an established U.S. dollar/local currency exchange rate for each local currency in which Mastercard volumes are reported. These exchange rates are calculated on a quarterly basis using the average exchange rate for each quarter. Mastercard reports period-over-period rates of change in purchase volume and cash volume on the basis of local currency information, in order to eliminate the impact of changes in the value of currencies against the U.S. dollar in calculating such rates of change.

Cross-border Volume2 measures cross-border dollar volume initiated and switched through our network during the period, on a local currency basis and U.S. dollar-converted basis, for all Mastercard-branded programs.

32 MASTERCARD MARCH 31, 2021 FORM 10-Q

PART I

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Switched Transactions2 measures the number of transactions switched by Mastercard. We define transactions switched as the number of transactions initiated and switched through our network during the period.

Operating Margin measures how much profit we make on each dollar of sales after our operating costs but before other income (expense) and income tax expense. Operating margin is calculated by dividing our operating income by net revenue.

1 Data used in the calculation of GDV is provided by Mastercard customers and is subject to verification by Mastercard and partial cross-checking against information provided by Mastercard’s transaction switching systems. All data is subject to revision and amendment by Mastercard or Mastercard’s customers.

2 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.

Foreign Currency

Currency Impact

Our primary revenue functional currencies are the U.S. dollar, euro, Brazilian real and the British pound. Our overall operating results are impacted by currency translation, which represents the effect of translating operating results where the functional currency is different than our U.S. dollar reporting currency.

Our operating results are also impacted by transactional currency. The impact of the transactional currency represents the effect of converting revenue and expense transactions occurring in a currency other than the functional currency. Changes in currency exchange rates directly impact the calculation of gross dollar volume (“GDV”) and gross euro volume (“GEV”), which are used in the calculation of our domestic assessments, cross-border volume fees and certain volume-related rebates and incentives. In most non-European regions, GDV is calculated based on local currency spending volume converted to U.S. dollars using average exchange rates for the period. In Europe, GEV is calculated based on local currency spending volume converted to euros using average exchange rates for the period. As a result, certain of our domestic assessments, cross-border volume fees and volume-related rebates and incentives are impacted by the strengthening or weakening of the U.S. dollar versus non-European local currencies and the strengthening or weakening of the euro versus other European local currencies. For example, our billing in Australia is in the U.S. dollar, however, consumer spend in Australia is in the Australian dollar. The currency transactional impact of converting Australian dollars to our U.S. dollar billing currency will have an impact on the revenue generated. The strengthening or weakening of the U.S. dollar is evident when GDV growth on a U.S. dollar-converted basis is compared to GDV growth on a local currency basis. For the three months ended March 31, 2021, GDV on a U.S. dollar-converted basis and on a local currency basis increased 9% and 8%, respectively, versus the comparable period in 2020. Further, the impact from transactional currency occurs in transaction processing revenue, other revenue and operating expenses when the local currency of these items is different than the functional currency of the entity.

Through December 31, 2020, our approach to manage our transactional currency exposure consisted of hedging a portion of anticipated revenues impacted by transactional currencies by entering into foreign exchange derivative contracts, and recording the related changes in fair value in general and administrative expenses on the consolidated statement of operations. During the first quarter of 2021, we started to formally designate certain newly-executed foreign exchange derivative contracts, which meet the established accounting criteria, as cash flow hedges. Gains and losses resulting from changes in fair value of these designated contracts will be deferred in accumulated other comprehensive income (loss) and subsequently recognized in the respective financial statement line item on the statement of operations when the underlying forecasted transactions impact earnings.

Foreign Exchange Activity

We incur foreign currency gains and losses from remeasuring monetary assets and liabilities, including settlement receivables and payables with our customers, that are denominated in a currency other than the functional currency of the entity. To manage this foreign exchange risk, we may enter into foreign exchange derivative contracts to economically hedge the foreign currency exposure of a portion of our nonfunctional monetary assets and liabilities. The gains or losses resulting from the changes in fair value of these contracts are intended to reduce the potential effect of the underlying hedged exposure and are recorded net within general and administrative expenses on the consolidated statement of operations. The impact of foreign exchange activity, including the related hedging activities, has not been eliminated in our currency-neutral results.

Our foreign exchange risk management activities are discussed further in Note 17 (Derivative and Hedging Instruments) to the consolidated financial statements included in Part I, Item 1.

Risk of Currency Devaluation

We are exposed to currency devaluation in certain countries. In addition, we are subject to exchange control regulations that restrict the conversion of financial assets into U.S. dollars. While these revenues and assets are not material to us on a consolidated basis, we can be negatively impacted should there be a continued and sustained devaluation of local currencies relative to the U.S. dollar and/or a continued and sustained deterioration of economic conditions in these countries.

MASTERCARD MARCH 31, 2021 FORM 10-Q 33

PART I

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Financial Results

Revenue

For the three months ended March 31, 2021, gross revenue increased 4%, or 3% on a currency-neutral basis, versus the comparable period in 2020, which includes growth of 1% percentage points from acquisitions. The remaining increase was primarily driven by growth in gross dollar volume activity, number of switched transactions and our value-added products and services, partially offset by a decrease in our cross-border volumes.

Rebates and incentives increased 6%, or 4% on a currency-neutral basis, for the three months ended March 31, 2021, versus the comparable period in 2020, primarily due to new and renewed deals and increased volumes, partially offset by mix.

Net revenue increased 4%, or 2% on a currency-neutral basis, for the three months ended March 31, 2021, versus the comparable period in 2020, and includes 1 percentage point of growth from our acquisitions.

The components of net revenue were as follows:


	Three Months Ended March 31,					Increase/ (Decrease)
		2021			2020
			($ in millions)
Domestic assessments			$	1,798		$	1,683	7%
Cross-border volume fees			932			1,217		(23)%
Transaction processing			2,351			2,200		7%
Other revenues			1,347			1,062		27%
Gross revenue			6,428			6,162		4%
Rebates and incentives (contra-revenue)			(2,273)			(2,153)		6%
Net revenue			$	4,155		$	4,009	4%

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


	Three Months Ended March 31, 2021
	Operational			Acquisitions	Currency Impact 3				Total
Domestic assessments	8	%	1		—	%	(1)	%		7	%
Cross-border volume fees	(26)	%	1		—	%	2	%		(23)	%
Transaction processing	4	%	1		—	%	2	%		7	%
Other revenues	23	%	2		3	%	—	%		27	%
Rebates and incentives (contra-revenue)	4	%			—	%	1	%		6	%
Net revenue	1	%			1	%	1	%		4	%

Note: Table may not sum due to rounding.

1 Includes impacts from our key metrics, other non-volume based fees, pricing and mix.

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

3 Includes the translational and transactional impact of currency and the related impact of our designated foreign exchange cash flow hedging activities.

34 MASTERCARD MARCH 31, 2021 FORM 10-Q

PART I

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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


	Three Months Ended March 31,
		2021	2020
	Increase/(Decrease)
			USD	Local	USD	Local
Mastercard-branded GDV 1			9%	8%	6%	8%
Asia Pacific/Middle East/Africa			10%	5%	3%	6%
Canada			9%	2%	3%	4%
Europe			8%	5%	9%	12%
Latin America			(3)%	6%	2%	12%
United States			14%	14%	6%	6%
Cross-border volume 1			(13)%	(17)%	(3)%	(1)%

1 Excludes volume generated by Maestro and Cirrus cards.


	Three Months Ended March 31,
		2021	2020
	Increase/(Decrease)
Switched transactions		9%	13%

Operating Expenses

For the three months ended March 31, 2021, operating expenses increased 9%, or 7% on a currency-neutral basis, versus the comparable period in 2020, which includes a 4 percentage point increase from acquisitions. Excluding acquisitions, expenses increased primarily due to higher personnel costs to support our continued investment in our strategic initiatives and a 3 percentage point increase due to the lapping of a favorable hedging gain from the prior year, partially offset by reduced spending on advertising and marketing, travel and professional fees.

The components of operating expenses were as follows:


	Three Months Ended March 31,					Increase/ (Decrease)
		2021			2020
			($ in millions)
General and administrative			$	1,676		$	1,494	12%
Advertising and marketing			119			154		(22)%
Depreciation and amortization			163			144		13%
Provision for litigation			—			6		**
Total operating expenses			1,958			1,798		9%
Special Items 1			—			(6)		**
Adjusted total operating expenses (excluding Special Items 1)			$	1,958		$	1,792	9%

Note: Table may not sum due to rounding

** Not meaningful.

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

MASTERCARD MARCH 31, 2021 FORM 10-Q 35

PART I

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following table summarizes the drivers of changes in operating expenses:


	Three Months Ended March 31, 2021
	Operational	Special Items 1	Acquisitions	Currency Impact 2	Total
General and administrative	6%	**	3%	3%	12%
Advertising and marketing	(25)%	**	1%	2%	(22)%
Depreciation and amortization	2%	**	9%	2%	13%
Provision for litigation	**	**	**	**	**
Total operating expenses	3%	**	4%	3%	9%

Note: Tables may not sum due to rounding.

** Not meaningful.

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

2 Includes translational and transactional impact of currency.

General and Administrative

For the three months ended March 31, 2021, general and administrative expenses increased 12%, or 9% on a currency-neutral basis, versus the comparable period in 2020. Current period results include growth of 3 percentage points from acquisitions. Excluding acquisitions, expenses increased primarily due to an increase in personnel costs to support our continued investment in our strategic initiatives and a 4 percentage point increase due to the lapping of a favorable hedging gain from the prior year, partially offset by reduced spending on travel.

The components of general and administrative expenses were as follows:


	Three Months Ended March 31,					Increase/(Decrease)
		2021			2020
			($ in millions)
Personnel			$	1,104		$	962	15%
Professional fees			97			93		4%
Data processing and telecommunications			200			179		12%
Foreign exchange activity 1			8			(52)		**
Other			267			312		(15)%
Total general and administrative expenses			$	1,676		$	1,494	12%

Note: Table may not sum due to rounding.

** Not meaningful.

1 Foreign exchange activity includes gains and losses on foreign exchange derivative contracts and the impact of remeasurement of assets and liabilities denominated in foreign currencies. See Note 17 (Derivative and Hedging Instruments) to the consolidated financial statements included in Part I, Item 1 for further discussion.

Advertising and Marketing

Advertising and marketing expenses decreased 22%, or 24% on a currency-neutral basis, respectively, for the three months ended March 31, 2021, versus the comparable period in 2020, primarily due to lower advertising and sponsorship spend in response to COVID-19.

Depreciation and Amortization

For the three months ended March 31, 2021, depreciation and amortization expenses increased 13%, or 11% on a currency-neutral basis, respectively, versus the comparable period in 2020, which includes growth of 9 percentage points from acquisitions.

Provision for Litigation

For the three months ended March 31, 2021, there were no litigation charges. For the three months ended March 31, 2020, we recorded $6 million in provisions for litigation settlements with U.K. merchants. See “Non-GAAP Financial Information” in this section for further discussion.

36 MASTERCARD MARCH 31, 2021 FORM 10-Q

PART I

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Other Income (Expense)

For the three months ended March 31, 2021, other income (expense) was favorable, versus the comparable period in 2020, primarily due to net gains in the current period versus net losses in prior period related to unrealized fair market value adjustments on marketable and non-marketable equity securities, partially offset by increased interest expense related to our recent debt issuances and a decrease in our investment income.

The components of our other income (expense) were as follows:


	Three Months Ended March 31,					Increase/ (Decrease)
		2021			2020
			($ in millions)
Investment income			$	1		$	16	**
Gains (losses) on equity investments, net			94			(174)		**
Interest expense			(107)			(69)		**
Other income (expense), net			5			3		**
Total other income (expense)			$	(7)		$	(224)	**

Note: Table may not sum due to rounding.

** Not meaningful.

Income Taxes

For the three months ended March 31, 2021, the effective income tax rate was 16.5% versus 14.8%, and the adjusted effective income tax rate was 16.9% versus 14.9%, for the comparable period in 2020. Both the as reported and as adjusted effective income tax rates increased primarily due to lower discrete benefits related to share-based payments.

Liquidity and Capital Resources

We rely on existing liquidity, cash generated from operations and access to capital to fund our global operations, capital expenditures, investments in our business and current and potential obligations. The following table summarizes the cash, cash equivalents, investments and credit available to us:


	March 31, 2021		December 31, 2020
	(in billions)
Cash, cash equivalents and investments 1	$	7.7	$	10.6
Unused line of credit	6.0		6.0

1 Investments include available-for-sale securities and held-to-maturity securities. This amount excludes restricted cash and restricted cash equivalents of $2.4 billion and $2.3 billion at March 31, 2021 and December 31, 2020, respectively.

We believe that our existing cash, cash equivalents and investment securities balances, our cash flow generating capabilities, and our access to capital resources are sufficient to satisfy our future operating cash needs, capital asset purchases, outstanding commitments and other liquidity requirements associated with our existing operations and potential obligations which include litigation provisions and credit and settlement exposure.

Our liquidity and access to capital could be negatively impacted by global credit market conditions. We guarantee the settlement of many of the transactions between our customers. Historically, payments under these guarantees have not been significant; however, historical trends may not be an indication of potential future losses. The risk of loss on these guarantees is specific to individual customers, but may also be driven by regional or global economic conditions, including, but not limited to the health of the financial institutions in a country or region. See Note 16 (Settlement and Other Risk Management) to the consolidated financial statements in Part I, Item 1 for a description of these guarantees.

Our liquidity and access to capital could also be negatively impacted by the outcome of any of the legal or regulatory proceedings to which we are a party. For additional discussion of these and other risks facing our business, see Part I, Item 1A - Risk Factors and Part II, Item 7 (Business Environment) of our Annual Report on Form 10-K for the year ended December 31, 2020 and Note 15 (Legal and Regulatory Proceedings) to the consolidated financial statements included in Part I, Item 1.

MASTERCARD MARCH 31, 2021 FORM 10-Q 37

PART I

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Cash Flow

The table below shows a summary of the cash flows from operating, investing and financing activities:


	Three Months Ended March 31,
	2021		2020
	(in millions)
Net cash provided by operating activities	$	1,463	$	1,859
Net cash used in investing activities	(3,560)		(507)
Net cash (used in) provided by financing activities	(606)		2,100

Net cash provided by operating activities decreased $396 million for the three months ended March 31, 2021, versus the comparable period in 2020, primarily due to timing of settlement with customers and higher customer incentives paid, partially offset by timing of estimated tax payments.

Net cash used in investing activities increased $3,053 million for the three months ended March 31, 2021, versus the comparable period in 2020, primarily due to higher current year acquisition of businesses.

During the three months ended March 31, 2021 we had a net use of cash for financing activities, versus the comparable period in 2020, when we had net cash provided by financing activities. This change was primarily due to lower net debt proceeds in the current period and higher dividends paid.

Debt and Credit Availability

In March 2021, we issued $600 million principal amount of notes due March 2031 and $700 million principal amount of notes due March 2051 (collectively the “2021 USD Notes”). Our total debt outstanding was $13.9 billion and $12.7 billion at March 31, 2021 and December 31, 2020, respectively, with the earliest maturity of $650 million of principal occurring in November 2021. The proceeds of the 2021 USD Notes due March 2031 are to be used to fund eligible green and social projects, examples of which are described in the Use of Proceeds section of the Prospectus Supplement filed on March 4, 2021. All other notes are to be used for general corporate purposes.

As of March 31, 2021, we have a commercial paper program (the “Commercial Paper Program”), under which we are authorized to issue up to $6 billion in outstanding notes, with maturities up to 397 days from the date of issuance. In conjunction with the Commercial Paper Program, we have a committed unsecured $6 billion revolving credit facility (the “Credit Facility”) which expires in November 2025.

Borrowings under the Commercial Paper Program and the Credit Facility are to provide liquidity for general corporate purposes, including providing liquidity in the event of one or more settlement failures by our customers. In addition, we may borrow and repay amounts under these facilities for business continuity purposes. We had no borrowings outstanding under the Commercial Paper Program or the Credit Facility at March 31, 2021 and December 31, 2020.

See Note 10 (Debt) to the consolidated financial statements included in Part I, Item 1 for further discussion on our debt and Note 15 (Debt) to the consolidated financial statements included in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2020 for further discussion on our debt, the Commercial Paper Program and the Credit Facility.

Dividends and Share Repurchases

We have historically paid quarterly dividends on our outstanding Class A common stock and Class B common stock. Subject to legally available funds, we intend to continue to pay a quarterly cash dividend. The declaration and payment of future dividends is at the sole discretion of our Board of Directors after taking into account various factors, including our financial condition, operating results, available cash and current and anticipated cash needs.

Aggregate payments for quarterly dividends totaled $439 million for the three months ended March 31, 2021.

On December 8, 2020, our Board of Directors declared a quarterly cash dividend of $0.44 per share paid on February 9, 2021 to holders of record on January 8, 2021 of our Class A common stock and Class B common stock. The aggregate amount of this dividend was $439 million.

On February 8, 2021, our Board of Directors declared a quarterly cash dividend of $0.44 per share payable on May 7, 2021 to holders of record on April 9, 2021 of our Class A common stock and Class B common stock. The aggregate amount of this dividend is estimated to be $434 million.

Repurchased shares of our common stock are considered treasury stock. In December 2020 and 2019, our Board of Directors approved share repurchase programs authorizing us to repurchase up to $6.0 billion and $8.0 billion, respectively, of our Class A common stock under each plan. The program approved in 2020 will become effective after completion of the share repurchase program authorized in 2019. The timing and actual number of additional shares repurchased will depend on a variety of factors, including cash requirements to meet the

38 MASTERCARD MARCH 31, 2021 FORM 10-Q

PART I

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

operating needs of the business, legal requirements, as well as the share price and economic and market conditions. The following table summarizes our share repurchase authorizations and repurchase activity of our Class A common stock through March 31, 2021, under the plan approved in 2019:




	(in millions, except average price data)
Remaining authorization at December 31, 2020		$	9,831
Dollar value of shares repurchased during the three months ended March 31, 2021		$	1,356
Remaining authorization at March 31, 2021		$	8,475
Shares repurchased during the three months ended March 31, 2021		3.9
Average price paid per share during the three months ended March 31, 2021		$	346.49

See Note 11 (Stockholders' Equity) to the consolidated financial statements included in Part I, Item 1 for further discussion.

Recent Accounting Pronouncements

For a description of recent accounting pronouncements, if any, and the potential impact of these pronouncements refer to Note 1 (Summary of Significant Accounting Policies) to the consolidated financial statements included in Part I, Item 1.

Item 3. 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.

Foreign currency and interest rate exposures are managed through our risk management activities, which is discussed further in Note 17 (Derivative and Hedging Instruments) to the consolidated financial statements included in Part I, Item 1.

Foreign Exchange Risk

We enter into foreign exchange derivative contracts to manage currency exposure associated with anticipated receipts and disbursements occurring in a currency other than the functional currency of the entity. We may also enter into foreign currency derivative contracts to offset possible changes in value of assets and liabilities due to foreign exchange fluctuations. The objective of these activities is to reduce our exposure to transaction gains and losses resulting from fluctuations of foreign currencies against our functional and reporting currencies, principally the U.S. dollar and euro. The effect of a hypothetical 10% adverse change in the value of the functional currencies could result in a fair value loss of approximately $63 million and $58 million on our foreign exchange derivative contracts outstanding at March 31, 2021 and December 31, 2020, respectively, before considering the offsetting effect of the underlying hedged activity.

We are also subject to foreign exchange risk as part of our daily settlement activities. To manage this risk, we enter into 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 when a payment transaction takes place and the subsequent settlement with our customers. The effect of a hypothetical 10% adverse change in the value of the functional currencies could result in a fair value loss of approximately $33 million and $23 million on our short duration foreign exchange derivative contracts outstanding at March 31, 2021 and December 31, 2020. respectively.

We are further exposed to foreign exchange rate risk related to translation of our foreign operating results where the functional currency is different than our U.S. dollar reporting currency. To manage this risk, we may enter into foreign exchange derivative contracts to hedge a portion of our net investment in foreign subsidiaries. The effect of a hypothetical 10% adverse change in the value of the U.S. dollar could result in a fair value loss of approximately $196 million on our foreign exchange derivative contracts designated as a net investment hedge at March 31, 2021, before considering the offsetting effect of the underlying hedged activity. The Company did not have similar foreign exchange derivative contracts outstanding as of December 31, 2020.

Interest Rate Risk

Our available-for-sale debt investments include fixed and variable rate securities that are sensitive to interest rate fluctuations. Our policy is to invest in high quality securities, while providing adequate liquidity and maintaining diversification to avoid significant exposure. A hypothetical 100 basis point adverse change in interest rates would not have a material impact to the fair value of our investments at March 31, 2021 and December 31, 2020.

MASTERCARD MARCH 31, 2021 FORM 10-Q 39

PART I

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Item 4. Controls and procedures

Evaluation of Disclosure Controls and Procedures

Our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) are designed to ensure that information that is required to be disclosed in the reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission and to ensure that information required to be disclosed is accumulated and communicated to management, including our Chief Executive Officer and our Chief Financial Officer, to allow timely decisions regarding disclosure. The Chief Executive Officer and the Chief Financial Officer, with assistance from other members of management, have reviewed the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Report and, based on their evaluation, have concluded that the disclosure controls and procedures were effective as of such date.

Changes in Internal Control over Financial Reporting

There was no change in Mastercard’s internal control over financial reporting that occurred during the three months ended March 31, 2021 that has materially affected, or is reasonably likely to materially affect, Mastercard's internal control over financial reporting.

40 MASTERCARD MARCH 31, 2021 FORM 10-Q

PART II

Item 1. Legal proceedings

Item 1A. Risk factors

Item 2. Unregistered sales of equity securities and use of proceeds

Item 5. Other information

Item 6. Exhibits

Signatures

PART II

ITEM 1. LEGAL PROCEEDINGS

Item 1. Legal proceedings

Refer to Note 15 (Legal and Regulatory Proceedings) to the consolidated financial statements included in Part I, Item 1.

Item 1A. Risk factors

For a discussion of our risk factors, see Part I, Item 1A - Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2020.

Item 2. Unregistered sales of equity securities and use of proceeds

Issuer Purchases of Equity Securities

During the first quarter of 2021, we repurchased 3.9 million shares for $1.4 billion at an average price of $346.49 per share of Class A common stock. See Note 11 (Stockholders' Equity) to the consolidated financial statements included in Part I, Item 1 for further discussion with respect to our share repurchase programs. The following table presents our repurchase activity on a cash basis during the first quarter of 2021:


Period	Total Number of Shares Purchased	Average Price Paid per Share (including commission cost)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Dollar Value of Shares that may yet be Purchased under the Plans or Programs 1
January 1 - 31	1,320,221	$	337.87	1,320,221	$	9,385,292,764
February 1 - 28	1,188,769	$	332.88	1,188,769	$	8,989,579,681
March 1 - 31	1,405,202	$	366.11	1,405,202	$	8,475,126,245
Total	3,914,192	$	346.49	3,914,192

1 Dollar value of shares that may yet be purchased under the repurchase programs is as of the end of the period.

Item 5. Other information

Pursuant to Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012, we hereby incorporate by reference herein the disclosure contained in Exhibit 99.1.

Item 6. Exhibits

Refer to the Exhibit Index included herein.

42 MASTERCARD MARCH 31, 2021 FORM 10-Q

PART II

EXHIBIT INDEX

Exhibit index


Exhibit Number						Exhibit Description
4.1						Officer’s Certificate of the Company, dated as of March 4, 2021 (incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K filed on March 4, 2021 (File No. 001-32877).
4.2						Form of Global Note representing the Company’s 1.900% Notes due 2031 (included in Officer’s Certificate of the Company, dated as of March 4, 2021) (incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K filed on March 4, 2021 (File No. 001-32877).
4.3						Form of Global Note representing the Company’s 2.950% Notes due 2051 (included in Officer’s Certificate of the Company, dated as of March 4, 2021) (incorporated by reference to Exhibit 4.1 of the Company’s Current Report on Form 8-K filed on March 4, 2021 (File No. 001-32877).
10.1+*						Form of Restricted Stock Unit Agreement for awards under 2006 Long Term Incentive Plan (effective for awards granted on and subsequent to March 1, 2021).
10.2+*						Form of Stock Option Agreement (effective for awards granted on and subsequent to March 1, 2021).
10.3+*						Form of Performance Unit Agreement (effective for awards granted on and subsequent to March 1, 2021).
10.4+*						Mastercard Senior Executive Annual Incentive Compensation Plan, as amended and restated effective April 9, 2021.
10.5+*						Amended and Restated Mastercard International Incorporated Executive Severance Plan, as amended and restated as of April 9, 2021.
31.1*						Certification of Michael Miebach , President and C hief Executive Officer, pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*						Certification of Sachin Mehra, Chief Financial Officer, pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*						Certific ation of Michael Miebach , President and C hief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*						Certification of Sachin Mehra, Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
99.1*						Disclosure pursuant to Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012.
101.INS						XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH*						XBRL Taxonomy Extension Schema Document
101.CAL*						XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*						XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*						XBRL Taxonomy Extension Label Linkbase Document
101.PRE*						XBRL Taxonomy Extension Presentation Linkbase Document

+ Management contracts or compensatory plans or arrangements.

* Filed or furnished herewith.

The agreements and other documents filed as exhibits to this Report are not intended to provide factual information or other disclosure other than with respect to the terms of the agreements or other documents themselves, and should not be relied upon for that purpose. In particular, any representations and warranties made by the Company in these agreements or other documents were made solely within the specific context of the relevant agreement or document and may not describe the actual state of affairs as of the date they were made or at any other time.

MASTERCARD MARCH 31, 2021 FORM 10-Q 43

SIGNATURES

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

MASTERCARD INCORPORATED

(Registrant)

Date:

April 29, 2021

By:

/S/ MICHAEL MIEBACH

Michael Miebach

President and Chief Executive Officer

(Principal Executive Officer)

Date:

April 29, 2021

By:

/S/ SACHIN MEHRA

Sachin Mehra

Chief Financial Officer

(Principal Financial Officer)

Date:

April 29, 2021

By:

/S/ SANDRA ARKELL

Sandra Arkell

Corporate Controller

(Principal Accounting Officer)

44 MASTERCARD MARCH 31, 2021 FORM 10-Q

EXHIBIT 10.1

FORM OF

RESTRICTED STOCK UNIT AGREEMENT

20__ GRANT

Name: xxxxxx

$ Granted: $ xxx,xxx

THIS AGREEMENT, dated as of March 1, 20__, (“Grant Date”) is between Mastercard Incorporated, a Delaware Corporation (“Company”), and you (the “Employee”). Capitalized terms that are used but not defined in this Agreement have the meanings given to them in the 2006 Long Term Incentive Plan, as amended (“Plan”).

WHEREAS, the Company has established the Plan, the terms of which Plan, but not the standard terms and conditions of Section 9.4, are made a part hereof;

WHEREAS, the Human Resources and Compensation Committee of the Board of Directors of the Company (“Committee”) has approved this grant under the terms of the Plan;

NOW, THEREFORE, the parties hereby agree as follows:

1. Grant of Units.

Subject to the terms and conditions of this Agreement and of the Plan, the Company hereby grants to the Employee <xxx> Units, as reflected in the Employee’s grant statement, the terms of which statement are incorporated as a part of this Agreement. The Units comprising this award will be recorded in an unfunded Units account in the Employee’s name maintained on the books of the Company (“Account”). Each Unit represents the right to receive one share of the Company’s $0.0001 par value Class A Common Stock (“Common Shares”) under the terms and conditions set forth below.

2. Vesting Schedule.


Vest Date			Vest Quantity
March 1, 20__			25%
March 1, 20__			25%
March 1, 20__			25%
March 1, 20__			25%

(a) Subject to (b), (c) and (d) below, the interest of the Employee in the Units shall vest 25 percent on each of the first, second, third and fourth anniversary of the Grant Date conditioned upon the Employee’s continued employment with the Company or an Affiliated Employer as of each such vesting date (collectively, the “Vesting Dates”). In the event of the Employee’s Termination of Employment with the Company or an Affiliated Employer for any reason other than as set forth in (b), (c) or (d), unvested Units shall be forfeited. A transfer of Employee’s employment among the Company and any Affiliated Employer shall not be treated as a Termination of Employment hereunder. As a condition of the Employee’s right to vest in the Units, the Employee shall be required to execute and comply with any Mastercard LTIP Non-Competition Agreement that the Company requires for the Employee to be eligible to participate in the Plan, and to execute any other documents required by the Committee pursuant to this Agreement. If the Employee has not executed and delivered to the Company any such required Mastercard LTIP Non-Competition Agreement by the date required by the Company, which will in no event be later than the first anniversary of the Grant Date or such earlier vesting event pursuant to (c) below, the unvested Units shall be forfeited.

(b) In the event that the Employee’s employment with the Company or an Affiliated Employer terminates by reason of the Employee’s death following the Grant Date, 100 percent of the Employee’s then unvested Units shall vest and be payable, as set forth in section 6(b). In the event of the Employee’s Termination of Employment with the Company or an Affiliated Employer due to Disability or Retirement seven months or longer after the Grant Date, unless circumstances exist at the time of Termination of Employment that would constitute Cause, unvested Units shall continue to vest as if there had been no Termination of Employment and shall be paid as set forth in section 6(a).

(c) In the event of the Employee’s Termination of Employment by the Company or an Affiliated Employer, or successor thereto, without Cause or due to a Job Elimination six months preceding or two years following a Change in Control, 100 percent of the Employee’s then unvested Units shall vest upon the later of the Employee’s termination date or the Change in Control and be payable in accordance with section 6(c).

(d) In the event of the Employee’s Termination of Employment with the Company or an Affiliated Employer due to a Job Elimination (other than in connection with a Change in Control, as provided in section 2(c)), the Employee’s interest in a pro-rata portion of the unvested Units shall continue to vest as if there had been no Termination of Employment and shall be paid as set forth in section 6(a), contingent upon the Employee’s execution and non-revocation of a separation agreement and/or a release of all claims in a form satisfactory to the Company within a period of no more than 75 days following the Job Elimination date. Such pro-rata portion of the unvested Units shall be calculated based on (A) the total Units granted multiplied by the ratio of (x) the number of calendar days worked by the Employee from the Grant Date to the Job Elimination date, to (y) the total number of calendar days in the original vesting schedule of the Units (from the Grant Date to the fourth anniversary of the Grant Date) less (B) any Units previously vested. For this

purpose, a “Job Elimination” shall mean either (i) the Employee’s involuntary and permanent Termination of Employment by the Company or an Affiliated Employer because of a permanent layoff, reduction in force, facility closing, reorganization, or consolidation, or (ii) the Employee’s involuntary Termination of Employment with the Company or an Affiliated Employer after the Employee has been offered and declined continued employment with the Company or an Affiliated Employer in a position that is, in the Company’s sole judgment, not comparable to or better than the position that the Employee previously held with the Company or an Affiliated Employer. Notwithstanding the foregoing, the Employee shall not be entitled to continued vesting of the Units under this Section 2(d) if the Employee incurs a “Disqualifying Event” under the terms of the Mastercard International Incorporated Severance Plan or, as applicable, the Amended and Restated Mastercard International Incorporated Executive Severance Plan. To obtain a copy of the Mastercard International Incorporated Severance Plan, please send a request to the Employment Counsel at 2000 Purchase Street, Purchase, NY 10577.

3. Transfer Restrictions.

The Units granted hereunder may not be sold, assigned, margined, transferred, encumbered, conveyed, gifted, hypothecated, pledged, or otherwise disposed of and may not be subject to lien, garnishment, attachment or other legal process, except as expressly permitted by the Plan.

4. Stockholder Rights.

Prior to the time that the Employee’s Units vest and the Company has issued Common Shares relating to such Units, the Employee will not be deemed to be the holder of, or have any of the rights of a holder with respect to, any Common Shares deliverable with respect to such Units. Specifically, and without limiting the foregoing, the Employee shall not be entitled to dividends or dividend equivalents prior to being issued Common Shares.

5. Changes in Stock.

In the event of any change with respect to outstanding Common Shares contemplated by Section 4.6(1) of the Plan, the Units may be adjusted in accordance with Section 4.6(1) of the Plan.

6. Form and Timing of Payment.

(a) The Company shall pay within 60 days following each Vesting Date set forth in section 2(a) above, a number of Common Shares equal to the aggregate number of vested Units credited to the Employee as of such Vesting Date; provided, however, that payment of any Units that vest pursuant to Section 2(d) may occur within up to 74 days following the applicable Vesting Date in connection with the Employee’s execution and non-revocation of a separation agreement and/or a release of all claims. Further, in the event that a Vesting Date falls within the period the Employee has to provide a separation agreement and/or a release of all claims pursuant to Section 2(d) and such period spans

two calendar years, any payment of the vested Units will be made in the second calendar year.

(b) In the event of vesting under section 2(b) above due to an Employee’s death, payment shall be made within 90 days following death, or where additional time is needed for administrative reasons, at such later time as is permitted under Section 409A (as defined in section 12 below).

(c) In the event of vesting under section 2(c) above due to Termination of Employment in connection with a Change in Control, payment shall be made as follows: (i) in the event of Termination of Employment prior to the Change in Control, within 90 days following the Change in Control; or (ii) in the event of Termination of Employment after the Change in Control, on the first business day which is at least seven months following the Termination of Employment or at such later date permitted under Section 409A.

(d) Notwithstanding section 6(a) above, the Company may, in its sole discretion, settle the Units in the form of a cash payment (i) to the extent settlement in Common Shares is prohibited under local law, or would require the Employee, the Company and/or the Employer to obtain the approval of any governmental and/or regulatory body in the Employee’s country of residence (or country of employment, if different) or (ii) in the event that the net number of Common Shares issuable on a Vesting Date is less than one whole Common Share. Alternatively, the Company may, in its sole discretion, settle the Units in the form of Common Shares but require the Employee to immediately sell such Common Shares (in which case, this Agreement shall give the Company the authority to issue sales instructions on behalf of the Employee).

7. Compliance with Law.

No Common Shares (or cash pursuant to section 6(d) above) will be delivered to the Employee in accordance with section 6 above unless counsel for the Company is satisfied that such delivery will be in compliance with all applicable laws, including, without limitation, any rule, regulation or procedure of the U.S. national securities exchange upon which the Company’s Common Shares are traded or any listing agreement with any such securities exchange, or any other requirement of law or of any administrative or regulatory body having jurisdiction over the Company or an Affiliated Employer.

8. Death of Employee.

In the event of the Employee’s death, where the death results in vesting and payment of Units under section 2(b) above, payment shall be made to the Employee’s estate.

9. Taxes.

arising out of this grant or the issuance of the Common Shares on vesting of Units hereunder or any other taxable event in connection with the Units.

Prior to any such taxable event, the Employee (or the Employee’s estate) shall pay or make adequate arrangements satisfactory to the Company or, if different, the Employee’s employer (the “Employer”) to meet the Company’s or the Employer’s withholding obligations for Tax-Related Items. In this regard, the Company is authorized to deduct from the total number of Common Shares the Employee is to receive on settlement of the Units a number of Common Shares with a total value equal to the amount necessary to satisfy any such withholding obligation at the minimum applicable withholding rate or, to the extent permitted by the Plan and applicable accounting principles, up to the maximum applicable withholding rate. If the Tax-Related Items withholding is satisfied by withholding in Common Shares, for tax purposes, the Employee is deemed to have been issued the full number of Common Shares subject to the vested Units, notwithstanding that a number of the Common Shares is held back solely for the purpose of paying the Tax-Related Items.

Alternatively, provided the Employee is not subject to Securities and Exchange Commission Rule 16b-3 (“Rule 16b-3”), the Company may sell or arrange for the sale of a sufficient number of Common Shares issued to the Employee upon settlement of the Units to meet the Tax-Related Items withholding obligation.

The Company (or, as applicable, the Employer) may withhold or account for Tax-Related Items by considering statutory withholding rates or other applicable withholding rates, including maximum rates applicable in the Employee’s jurisdiction(s), and will do so using the information in its applicable systems and other business records at the time of such withholding event. In the event of over-withholding, the Employee may receive a refund from the local tax authorities of any over-withheld amount in cash and will have no entitlement to the Common Share equivalent. In the event the withholding deducted is less than the Tax-Related Items for which the Employee is liable, the Employee may be required to pay any additional Tax-Related Items directly to the applicable tax authority or to the Company and/or the Employer.

Further, to the extent that any obligation to withhold Tax-Related Items arises prior to settlement of the Units, the Company may cause the Units to vest prior to any Vesting Date for the purpose of satisfying such obligation by withholding or selling of Common Shares as provided for above (to the extent such methods are otherwise permitted under this Agreement), provided that (a) to avoid a prohibited acceleration under Section 409A, the number of Units so vested will not exceed the number necessary to satisfy the liability for Tax-Related Items; and (b) if the Employee is subject to Rule 16b-3, any withholding in Common Shares pursuant to the foregoing will either be approved in advance by the Human Resources and Compensation Committee or solely at the election of the Employee. Pursuant to the foregoing and without limiting the discretion and authority of the Company as provided herein with respect to any other applicable Tax-Related Items, the Employee will have the right to elect to have the Company satisfy any Federal Insurance Contributions Act taxes required to be withheld before settlement of the Units by causing a sufficient portion of the Units to vest and withholding in Common Shares. If Tax-Related

Items are withheld prior to a Vesting Date by the method described in this paragraph, the number of Units in the Employee’s Account and originally scheduled to vest on the next applicable Vesting Date will be reduced by the number of Units vested and used to satisfy such Tax-Related Items.

The Employee agrees to pay to the Company or the Employer, including through withholding from the Employee’s wages or other cash compensation paid to the Employee by the Company and/or the Employer, any amount of Tax-Related Items that the Company or the Employer may be required to withhold or account for as a result of the Employee’s participation in the Plan that is not satisfied by the means previously described including, without limitation, any Federal Insurance Contributions Act taxes required to be withheld before settlement of the Units for which the Employee does not elect withholding in Common Shares pursuant to the preceding paragraph.

Finally, the Employee acknowledges that the ultimate liability for all Tax-Related Items legally due by the Employee is and remains the Employee’s responsibility, regardless of any withholding by the Company or the Employer, and that the Company and the Employer: (1) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Units, including the grant of the Units, the vesting of the Units, the settlement of the Units, the subsequent sale of any Common Shares acquired pursuant to the Units, or the receipt of any dividends; and (2) do not commit to structure the terms of the grant or any aspect of the Units to reduce or eliminate the Employee’s liability for Tax-Related Items. The Company may refuse to issue or deliver the Common Shares, or the proceeds of the sale of Common Shares, if the Employee fails to comply with the Employee’s obligations in connection with the Tax-Related Items.

10. Discretionary Nature of Plan.

The Employee acknowledges and agrees that the Plan is discretionary in nature and may be amended, cancelled, or terminated by the Company, in its sole discretion, at any time. The grant of Units under the Plan is a one-time benefit and does not create any contractual or other right to receive a grant of Units, other types of grants under the Plan, or benefits in lieu of such grants in the future. Future grants, if any, will be at the sole discretion of the Company, including, but not limited to, the timing of any grant, the number of Units granted and vesting provisions.

11. Consent to On-Line Grant and Acceptance.

The Employee acknowledges and agrees that, as a term of this grant of Units, any grant, communication, or acceptance of such grant, if applicable, is permitted to be made and processed through the online system operated and maintained for this purpose. The Employee further acknowledges and agrees that execution of any documents through such system shall have the same force and effect as if executed in writing.

12. Section 409A.

The Company intends that payments under this Agreement will either comply with or be exempt from Section 409A of the Internal Revenue Code and the regulations and guidance promulgated thereunder (collectively, “Section 409A”) and, accordingly, to the maximum extent permitted, this Agreement shall be interpreted to be exempt from Section 409A or in compliance therewith, as applicable. To the extent the Company determines that this Agreement is subject to Section 409A, but does not conform with the requirements of Section 409A, the Company may at its sole discretion amend or replace the Agreement to cause the Agreement to comply with Section 409A. The Company makes no representation that the Agreement is exempt from or complies with Section 409A and makes no undertaking to preclude Section 409A from applying to the Agreement. The Company will have no liability to the Employee or to any other party if the Agreement that is intended to be exempt from or compliant with Section 409A is not so exempt or compliant or for any action taken by the Company with respect thereto.

13. Recoupment Policy.

As an additional condition of receiving the Units, the Employee agrees that the Units and any benefits the Employee may receive hereunder shall be subject to forfeiture and/or repayment to the Company: (a) to the extent required under the terms of any recoupment or “clawback” policy adopted by the Company and in effect as of the Grant Date; (b) to comply with any recoupment requirement imposed under applicable laws, rules, regulations or stock exchange listing standards, including, without limitation, pursuant to Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010; and/or (c) in the event the Employee engages in misconduct which has or might reasonably be expected to have material reputational or other harm to the Company, provided that in such case the Company will not seek to recover Units that were paid more than three years before the date the detrimental behavior was discovered or the date the full impact of the misconduct was known, as determined by the Committee. A recovery under this section 13 can be made by withholding compensation otherwise due to the Employee, by cancelling vested but unpaid Units or by such other means determined appropriate by the Committee. The Recoupment Policy set forth in this Section 13 shall be applied by the Committee, at its discretion, to the maximum extent permitted under applicable law.

14. Miscellaneous.

(a) All amounts credited to the Employee’s Account under this Agreement shall continue for all purposes to be a part of the general assets of the Company. The Employee’s interest in the Account shall make the Employee only a general, unsecured creditor of the Company.

(b) The parties agree to execute such further instruments and to take such action as may reasonably be necessary to carry out the intent of this Agreement.

(c) Any notice required or permitted hereunder that is not covered by section 11 above, shall be given in writing and shall be deemed effectively given upon

delivery to the Employee at the address then on file with the Company or upon delivery to the Company at 2000 Purchase Street, Purchase, New York 10577, Attn: EVP, Total Rewards.

(d) Neither the Plan nor this Agreement nor any provisions under either shall be construed so as to grant the Employee any right to remain in the employ of the Company or an Affiliated Employer. Neither the Plan nor this Agreement shall interfere with the rights of the Company or an Affiliated Employer, as applicable, to terminate the employment of the Employee and/or take any personnel action affecting the Employee without regard to the effect which such action may have upon the Employee as a recipient or prospective recipient of any benefits under the Plan or this Agreement.

The value of the Units granted hereunder is an extraordinary item of compensation outside the scope of the Employee’s terms and conditions of employment and/or employment contract, if any. As such, the Units granted hereunder are not part of normal or expected compensation for purposes of calculating any severance, resignation, redundancy, end of service payments, bonuses, long-service awards, pension, or retirement benefits or similar payments.

(e) The Company reserves the right to impose other requirements on the Units, any Common Shares acquired or payment made pursuant to the Units, and the Employee’s participation in the Plan, to the extent the Company determines, in its sole discretion, that such other requirements are necessary or advisable. Such requirements may include (but are not limited to) requiring the Employee to sign any agreements or undertakings that may be necessary to accomplish the foregoing.

(f) Notwithstanding any provisions in this Agreement, the Units will be subject to any country-specific terms set forth in an addendum to this Agreement for Participants who work or reside in a country outside the United States (“Addendum”). Moreover, if the Employee relocates to one of the countries included in the Addendum, the terms for such country will apply to him or her, to the extent the Company determines that the application of such terms is necessary or advisable. The Addendum constitutes part of this Agreement.

(g) The provisions of this Agreement are severable and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable. Further, upon a determination that any term or other provision of this Agreement is illegal or otherwise incapable of being enforced, such term or other provision shall be deemed replaced by a term or provision that is valid and enforceable and that comes closest to expressing the intention of the illegal or unenforceable term or provision.

(h) This Agreement, along with the incorporated grant statement, an executed Mastercard LTIP Non-Competition Agreement, and any special provisions for the Employee’s country of residence or employment, as set forth in the applicable Addendum, constitutes the entire agreement of the parties with respect to the subject matter hereof.

By: _______________________________

Name:

Title:

EXHIBIT 10.2

FORM OF

STOCK OPTION AGREEMENT

20__ GRANT

Name: xxxxxx

$ Granted: $ xxx,xxx

WHEREAS, the Company has established the Plan, the terms of which Plan, but not the standard terms and conditions of Section 6.4, are made a part hereof;

WHEREAS, the Human Resources and Compensation Committee of the Board of Directors of the Company (“Committee”) has approved this grant under the terms of the Plan;

NOW, THEREFORE, the parties hereby agree as follows:

1. Grant of Stock Options.

Subject to the terms and conditions of this Agreement and of the Plan, the Company hereby grants to the Employee a nonqualified stock option (“Stock Option”) to purchase from time to time all or any part of >xxxx< common shares of the Company’s Class A Common Stock (“Common Shares”), as reflected in the Employee’s grant statement, the terms of which are incorporated as part of this Agreement, at a price per share equal to 100 percent of the Fair Market Value of the Common Shares (the closing price) on the Grant Date.

2. Exercise.

This Stock Option is exercisable from the date and to the extent that the Employee’s interest in the Stock Option is vested, but in no event earlier than seven months after the Grant Date (other than in the case of the Employee’s death, as set forth in Section 3(b) below), until the date the term of the Stock Option expires under Section 4 below. The Employee’s interest in the Stock Option may be exercised only by delivering notice of exercise, in the form prescribed by the Company, to the Company or its designated agent, and paying the full exercise price for the shares and the full amount of any Tax-Related

Items required to be withheld. Unless otherwise set forth in an addendum to this Agreement for Participants who work or reside in or relocate to a country outside the United States (“Addendum”), the exercise price may be paid by delivery of cash or a certified check, delivery of Common Shares already owned by the Employee, or by delivery of cash by a broker-dealer as a “cashless” exercise. Special rules will apply to the payment of the exercise price and any Tax-Related Items by Participants who are subject to Securities and Exchange Commission Rule 16b-3. Common Shares issued on exercise of the Stock Option shall be unrestricted Common Shares. As a condition of the Employee’s right to exercise the Stock Option, the Employee shall be required to execute and comply with any Mastercard LTIP Non-Competition Agreement that the Company requires for the Employee to be eligible to participate in the Plan and to execute any other documents required by the Committee pursuant to this Agreement.

3. Vesting.


Vest Date			Vest Quantity
March 1, 20__			25%
March 1, 20__			25%
March 1, 20__			25%
March 1, 20__			25%

(a) Subject to (b) and (c) below, the interest of the Employee in the Stock Option shall vest 25 percent on each of the first, second, third, and fourth anniversaries of the Grant Date, conditioned upon the Employee’s continued employment with the Company or an Affiliated Employer as of each vesting date. In the event of the Employee’s Termination of Employment with the Company or an Affiliated Employer for any reason other than as set forth in (b) or (c), the unvested portion of the Stock Option shall be forfeited. A transfer of Employee’s employment among the Company and any Affiliated Employer shall not be treated as a Termination of Employment hereunder.

(b) In the event that the Employee’s employment with the Company or an Affiliated Employer terminates by reason of the Employee’s death after the Grant Date, 100 percent of the Employee’s interest in the Stock Option shall vest and become immediately exercisable. In the event of the Employee’s Termination of Employment with the Company or an Affiliated Employer due to Disability or Retirement seven months or longer after the Grant Date, unless circumstances exist at the time of Termination of Employment that would constitute Cause, the Employee’s interest in the Stock Option shall continue to vest and become exercisable as if there was no Termination of Employment.

(c) In the event of the Employee’s Termination of Employment by the Company or an Affiliated Employer, or successor thereto, without Cause six months preceding or two years following a Change in Control, 100 percent of the Employee’s then unvested interest in the Stock Option shall vest upon the later of the Employee’s termination date or the Change in Control.

4. Term and Termination.

The Stock Option shall expire on the earlier of (i) the tenth anniversary of the Grant Date, or (ii) in the case of a Stock Option that has vested at the time of an Employee’s Termination of Employment other than by death, Disability, or Retirement, 120 days from the date of the Employee’s Termination of Employment. In the event an Employee’s Termination of Employment is due to death, Disability, Retirement, or is in connection with a Change in Control under the circumstances specified in Section 3(c) above, the Stock Option shall expire on the tenth anniversary of the Grant Date. Expiration on a date shall occur as of the closing time of regular trading on the market on which the Company’s Common Shares are traded on that date or, if that date is not a date on which such market is open for trading, as of the closing time of regular trading on the market on which the Company’s Common Shares are traded on the immediately preceding trading date. The Employee is solely responsible for any election to exercise the Stock Option, and the Company has no obligation to provide notice to the Employee of any matter, including, but not limited to, the date the Stock Option terminates. Neither the Company nor any Affiliated Employer has any liability in the event of the Employee’s failure to timely exercise any vested Stock Option prior to its expiration.

5. Transfer Restrictions.

Other than by will or by the laws of descent and distribution, the Stock Option may not be sold, assigned, margined, transferred, encumbered, conveyed, gifted, hypothecated, pledged, or otherwise disposed of and may not be subject to lien, garnishment, attachment or other legal process, except as expressly permitted by the Plan. During the Employee’s lifetime, the Stock Option is exercisable only by the Employee.

6. Stockholder Rights.

Prior to the time that the Company has issued Common Shares on an Employee’s exercise of the Employee’s interest in his or her Stock Option, the Employee will not be deemed to be the holder of, or have any of the rights of a holder with respect to, any Common Shares deliverable with respect to such Stock Option.

7. Changes in Stock.

In the event of any change with respect to outstanding Common Shares contemplated by Section 4.6(1) of the Plan, the Stock Option may be adjusted in accordance with Section 4.6(1) of the Plan.

8. Compliance with Law.

No Common Shares will be delivered to the Employee upon the Employee’s exercise of his or her interest in the Stock Option unless counsel for the Company is satisfied that such delivery will be in compliance with all applicable laws, including, without limitation, any rule, regulation or procedure of the U.S. national securities exchange upon which the Company’s Common Shares are traded or any listing agreement with any such securities

exchange, or any other requirement of law or of any administrative or regulatory body having jurisdiction over the Company or an Affiliated Employer.

9. Death of Employee.

In the event of the Employee’s death, the Stock Option shall be exercisable by the executor or administrator of the Employee’s estate or the person to whom the Stock Option has passed by will or the laws of descent and distribution in accordance with Section 5 of this Agreement.

10. Taxes.

The Employee shall be liable for any and all taxes, including income tax (including U.S. federal, state and local taxes and/or non-U.S. taxes), social insurance, payroll tax, fringe benefits tax, payment on account or other tax-related items (“Tax-Related Items”), arising out of the transfer of Common Shares on exercise of the Stock Option or any other taxable event in connection with the Stock Option.

Prior to any such taxable event, the Employee (or the Employee’s estate) shall pay or make adequate arrangements satisfactory to the Company or, if different, the Employee’s employer (the “Employer”) to meet the Company’s or the Employer’s withholding obligations for Tax-Related Items. In this regard, the Employee may satisfy such Tax-Related Items obligations by delivery of cash or a certified check or delivery of cash by a broker-dealer as part of a “cashless” exercise. The Company is also authorized to deduct from the total number of Common Shares the Employee is to receive on exercise of the Stock Option, a number of Common Shares with a total value equal to the amount necessary to satisfy any such withholding obligation at the minimum applicable withholding rate or, to the extent permitted by the Plan and applicable accounting principles, up to the maximum applicable withholding rate. If the Tax-Related Items withholding is satisfied by withholding in Common Shares, for tax purposes, the Employee is deemed to have been issued the full number of Common Shares subject to the exercised Stock Option, notwithstanding that a number of the Common Shares is held back solely for the purpose of paying the Tax-Related Items.

Alternatively, provided the Employee is not subject to Securities and Exchange Commission Rule 16b-3, the Company may sell or arrange for the sale of a sufficient number of Common Shares issued to the Employee upon exercise of the Stock Option to meet the Tax-Related Items withholding obligation.

The Company (or, as applicable, the Employer) may withhold or account for Tax-Related Items by considering statutory withholding rates or other applicable withholding rates, including maximum rates applicable in the Employee’s jurisdiction(s), and will do so using the information in its applicable systems and other business records at the time of such withholding event. In the event of over-withholding in or through sale of Common Shares, the Employee may receive a refund from the local tax authorities of any over-withheld amount in cash and will have no entitlement to the Common Share equivalent. In the event the withholding deducted is less than the Tax-Related Items for which the

Employee is liable, the Employee may be required to pay any additional Tax-Related Items directly to the applicable tax authority or to the Company and/or the Employer.

Finally, the Employee acknowledges that the ultimate liability for all Tax-Related Items legally due by the Employee is and remains the Employee’s responsibility, regardless of any withholding by the Company or the Employer, and that the Company and the Employer: (a) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Stock Option, including the grant of the Stock Option, the vesting of the Stock Option, the exercise of the Stock Option, the subsequent sale of any Common Shares acquired pursuant to the Stock Option, or the receipt of any dividends; and (b) do not commit to structure the terms of the grant or any aspect of the Stock Option to reduce or eliminate the Employee’s liability for Tax-Related Items. The Company may refuse to issue or deliver the Common Shares, or the proceeds of the sale of Common Shares, if the Employee fails to comply with the Employee’s obligations in connection with the Tax-Related Items.

11. Discretionary Nature of Plan.

The Employee acknowledges and agrees that the Plan is discretionary in nature and may be amended, cancelled, or terminated by the Company, in its sole discretion, at any time. The grant of a Stock Option under the Plan is a one-time benefit and does not create any contractual or other right to receive a grant of a Stock Option, other awards under the Plan, or benefits in lieu of such awards in the future. Future grants, if any, will be at the sole discretion of the Company, including, but not limited to, the timing of any grant, the number of Stock Options granted, and vesting provisions.

12. Section 409A.

The Stock Option is not intended to provide for a “deferral of compensation” within the meaning of Section 409A of the Internal Revenue Code (“Section 409A”) and shall be interpreted, administered and construed in a manner consistent with that intent. To the extent the Company determines that this Agreement is subject to Section 409A, but does not conform with the requirements of Section 409A the Company may at its sole discretion amend or replace the Agreement to cause the Agreement to be exempt from or comply with Section 409A. The Company makes no representation that the Agreement is exempt from or complies with Section 409A and makes no undertaking to preclude Section 409A from applying to the Agreement. The Company will have no liability to the Employee or to any other party if the Agreement that is intended to be exempt from or compliant with Section 409A is not so exempt or compliant or for any action taken by the Company with respect thereto.

13. Consent to On-Line Grant and Acceptance.

The Employee acknowledges and agrees that, as a term of this Stock Option grant, any grant, communication, acceptance of such grant, or exercise of such grant, is permitted to be made and processed through the on-line system operated and maintained for this purpose. The Employee further acknowledges and agrees that execution of any documents through such system shall have the same force and effect as if executed in writing.

14. Recoupment Policy.

As an additional condition of receiving the Stock Option, the Employee agrees that the Stock Option and any benefits the Employee may receive hereunder shall be subject to forfeiture and/or repayment to the Company: (a) to the extent required under the terms of any recoupment or “clawback” policy adopted by the Company and in effect as of the Grant Date; (b) to comply with any recoupment requirement imposed under applicable laws, rules, regulations or stock exchange listing standards, including, without limitation pursuant to Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010; and/or (c) in the event the Employee engages in misconduct which has or might reasonably be expected to have material reputational or other harm to the Company, provided that in such case the Company will not seek to recover Stock Options that became fully vested more than three years before the date the detrimental behavior was discovered or the date the full impact of the misconduct was known, as determined by the Committee. A recovery under this Section 14 can be made by withholding compensation otherwise due to the Employee, by cancelling vested or unvested Stock Options or by such other means determined appropriate by the Committee. The Recoupment Policy set forth in this Section 14 shall be applied by the Committee, at its discretion, to the maximum extent permitted under applicable law.

15. Miscellaneous.

(a) The parties agree to execute such further instruments and to take such action as may reasonably be necessary to carry out the intent of this Agreement.

(b) Any notice required or permitted hereunder that is not covered by Section 13 above shall be given in writing and shall be deemed effectively given upon delivery to the Employee at the address then on file with the Company or upon delivery to the Company at 2000 Purchase Street, Purchase, New York 10577, Attn: EVP, Total Rewards.

(c) Neither the Plan nor this Agreement nor any provisions under either shall be construed so as to grant the Employee any right to remain in the employ of the Company or an Affiliated Employer. Neither the Plan nor this Agreement shall interfere with the rights of the Company or an Affiliated Employer, as applicable, to terminate the employment of the Employee and/or take any personnel action affecting the Employee without regard to the effect which such action may have upon the Employee as a recipient or prospective recipient of any benefits under the Plan or this Agreement.

The value of the Stock Option granted hereunder is an extraordinary item of compensation outside the scope of the Employee’s terms and conditions of employment and/or employment contract, if any. As such, the Stock Options granted hereunder are not part of normal or expected compensation for purposes of calculating any severance, resignation, redundancy, end of service payments, bonuses, long-service awards, pension, or retirement benefits or similar payments.

(d) The Company reserves the right to impose other requirements on the Stock Option, any Common Shares acquired or payment made pursuant to the Stock Option, and the Employee’s participation in the Plan, to the extent the Company determines, in its sole discretion, that such other requirements are necessary or advisable. Such requirements may include (but are not limited to) requiring the Employee to sign any agreements or undertakings that may be necessary to accomplish the foregoing.

(e) Notwithstanding any provisions in this Agreement, the Stock Option will be subject to any country-specific terms set forth in the Addendum for the Employee’s country of residence or employment. Moreover, if the Employee relocates to one of the countries included in the Addendum, the terms for such country will apply to the Employee, to the extent the Company determines that the application of such terms is necessary or advisable. The Addendum constitutes part of this Agreement.

(f) The provisions of this Agreement are severable and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable. Further, upon a determination that any term or other provision of this Agreement is illegal or otherwise incapable of being enforced, such term or other provision shall be deemed replaced by a term or provision that is valid and enforceable and that comes closest to expressing the intention of the illegal or unenforceable term or provision.

(g) This Agreement, along with the incorporated grant statement, an executed Mastercard LTIP Non-Competition Agreement, and any special provisions for the Employee’s country of residence or employment, as set forth in the applicable Addendum, constitutes the entire agreement of the parties with respect to the subject matter hereof.

By: ________________________

Name:

Title:

EXHIBIT 10.3

FORM OF

PERFORMANCE STOCK UNIT AGREEMENT

20__ GRANT

Name: xxxxxx

$ Granted: $ xxx,xxx

WHEREAS, the Company has established the Plan, the terms of which are made a part hereof;

WHEREAS, the Human Resources and Compensation Committee of the Board of Directors of the Company (“Committee”) has approved this grant under the terms of the Plan;

NOW, THEREFORE, the parties hereby agree as follows:

1. Grant of Units.

Subject to the terms and conditions of this Agreement and of the Plan, the Company hereby grants to the Employee <xxx> Units, as reflected in the Employee’s grant statement, the terms of which statement are incorporated as a part of this Agreement. Each Unit represents the right to receive an amount of the Company’s $0.0001 par value Class A Common Stock (“Common Shares”) that varies depending on the level of performance achieved on specified performance criteria during the performance period established by the Committee, which shall be within or concurrent with the period from January 1, 20__, through December 31, 20__.

2. Vesting of Units.

Subject to section 4 below, the interest of the Employee in the Units shall vest on March 1, 20__ (the “Vesting Date”), conditioned upon the Employee’s continued employment with the Company or an Affiliated Employer as of the Vesting Date, and the achievement of the performance goals established by the Committee and set forth in the Employee’s grant statement. In the event of the Employee’s Termination of Employment with the Company or an Affiliated Employer for any reason other than as set forth in section 4, unvested Units shall be forfeited. A transfer of Employee’s employment among the Company and any Affiliated Employer shall not be treated as a Termination of

Employment hereunder. Vesting in Units is subject to the Committee’s exercise of downward discretion to reduce the amounts earned on achievement of performance goals. As a condition of the Employee’s right to vest in the Units, the Employee shall be required to execute and comply with any Mastercard LTIP Non-Competition Agreement that the Company requires for the Employee to be eligible to participate in the Plan, and to execute any other documents required by the Committee pursuant to this Agreement. If the Employee has not executed and delivered to the Company any such required Mastercard LTIP Non-Competition Agreement by the date required by the Company, which will in no event be later than the Vesting Date or such earlier vesting event pursuant to section 4(c)(ii) below, the unvested Units shall be forfeited.

3. Form and Timing of Payment.

(a) Payment Date. Except as otherwise provided in section 4(a) or 4(c)(ii) below, on the first anniversary of the Vesting Date, March 1, 20__ (or if such date is not a business day, then on the first business day thereafter) (the “Payment Date”), the Company shall pay to the Employee a number of Common Shares equal to the aggregate number of Units determined to have been earned based on achievement of the performance goals.

(b) Treatment of Vested Units. Between the Vesting Date and the Payment Date (the “Deferral Period”), the number of Units determined to have been earned (“Vested Units”) will be fully vested and nonforfeitable by the Employee, subject to section 9 below. In any case under this Agreement where the Deferral Period applies, such Vested Units will accrue dividend equivalents, consisting of a cash amount equal to the number of Vested Units held by the Employee times any per share dividend payment made to holders of the Company’s Common Shares during the Deferral Period. Such dividend equivalents will be paid to the Employee in cash on the Payment Date, along with the Common Shares distributable pursuant to section 3(a), except as otherwise provided in section 4(a) or 4(c)(ii) below. Vested Units will count as Common Shares for purpose of the Employee’s compliance with the Company’s stock ownership requirement. For purposes of this Agreement, “Vested Units” shall include Units that vest at target pursuant to sections 4(a) or 4(c).

(c) Cash Settlement. Notwithstanding section 3(a) or (b) above, the Company may, in its sole discretion, settle the Units in the form of a cash payment to the extent settlement in Common Shares is prohibited under local law, or would require the Employee, the Company and/or the Employer to obtain the approval of any governmental and/or regulatory body in the Employee’s country of residence (or country of employment, if different). Alternatively, the Company may, in its sole discretion, settle the Units in the form of Common Shares but require the Employee to immediately sell such Common Shares (in which case, this Agreement shall give the Company the authority to issue sales instructions on behalf of the Employee).

4. Termination of Employment; Change in Control.

(a) Death. In the event that the Employee’s employment with the Company or an Affiliated Employer terminates by reason of the Employee’s death prior to the Vesting Date, 100 percent of the Employee’s then unvested Units shall vest and be payable at the target level of performance and the Deferral Period shall not apply. If the Employee’s employment terminates by reason of the Employee’s death during the Deferral Period, the Employee’s Vested Units and any dividend equivalents accrued thereon will become immediately payable. In either case, payment of the Units shall be made within 90 days following death, or where additional time is needed for administrative reasons, at such later time as is permitted under Section 409A (as defined in section 12 below). Payment shall be made to the Employee’s estate.

(b) Disability or Retirement. In the event of the Employee’s Termination of Employment with the Company or an Affiliated Employer due to Disability or Retirement seven months or longer after the Grant Date but prior to the Vesting Date, unless circumstances exist at the time of Termination of Employment that would constitute Cause, unvested Units shall continue to vest as if there had been no Termination of Employment, subject to the achievement of performance goals; provided, however, that the Committee shall have discretion to determine at any time during the vesting period that an Employee shall not vest in whole or in part in a particular Unit. Where the Employee has a Termination of Employment due to Disability or Retirement before the Vesting Date, or after the Vesting Date but during the Deferral Period, payment of any Vested Units and any dividend equivalents accrued thereon (if applicable) will be made on the Payment Date in accordance with section 3(a).

(i) In the event of a Change in Control, vesting and payment will be as set forth in section 2 and section 3(a) to the extent the achievement of performance goals can continue to be measured after the Change in Control. To the extent the achievement of performance goals is no longer capable of measurement following a Change in Control, the Employee’s unvested Units shall vest at the target level of performance on the Vesting Date, conditioned upon the Employee’s continued employment (except as otherwise set forth in this section 4) with the Company or an Affiliated Employer, or successor thereto, as of the Vesting Date, and shall be paid along with any dividend equivalents accrued thereon, on the Payment Date in accordance with section 3(a).

(ii) Notwithstanding section 4(c)(i) above, in the event of the Employee’s Termination of Employment by the Company or an Affiliated Employer, or successor thereto, without Cause or due to a Job Elimination six months preceding or two years following a Change in Control and prior to the Vesting Date, the Employee’s then unvested Units shall vest upon the later of the Employee’s termination date or the Change in Control and be payable at the target level of performance, and the Deferral Period shall not apply. If the Employee’s employment

is terminated by the Company or an Affiliated Employer, or successor thereto, without Cause or due to a Job Elimination six months preceding or two years following a Change in Control and during the Deferral Period, the Employee’s Vested Units and any dividend equivalents accrued thereon will become immediately payable. In either case, payment of the Vested Units and any dividend equivalents accrued thereon (if applicable) shall be made as follows: (i) in the event of Termination of Employment prior to the Change in Control, within 90 days following the Change in Control; or (ii) in the event of Termination of Employment after the Change in Control, on the first business day which is at least seven months after the Termination of Employment or at such later date permitted under Section 409A.

(d) Job Elimination. In the event of the Employee’s Termination of Employment with the Company or an Affiliated Employer due to a Job Elimination prior to the Vesting Date (other than in connection with a Change in Control, as provided in section 4(c)(ii)), the Employee’s interest in a pro-rata portion of the unvested Units shall continue to vest as if there had been no Termination of Employment, subject to the achievement of performance goals, provided, however, that the Committee shall have discretion to determine at any time during the vesting period that an Employee shall not vest in whole or in part in a particular Unit. Such continued vesting is contingent upon the Employee’s execution and non-revocation of a separation agreement and/or a release of all claims in a form satisfactory to the Company within a period of no more than 75 days following the Job Elimination date. The aforementioned pro-rata portion of the unvested Units shall be calculated based on the ratio of (x) the number of calendar days worked by the Employee from the Grant Date to the Job Elimination date, to (y) the total number of calendar days in the original vesting schedule of the Units. For this purpose, a “Job Elimination” shall mean either (i) the Employee’s involuntary and permanent Termination of Employment by the Company or an Affiliated Employer because of a permanent layoff, reduction in force, facility closing, reorganization, or consolidation, or (ii) the Employee’s involuntary Termination of Employment with the Company or an Affiliated Employer after the Employee has been offered and declined continued employment with the Company or an Affiliated Employer in a position that is, in the Company’s sole judgment, not comparable to or better than the position that the Employee previously held with the Company or an Affiliated Employer. Notwithstanding the foregoing, the Employee shall not be entitled to continued vesting of the Units under this section 4(d) if the Employee incurs a “Disqualifying Event” under the terms of the Mastercard International Incorporated Severance Plan or, as applicable, the Amended and Restated Mastercard International Incorporated Executive Severance Plan. To obtain a copy of the Mastercard International Incorporated Severance Plan, please send a request to the Employment Counsel at 2000 Purchase Street, Purchase, NY 10577. Where the Employee has a Termination of Employment due to a Job Elimination before the Vesting Date, or after the Vesting Date but during the Deferral Period, payment of any Vested Units and any dividend equivalents accrued thereon (if applicable) will be made on the Payment Date in accordance with section 3(a).

5. Transfer Restrictions.

6. Stockholder Rights.

Prior to the time that the Company has issued Common Shares to the Employee relating to the Employee’s Vested Units, the Employee will not be deemed to be the holder of, or have any of the rights of a holder with respect to, any Common Shares deliverable with respect to such Units. Specifically, and without limiting the foregoing, the Employee shall not be entitled to dividends prior to being issued Common Shares. However, the Employee will be entitled to accrue dividend equivalents during the Deferral Period as provided in section 3(b).

7. Changes in Stock.

In the event of any change with respect to outstanding Common Shares contemplated by Section 4.6(1) of the Plan, the Units may be adjusted in accordance with Section 4.6(1) of the Plan.

8. Compliance with Law.

No Common Shares (or cash pursuant to section 3(c) above) will be delivered to the Employee in accordance with section 3 above unless counsel for the Company is satisfied that such delivery will be in compliance with all applicable laws, including, without limitation, any rule, regulation or procedure of the U.S. national securities exchange upon which the Company’s Common Shares are traded or any listing agreement with any such securities exchange, or any other requirement of law or of any administrative or regulatory body having jurisdiction over the Company or an Affiliated Employer.

9. Recoupment Policy.

(a) Forfeiture/Recoupment in the event of Restatement. In the event of a restatement of materially inaccurate financial results, the Committee has the discretion to recover from the Employee stock or cash equal to the value of the stock issued on settlement of these Units or issuable pursuant to any Vested Units, or the proceeds realized by the Employee on the sale of such stock to the extent the vesting schedule of the Units under section 2 includes all or part of the period covered by the restatement. If the amount that would have vested based on achievement of performance goals would have been lower had the achievement of applicable financial performance targets been calculated based on such restated financial results, the Committee may, if it determines appropriate in its sole discretion recover from the Employee stock or cash equal to the portion of the stock issued or issuable in excess of the amount that would have been paid based on the restated financial results. A recovery under this section 9(a) can be made by withholding compensation otherwise due to the Employee, by the cancelling of Vested Units during the Deferral Period or by such other means determined appropriate by the Committee. Unless

otherwise required by applicable laws or stock exchange listing standards, the Company will not seek to recover amounts paid under this Agreement based on materially inaccurate financial results that are restated more than three years after the date the Company files the report with the Securities and Exchange Commission that contained such financial results.

(b) Forfeiture/Recoupment in the event of Detrimental Behavior. In the event an Employee engages in misconduct which has or might reasonably be expected to have material reputational or other harm to the Company, the Committee has the discretion to recover stock or cash equal to the value of the stock issued on settlement of these Units or issuable pursuant to any Vested Units, or the proceeds realized by the Employee on the sale of such stock. A recovery under this section 9(b) can be made by withholding compensation otherwise due to the Employee, by the cancelling of Vested Units during the Deferral Period or by such other means determined appropriate by the Committee. The Company will not seek to recover Units that were paid more than three years before the date the detrimental behavior was discovered or the date the full impact of the misconduct was known, as determined by the Committee.

(c) Forfeiture/Recoupment Required by Law. The Recoupment Policy set forth in this Section 9 shall be applied by the Committee, at its discretion, to the maximum extent permitted under applicable law. Further, the Recoupment Policy set forth in this section 9 is in addition to, and not in lieu of, any recoupment requirements under the Sarbanes-Oxley Act or under other applicable laws, rules, regulations or stock exchange listing standards, including, without limitation, Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and shall apply notwithstanding anything to the contrary in this Agreement or in the Plan.

10. Taxes.

The Employee shall be liable for any and all taxes, including income tax (including U.S. federal, state and local taxes and/or non-U.S. taxes), social insurance, payroll tax, fringe benefits tax, payment on account or other tax-related items (“Tax-Related Items”), arising out of this grant, vesting, or the issuance of the Common Shares hereunder or any other taxable event in connection with the Units.

that a number of the Common Shares is held back solely for the purpose of paying the Tax-Related Items.

The Company (or, as applicable, the Employer) may withhold or account for Tax-Related Items by considering statutory withholding rates or other applicable withholding rates, including maximum rates applicable in the Employee’s jurisdiction(s), and will do so using the information in its applicable systems and other business records at the time of such withholding event. In the event of over-withholding, the Employee may receive a refund from the local tax authorities of any over-withheld amount in cash and will have no entitlement to the Common Share equivalent In the event the withholding deducted is less than the Tax-Related Items for which the Employee is liable, the Employee may be required to pay any additional Tax-Related Items directly to the applicable tax authority or to the Company and/or the Employer.

Further, to the extent that any obligation to withhold Tax-Related Items arises prior to settlement of the Units, the Company may cause the Units to vest prior to the Vesting Date, and/or to be deemed payable prior to the Payment Date, for the purpose of satisfying such obligation by withholding or selling of Common Shares as provided for above (to the extent such methods are otherwise permitted under this Agreement), provided that (a) to avoid a prohibited acceleration under Section 409A, the number of Units so vested and/or deemed payable will not exceed the number necessary to satisfy the liability for Tax-Related Items; and (b) if the Employee is subject to Rule 16b-3, any withholding in Common Shares pursuant to the foregoing will either be approved in advance by the Human Resources and Compensation Committee or solely at the election of the Employee. Pursuant to the foregoing and without limiting the discretion and authority of the Company as provided herein with respect to any other applicable Tax-Related Items, the Employee will have the right to elect to have the Company satisfy any Federal Insurance Contributions Act taxes required to be withheld before settlement of the Units by causing a sufficient portion of the Units to be deemed payable and withholding in Common Shares. If Tax-Related Items are withheld prior to the Payment Date by the method described in this paragraph, the number of Units scheduled to be paid on the Payment Date will be reduced by the number of Units used to satisfy such Tax-Related Items.

11. Discretionary Nature of Plan.

12. Consent to On-Line Grant and Acceptance.

13. Section 409A.

14. Miscellaneous.

(a) All amounts granted under this Agreement shall continue for all purposes to be a part of the general assets of the Company. The Employee’s interest in the amount ultimately determined to be earned shall make the Employee only a general, unsecured creditor of the Company.

(b) The parties agree to execute such further instruments and to take such action as may reasonably be necessary to carry out the intent of this Agreement.

(c) Any notice required or permitted hereunder that is not covered by section 12 above, shall be given in writing and shall be deemed effectively given upon delivery to the Employee at the address then on file with the Company or upon delivery to the Company at 2000 Purchase Street, Purchase, New York 10577, Attn: EVP, Total Rewards.

By: ________________________

Name:

Title:

EXHIBIT 10.4

MASTERCARD

SENIOR EXECUTIVE ANNUAL INCENTIVE COMPENSATION PLAN

As Amended and Restated Effective April 9, 2021

Mastercard Incorporated and subsidiaries (collectively or individually, as the context requires, the “Company”) has adopted the Mastercard Senior Executive Annual Incentive Compensation Plan (the “Plan”) to reward senior executives for successfully achieving performance goals that are in direct support of corporate and business unit/regional goals.

ARTICLE I

DEFINITIONS

Section 1.1 “Board” shall mean the Board of Directors of the Company.

Section 1.2 “Committee” shall mean the Human Resources and Compensation Committee of the Board of Directors of the Company, or such other committee or subcommittee designated by the Board to administer the Plan.

Section 1.3 “Disability” shall mean total and permanent disability in accordance with the Company’s long-term disability plan, as determined by the Committee.

Section 1.4 “Participant” shall mean, with respect to any Performance Period, Section 16 officers of the Company (for purposes of the Securities Exchange Act of 1934, as amended), excluding the Corporate Controller.

Section 1.5 “Performance Period” shall mean a period of no less than 90 days during which the attainment of performance targets shall be measured for purposes of determining the amount of incentive compensation payable hereunder, as established by the Committee.

Section 1.6 “Retirement” shall have the meaning set forth in the Mastercard Incorporated 2006 Long Term Incentive Plan, as amended from time to time.

ARTICLE II

BONUS AWARDS

Section 2.1 Performance Targets.

(a) The Committee (or subcommittee described in Section 6.1(a) below), will establish performance targets for each Performance Period. The performance targets for a Performance Period shall be based upon one or more of the following objective business criteria, or such other criteria determined by the Committee, in its discretion: (i) revenue; (ii) earnings (including earnings before interest, taxes, depreciation and amortization, earnings before interest and taxes, and earnings before or after taxes); (iii) operating income; (iv) net income; (v) profit or operating margins; (vi) earnings per share; (vii) return on assets; (viii) return on equity; (ix) return on invested capital; (x) economic value-added; (xi) stock price; (xii) gross dollar volume; (xiii) total shareholder return; (xiv) market share; (xv) book value; (xvi) expense management; (xvii) cash flow; (xviii) customer satisfaction; and (xix) strategic corporate or individual objectives. The foregoing criteria may relate to the Company, one or more of its affiliated employers or subsidiaries or one or more of its divisions, regions or units, or any combination of the foregoing, and may be applied on an absolute basis and/or be relative to one or more peer group companies or indices, or any combination thereof, all as the Committee shall determine. In establishing performance targets under Section 2.1(b) based on these business criteria, the Committee may provide that the targets shall be adjusted to reflect specified extraordinary, unusual and/or non-recurring items.

(b) The performance targets shall be established by the Committee (or subcommittee) for a Performance Period (i) while the outcome for that Performance Period is substantially uncertain and (ii) no more than 90 days or, if less, the number of days which is equal to 25 percent of the relevant Performance Period, after the commencement of the Performance Period to which the performance target relates.

Section 2.2 Bonus Awards.

(a) The maximum bonus award payable to any Participant with respect to any calendar year of the Company shall not exceed $10,000,000. The Committee shall establish a target level of bonus for each year for each Participant and the maximum bonus payable to each Participant shall be 250 percent of the Participant’s target bonus; provided, however, that the aggregate maximum bonus payable to all Participants shall be 200 percent of the aggregate target bonuses.

(b) Prior to the payment of a bonus award to any Participant, the Committee (or subcommittee described in Section 6.1(a) below) shall certify in writing the level of performance attained for the Performance Period to which such bonus award relates. The Committee shall have no discretion to increase the amount of a Participant’s maximum bonus award that would otherwise be payable to the Participant upon the achievement of specified levels of the performance target established by the Committee, however, the

Committee may exercise negative discretion to make an award to any Participant for any Performance Period in an amount that is less than such maximum bonus award.

ARTICLE III

PAYMENT OF BONUS AWARD

Section 3.1 Form of Payment. Each Participant’s bonus award shall be paid in cash.

Section 3.2 Timing of Payment. Unless otherwise elected by the Participant pursuant to Section 3.3 below, each bonus award shall be paid in the first 2 ½ months of the year following the end of the Performance Period.

Section 3.3 Deferral of Payment. Payments of bonus awards under the Plan are eligible for deferral as allowed under the Mastercard Incorporated Deferral Plan.

ARTICLE IV

BONUS AWARD RECOUPMENT POLICY

Section 4.1 Forfeiture/Recoupment in the event of restatement. In the event of a restatement of materially inaccurate financial results, the Committee has the discretion to recover bonus awards that were paid under the Plan to a Participant with respect to the period covered by the restatement as set forth herein. If the payment of a bonus award would have been lower had the achievement of applicable financial performance targets been calculated based on such restated financial results, the Committee may, if it determines appropriate in its sole discretion, to the extent permitted by law, recover from the Participant the portion of the bonus award paid (or earned) in excess of the payment that would have been made based on the restated financial results. The Company will not seek to recover bonus awards paid (or, in the case of a deferred bonus, earned) more than three years after the date the Company filed the original report with the Securities and Exchange Commission that contained the inaccurate financial results to be restated.

Section 4.2 Forfeiture/Recoupment in the event of detrimental behavior. In the event a Participant engages in misconduct which has or might reasonably be expected to have material reputational or other harm to the Company, the Committee has the discretion to forfeit the Participant’s bonus award for the Performance Period in which the misconduct was discovered and recover bonus awards that were paid under the Plan to a Participant (or, in the case of a deferred bonus, earned by such Participant) in the three-year period prior to the date the misconduct was discovered or prior to the date the full impact of the misconduct was known, as determined by the Committee.

Section 4.3 Forfeiture/Recoupment required by law. The Recoupment Policy set forth in this Article IV shall be applied by the Committee, at its discretion, to the maximum extent permitted under applicable law. Further, the Recoupment Policy is in addition to, and not in lieu of, any recoupment requirements under the Sarbanes-Oxley Act or under other applicable laws, rules, regulations or stock exchange listing standards, including,

without limitation, Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and shall apply notwithstanding anything to the contrary in the Plan.

ARTICLE V

TERMINATIONS

Section 5.1 Terminations. Unless otherwise determined by the Committee, a Participant who, whether voluntarily or involuntarily, is terminated, demoted, transferred or otherwise ceases to be a Participant at any time prior to the date a bonus award is paid in respect of a Performance Period shall not be eligible to receive any bonus award with respect to such Performance Period. Notwithstanding the foregoing, (i) in the event of a Participant’s death during a Performance Period or prior to the date a bonus award is paid in respect of a Performance Period, the Participant shall receive within 75 days of death the target award payable for the Performance Period of the Participant’s death; (ii) in the event of a Participant’s termination by reason of Disability during the Performance Period or prior to the date a bonus award is paid in respect of a Performance Period, the Participant shall receive within 75 days of such termination a partial target award, prorated based on the portion of the Performance Period that elapsed prior to such termination of employment by reason of Disability; and (iii) in the event of a Participant’s Retirement during a Performance Period or prior to the date a bonus award is paid in respect of a Performance Period, the Participant shall receive a partial award based on the level of performance attained for such Performance Period, as determined pursuant to Section 2.2(b), prorated based on the portion of the Performance Period that elapsed prior to the Participant’s Retirement, and paid to the Participant in accordance with Section 3.2 above.

ARTICLE VI

ADMINISTRATION

Section 6.1 Administration.

(a) The Plan shall be administered by the Committee, which may delegate its duties and powers in whole or in part to any subcommittee thereof.

(b) It shall be the duty of the Committee to conduct the general administration of the Plan in accordance with its provisions. The Committee shall have the power to interpret the Plan, and to adopt such rules for the administration, interpretation and application of the Plan as are consistent therewith and to interpret, amend or revoke any such rules. The Committee’s decisions or actions in respect thereof shall be conclusive and binding upon any and all Participants and their beneficiaries, successors and assigns, and all other persons.

ARTICLE VII

OTHER PROVISIONS

Section 7.1 Term. This Plan, as approved by the Committee on February 4, 2019, shall be effective for bonuses awarded for 2018 and thereafter.

Section 7.2 Amendment, Suspension or Termination of the Plan. This Plan does not constitute a promise to pay and may be wholly or partially amended or otherwise modified, suspended or terminated at any time or from time to time by the Board or the Committee.

Section 7.3 Bonus Awards and Other Plans. Nothing contained in the Plan shall prohibit the Company from granting awards or authorizing other compensation to any Participant under any other plan or authority or limit the authority of the Company to establish other special awards or incentive compensation plans providing for the payment of incentive compensation to Participants.

Section 7.4 Miscellaneous.

(a) The Company shall deduct all federal, state and local taxes required by law to be withheld from any bonus award earned by or paid to a Participant hereunder, including, without limitation, any Federal Insurance Contributions Act taxes required to be withheld on a deferred bonus award prior to its payment.

(b) In no event shall the Company be obligated to pay to any Participant a bonus award for a Performance Period by reason of the Company’s payment of a bonus award to such Participant in any other Performance Period.

(c) The rights of Participants under the Plan shall be unfunded and unsecured. Amounts payable under the Plan are not and will not be transferred into a trust or otherwise set aside, except as provided in the Mastercard Incorporated Deferral Plan, in the event of a deferral thereunder. The Company shall not be required to establish any special or separate fund or to make any other segregation of assets to assure the payment of any bonus award under the Plan.

(d) Nothing in this Plan or in any instrument executed pursuant hereto shall confer upon any person any right to continue in the employment or other service of the Company, or shall affect the right of the Company to terminate the employment or other service of any person at any time with or without cause.

(e) No rights of any Participant to payments of any amounts under the Plan shall be sold, exchanged, transferred, assigned, pledged, hypothecated or otherwise disposed of other than by will or by laws of descent and distribution, and any such purported sale, exchange, transfer, assignment, pledge, hypothecation or disposition shall be void.

(f) Any provision of the Plan that is prohibited or unenforceable shall be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions of the Plan.

(g) The validity, construction, interpretation and administration of the Plan and any bonus awards under the Plan and of any determinations or decisions made thereunder, and the rights of all persons having or claiming to have any interest herein or thereunder, shall be governed by, and determined exclusively in accordance with, the laws of New York (determined without regard to its conflict of laws provisions).

EXHIBIT 10.5

Amended and Restated Mastercard International Incorporated Executive Severance Plan

The Amended and Restated Mastercard International Incorporated Executive Severance Plan (the “Plan”) sets forth the guidelines for Mastercard International Incorporated (“Mastercard” or the “Company”) with respect to severance payments and/or benefits to certain of its employees who meet the eligibility requirements set forth in the Plan. At all times, payments under the Plan shall be made solely from the general assets of the Company.

Effective Date

The Plan was effective as of August 1, 2009, and is amended and restated as of April 9, 2021.

Eligibility

Section 16 Officers of the company (for purposes of the Securities Exchange Act of 1934, as amended), excluding the Corporate Controller, shall be eligible to participate in the Plan (“Eligible Members”), to the extent such individuals are not subject to an employment agreement (or other similar agreement) which addresses their eligibility for severance. Eligible Members shall not be eligible to participate in, and receive any severance benefits under, the Amended and Restated Mastercard International Incorporated Severance Plan. To the extent that an Eligible Member is party to an employment agreement (or other similar agreement) providing for payments or benefits other than severance upon a specific termination of employment event also addressed herein, the Eligible Member shall be entitled to receive such payments or benefits as provided upon such event under his or her employment agreement (or other similar agreement), and not under this Plan. In the event of any other inconsistency between the Plan and an Eligible Member’s employment agreement (or other similar agreement), the Eligible Member’s employment agreement will control.

Qualification

An Eligible Member will be entitled to receive “Severance Payments” (as defined below) if:

a.the Eligible Member is terminated by the Company without “Cause” (as such term is defined in the “Definitions” section); or

b.the Eligible Member terminates his or her employment with the Company for “Good Reason” (as such term is defined in the “Definitions” section);

•the Eligible Member’s employment may be terminated at the option of the Eligible Member, effective ninety (90) days after the giving of written notice to the Company by such Eligible Member of the grounds for termination for Good Reason, which grounds, as specified by the Eligible Member, have not been cured by the Company during such ninety (90) day period; provided, however, that such Eligible Member gave notice to the Company of the event(s) constituting Good Reason within sixty (60) days after such event(s).

•the Company may waive all or part of the ninety (90) day notice required to be given by the Eligible Member hereunder by giving written notice to such Eligible Member.

Disqualifying Events

Notwithstanding the foregoing, an Eligible Member shall not be entitled to receive Severance Payments if any of the following disqualifying events occur; provided, however, that such Eligible Member shall nevertheless be eligible to receive certain accrued payments (as described below).

a.the Eligible Member’s employment is terminated due to death or, at the option of the Company, upon the “Disability” (as such term is defined in the “Definitions” section) of the Eligible Member;

b.the Eligible Member elects to voluntarily terminate his or her employment with the Company or a successor for any reason other than for Good Reason (“Voluntary Resignation”) or Mandatory Retirement;

c.the Eligible Member’s employment with the Company is terminated for Cause;

•the Eligible Member’s employment may be terminated for Cause by the Company, effective upon the giving of written notice by the Company to the Eligible Member of such termination for Cause, or effective upon such other date as specified therein (“Notice of Termination for Cause”). The Company’s Notice of Termination For Cause shall state the date of termination and the basis for the Company’s determination that the Eligible Member’s actions establish Cause hereunder.

•if within sixty (60) days subsequent to the termination of the Eligible Member’s employment for death, Disability, Good Reason or Voluntary Resignation or otherwise, the Company determines that the Eligible Member could have been terminated for Cause, such voluntary termination shall be recharacterized as a termination for Cause, upon the giving of written notice to the Eligible Member and the Eligible Member is provided at least five (5) days to provide a written response to the Company. Thereafter, the Company may take appropriate legal action to seek recompense for any Severance Payments improperly paid to the Eligible Member, his estate or beneficiaries hereunder. Following a judicial determination, the prevailing party in any action under this paragraph, shall be entitled to be reimbursed by the non-prevailing party for reasonable legal fees and expenses incurred by the prevailing party in connection with the judicial proceeding seeking to enforce the provisions of this paragraph.

•notwithstanding anything to the contrary herein, if the Company has reason to believe that there are circumstances which, if substantiated, would constitute Cause as defined herein, the Company may suspend the Eligible Member from employment immediately upon notice for such period of time as shall be reasonably necessary for the Company to ascertain whether such circumstances are substantiated. During such suspension, the Eligible Member shall continue to be paid the compensation and provided all benefits in accordance with the regular payroll and benefit practices of the Company; provided, however, that if the Eligible Member has been indicted or otherwise formally charged by governmental authorities with any felony, the Company may, in its sole discretion, and without limiting the Company’s discretion to terminate the Eligible Member’s employment for Cause (provided it has grounds to do so under the terms of this “Disqualifying Events” section, paragraph (c), suspend the Eligible Member without continuation of any compensation or benefits (except health benefits, which shall be continued during the period of suspension), pending final disposition of such criminal

charge(s). Upon receiving notice of any such suspension, the Eligible Member shall promptly leave the premises of the Company and remain off such premises until further notice from the Company. In the event the Eligible Member is suspended as a result of such charges, but is later acquitted or otherwise exonerated from such charges, the Company shall pay to the Eligible Member such compensation, with interest, calculated from the date such compensation was suspended at the prime lending rate in effect on the date the Company receives notice from the Eligible Member of such acquittal or exoneration, and provide benefits withheld from the Eligible Member during the period of the Eligible Member’s suspension, if any, all of which shall be paid and provided within thirty (30) days of the date of the Eligible Member’s acquittal or exoneration from criminal charges that resulted in his suspension shall be limited with respect to the period of up to two (2) years from the date of suspension;

d.the failure by the Eligible Member to give a timely notice of termination for Good Reason (as described above); or

e.the Eligible Member becomes employed by a Company Entity.

Amount and Duration of Severance

a.Accrued Payments

An Eligible Member shall be entitled to the following accrued payments following the Date of Termination (as such term is defined in the “Definitions” section) regardless of whether the Eligible Member has been rendered ineligible for receipt of the Severance Payments due to a disqualifying event (as described above):

Death, Disability or Mandatory Retirement

If the Eligible Member’s employment is terminated on account of his or her death, due to Disability, or upon Mandatory Retirement, the Eligible Member or his or her estate and/or beneficiaries, as applicable, shall be entitled to receive the following lump sum payment (subject to any previously elected deferrals under the Mastercard Incorporated Deferral Plan), within thirty (30) days following the Date of Termination:

•“Base Salary” (as such term is defined in the “Definitions” section) earned but not paid prior to the Date of Termination;

•payment for all accrued but unused vacation time up to the Date of Termination;

•(x) in the event of the Eligible Member’s death, the target annual incentive bonus payable for the year in which the Eligible Member’s death occurs, (y) in the event of termination due to Disability, a pro rata portion (based upon completed calendar months worked prior to the date of Disability) of the target annual incentive bonus payable for the year in which the Eligible Member’s Date of Termination occurs, or (z) in the event of Mandatory Retirement, a pro rata portion (based upon actually completed calendar months worked) of the annual incentive bonus payable for the year in which the Eligible Member’s termination of employment occurs based upon the actual performance of the Company for the applicable performance period (and taking into account the terms of the annual incentive plan, including but not limited to the discretion of the Compensation Committee to reduce such bonus amount) as contemplated in accordance with the requirements of Section 162(m) of

the Internal Revenue Code of 1986, as amended (the “Code”), with such amount payable when the annual incentive bonus is regularly paid to similarly employees for such year;

•to the extent not already paid, the annual incentive bonus for the year immediately preceding the year in which the Eligible Member’s Date of Termination, with such amount payable when the annual incentive bonus is regularly paid to similarly employees for such year; and

•such additional benefits, if any, to which the Eligible Member is expressly eligible following the termination of the Eligible Member’s employment on account of death, Disability or Mandatory Retirement, as applicable, payable or made available under such terms and conditions as may be provided by the then existing plans, programs and/or arrangements of the Company.

Cause or Voluntary Resignation

If the Company terminates the Eligible Member’s employment for Cause or the Eligible Member terminates his or her employment by Voluntary Resignation, the Eligible Member shall be entitled to receive the following lump sum payment, as soon as practicable, but in no event later than thirty (30) days following the Date of Termination:

•Base Salary earned but not paid prior to the Date of Termination;

•payment for all accrued but unused vacation time up to the Date of Termination; and

•additional benefits, if any, to which the Eligible Member is expressly eligible following his termination for Cause or by Voluntary Resignation, as applicable, payable or made available under such terms and conditions as may be provided by the then existing plans, programs and/or arrangements of the Company.

Without Cause or For Good Reason

If the Company terminates the Eligible Member’s employment without Cause or the Eligible Member terminates his or her employment for Good Reason, the Eligible Member shall be entitled to the following payments following the Date of Termination:

•a lump sump payment (subject to any previously elected deferrals under the Mastercard Incorporated Deferral Plan), within thirty (30) days following the Date of Termination of all Base Salary earned but not paid prior to the Date of Termination;

•a lump sum payment within thirty (30) days following the Date of Termination equal to all accrued but unused vacation time up to the Date of Termination;

•a pro rata portion (based upon actually completed calendar months worked) of the annual incentive bonus payable for the year in which the Eligible Member’s Date of Termination occurs based on the actual performance of the Company for the applicable performance period as determined by the Compensation Committee and payable in accordance with the regular bonus pay practices of the Company, as contemplated in accordance with the requirements of Section 162(m) of the Code; and

•to the extent not already paid, the annual incentive bonus for the year immediately preceding the year in which the Eligible Member’s Date of Termination occurs, payable in the

amount and at the time such bonus would have been paid had the Eligible Member remained employed.

b.Severance Payments

If the Eligible Member is entitled to receive severance payments and/or benefits as provided under the “Qualification” section, and has not been rendered ineligible for receipt of such severance payments and/or benefits due to a disqualifying event (as described above), the Eligible Member shall be entitled to the following payments (the “Severance Payments”):

1.Severance Pay

The Eligible Member shall be entitled to receive (i) Base Salary continuation for an eighteen (18) month period following the Eligible Member’s Date of Termination (the “Severance Pay Period”), and (ii) payment (subject to any previously elected deferrals under the Mastercard Incorporated Deferral Plan), of an amount equal to 1.5 times the annual incentive bonus paid to such Eligible Member for the year prior to the year in which the Eligible Member’s Date of Termination occurs (the “Bonus Payment”) payable ratably over the Severance Pay Period in accordance with the annual incentive bonus pay practices of the Company (such Base Salary continuation and Bonus Payment being collectively referred to herein as “Severance Pay”).

2.Medical Benefits Continuation

The Eligible Member shall be entitled to payment by the Company on the Eligible Member’s behalf, for the monthly cost of the premiums for coverage under the Consolidated Omnibus Reconciliation Act of 1985, as amended (“COBRA”), for a period equivalent to the eighteen (18) month COBRA period (twenty-nine (29) month period, if the Eligible Member is disabled under the Social Security Act within the first sixty (60) days of the continuation period) or the Severance Pay Period, whichever is shorter (the “Medical Benefits”), provided, however, such coverage shall not be provided if during such period the Eligible Member is or becomes ineligible under the provisions of COBRA for continuing coverage; and provided, further, that if the Eligible Member is eligible for Retiree Health Coverage under the Mastercard Retiree Health Plan, the Company shall pay the full cost of such Retiree Health or COBRA coverage, as applicable, during the Severance Pay Period and thereafter, retiree contribution levels provided under the provisions of the Retiree Health Plan shall apply.

3. Outplacement Services

The Eligible Member shall be entitled to reasonable outplacement services, to be provided by a firm selected by the Company, at a level generally made available to executives of the Company for the shorter of the Severance Pay Period or the period he or she remains unemployed.

4.Additional Payments

The Company reserves the right, in its sole discretion, to increase Severance Payments or Severance Pay for up to an additional six months for Eligible Members. Additional payments may be conditioned upon any additional criteria as the Company may determine in its sole discretion.

The Eligible Member shall be entitled to such other benefits, if any, to which such Eligible Member is expressly eligible following the termination of the Eligible Member’s employment by the Company without Cause, by the Eligible Member with Good Reason, payable or made available under such

terms and conditions as may be provided by the then existing plans, programs and/or arrangements of the Company (other than any severance payments payable under the terms of any benefit plan, including, but not limited to, the Amended and Restated Mastercard International Incorporated Severance Plan).

5.Separation Agreement and Release

The Company’s obligations to make payments and provide benefits under this “Severance Payments” section, paragraphs (1)-(3), are conditioned upon the Eligible Member’s execution (without revocation) of the Company’s separation agreement and release of all claims related to the Eligible Member’s employment or the termination thereof in a form satisfactory to Mastercard (the “Separation Agreement and Release”), which Separation Agreement and Release shall include a non-competition restriction and a non-solicitation restriction for a period no less than the Severance Pay Period (taking into account any additional payment periods pursuant to Section 4 above), as more fully described in such Separation Agreement and Release, provided that if the Eligible Member should fail to execute such Separation Agreement and Release within sixty (60) days following the Date of Termination, the Company shall not have any obligation to make the payments and provide the benefits contemplated under this “Severance Payments” section, paragraphs (1)-(3). In the event of Severance Pay in the case in which the Eligible Member is provided with a notice period, the Severance Pay shall be payable beginning at the end of the notice period (provided that the Separation Agreement and Release has been fully executed and legally effective as of the last day of the notice period). In the event of Severance Pay in the case in which the Eligible Member is not provided with a notice period, the Severance Pay payable during the period following the Eligible Member’s Date of Termination during which the Eligible Member is required to execute a legally effective Separation Agreement and Release shall be aggregated and paid in a lump sum on the 60th day following the Date of Termination, with subsequent payments following over the original schedule during the Separation Pay Period (unless required to be paid six months plus one day after the Date of Termination).

Rehired Eligible Members

If, following an Eligible Member’s Date of Termination, an Eligible Member is rehired by the Company or any Company Entity or is retained by the Company or any Company Entity as a consultant, his or her Severance Pay, Medical Benefits, outplacement services, and any additional payments under this Plan will cease and be forfeited as of the date of reemployment or the effective date of the consultancy, and no further severance payments and/or benefits will be paid or provided by the Company to such Eligible Member.

Income Taxes

Accrued payments and Severance Payments are subject to all applicable foreign, federal, state, and local tax withholding and generally are taxable income to the Eligible Member.

Section 409A of the Code

Notwithstanding any other provision of the Plan, if any payment, compensation or other benefit provided to the Eligible Member in connection with his or her employment termination is determined, in whole or in part, to constitute “nonqualified deferred compensation” within the meaning of Section 409A of the Code and the Eligible Member is a specified employee as defined in Section 409A(a)(2)(b)(i) of the Code, no part of such payments shall be paid before the day that is six (6) months plus one (1) day after the Date of Termination (such date, the “New Payment

Date”). The aggregate of any payments that otherwise would have been paid to the Eligible Member during the period between the Date of Termination and the New Payment Date shall be paid to the Eligible Member in a lump sum on such New Payment Date. Thereafter, any payments that remain outstanding as of the day immediately following the New Payment Date shall be paid without delay over the time period originally scheduled, in accordance with the terms of the Plan. If the Eligible Member dies during the period between the Date of Termination and the New Payment Date, the amounts withheld on account of Section 409A of the Code shall be paid to the Eligible Member’s beneficiary within thirty (30) days of the Eligible Member’s death.

Notwithstanding the preceding paragraph, up to two (2) times the lesser of: (i) the Eligible Employee’s Base Salary for the year preceding the year in which the Date of Termination occurs; and (ii) the maximum amount that may be taken into account under a qualified plan pursuant to Section 401(a)(17) of the Code for the year in which the Date of Termination occurs, shall be paid in accordance with the schedule set forth in the “Severance Payments” section, paragraph (1), without regard to such six (6) month delay.

The Plan is intended to comply with the requirements of Section 409A of the Code, and, specifically, with the separation pay exemption and short term deferral exemption of Section 409A of the Code, and shall in all respects be administered in accordance with Section 409A of the Code. Notwithstanding anything in the Plan to the contrary, distributions may only be made under the Plan upon an event and in a manner permitted by Section 409A of the Code or an applicable exemption. All payments to be made upon a termination of employment under the Plan may only be made upon a “separation from service” under Section 409A of the Code. For purposes of Section 409A of the Code, the right to a series of installment payments under the Plan shall be treated as a right to a series of separate payments. In no event may the Eligible Member, directly or indirectly, designate the calendar year of a payment. All reimbursements and in-kind benefits provided under the Plan shall be made or provided in accordance with the requirements of Section 409A of the Code, including, where applicable, the requirement that (i) any reimbursement shall be for expenses incurred during the Eligible Member’s lifetime (or during a shorter period of time specified in the Plan), (ii) the amount of expenses eligible for reimbursement, or in-kind benefits provided, during a calendar year may not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other calendar year, (iii) the reimbursement of an eligible expense will be made on or before the last day of the calendar year following the year in which the expense is incurred, and (iv) the right to reimbursement or in-kind benefits is not subject to liquidation or exchange for another benefit.

Administration of Plan

The “Plan Administrator” (as such term is defined in the “Definitions” section) shall have the exclusive right, power, and authority, in its sole and absolute discretion, to administer, apply, and interpret the Plan and to decide all matters arising in connection with the operation or administration of the Plan to the extent not retained by Mastercard as set forth herein. Without limiting the generality of the foregoing, the Plan Administrator shall have the sole and absolute discretionary authority to:

•take all actions and make all decisions with respect to the eligibility for, and the amount of, severance and benefits payable under the Plan;

•formulate, interpret and apply rules, regulations, and policies necessary to administer the Plan in accordance with its terms;

•decide questions, including legal or factual questions, with regard to any matter related to the Plan;

•construe and interpret the terms and provisions of the Plan and all documents which relate to the Plan and decide any and all matters arising thereunder including the right to remedy possible ambiguities, inconsistencies or omissions;

•investigate and make such factual or other determinations as shall be necessary or advisable for the resolution of appeals of adverse determinations under the Plan; and

•process, and approve or deny, claims for severance and benefits under the Plan.

All determinations made by the Plan Administrator as to any question involving their respective responsibilities, powers and duties under the Plan shall be final and binding on all parties, to the maximum extent permitted by law. All determinations by Mastercard referred to in the Plan shall be made by Mastercard in its capacity as an employer and settlor of the Plan.

Modification or Termination of Plan

Mastercard reserves the right in its sole and absolute discretion, to amend, modify, or terminate the Plan, in whole or in part, including any or all of the provisions of the Plan, for any reason, at any time, by action of the Plan Administrator. Any amendments to the Plan must be approved in writing by the Human Resource Compensation Committee of Mastercard.

Claims and Appeal Procedures

The Plan Administrator shall make a determination in connection with the termination of employment of any Eligible Member as to whether a benefit under the Plan is payable to such Eligible Member, taking into consideration any determination made by the Company as to the circumstances regarding the termination, the Company’s decision as to whether or not to pay a benefit under the “Qualification” section, the “Disqualifying Events” section, or the potential applicability of a disqualifying event, and as to the amount of payment. The Plan Administrator shall advise any Eligible Member it determines is entitled to severance and benefits under the Plan and the amount of such severance and benefits. The Plan Administrator may delegate any or all of its responsibilities under this section.

Claim Procedures

Each Eligible Member or his or her authorized representative (each, the “Claimant”) claiming severance and benefits under the Plan who has not been advised of such severance and benefits by the Plan Administrator or who is not satisfied with the amount of any severance and benefits awarded under the Plan is eligible to file a written claim with the Plan Administrator.

Within ninety (90) days after receiving the claim, the Plan Administrator will decide whether or not to approve the claim. The ninety (90)-day period may be extended by the Plan Administrator for an additional ninety (90)-day period if special circumstances require an extension of time to consider the claim. If the Plan Administrator extends the ninety (90)-day period, the Claimant will be notified in writing before the expiration of the initial 90 day period as to the length of the extension and the special circumstances that necessitate the extension.

If the claim is denied, the Plan Administrator shall set forth in writing or electronically the reasons for the denial; the relevant provisions of the Plan on which the decision is made; a description of the

Plan’s claim appeal procedures; and if additional material or information is necessary to perfect the claim, an explanation of why such material or information is necessary. The notice will also include a statement regarding the procedures for the Claimant to file a request for review of the claim denial as set forth in the “Appeal Procedures” section and the Claimant’s right to bring a civil action under Section 502(a) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) following a claim denial on appeal.

Appeal Procedures

If a claim has been denied by the Plan Administrator and the Claimant wishes further consideration and review of his or her claim, he or she must file an appeal of the denial of the claim to the Plan Administrator no later than sixty (60) days after the receipt of the written notification of the Plan Administrator’s denial. In correlation with his or her appeal, the Claimant may request the opportunity to review relevant documents prior to submission of a written statement, submit documents, records and comments in writing, and receive, upon request and free of charge, reasonable access to and copies of all documents, records and other information relevant to the Claimant’s claim for severance and benefits under the Plan. The review of the appeal by the Plan Administrator will take into account all comments, documents, records and other information submitted by the Claimant relating to the claim, without regard to whether such information was submitted or considered in the initial review of the claim.

The Plan Administrator will notify the Claimant in writing or electronically of its decision with respect to its review of the appeal within sixty (60) days of the receipt of the request for a review of the claim. Due to special circumstances, the Plan Administrator may extend the time to reach a decision with respect to the appeal of the claim denial, in which case the Plan Administrator will notify the Claimant in writing before the expiration of the initial 60 day period as to the length of the extension and the special circumstances that necessitate such extension and render a decision as soon as possible, but not later than one hundred twenty (120) days following the receipt of the Claimant’s request for appeal.

If the appeal is denied, the Plan Administrator will set forth in writing or electronically the specific reasons for the denial and references to the relevant Plan provisions on which the determination of the denial is based. The notice will also include a statement that the Claimant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant to the claim, and a statement of the Claimant’s right to bring an action under Section 502(a) of ERISA.

Exhaustion of Remedies under the Plan

A Claimant wishing to seek judicial review of an adverse benefit determination under the Plan, whether in whole or in part, must file any suit or legal action, including, without limitation, a civil action under Section 502(a) of ERISA, within one (1) year of the date the final decision on the adverse benefit determination on review is issued or should have been issued or lose any rights to bring such an action. If any such judicial proceeding is undertaken, the evidence presented shall be strictly limited to the evidence timely presented to the Plan Administrator. A Claimant may bring an action under ERISA only after he or she has exhausted the Plan’s claims and appeal procedures.

Miscellaneous Provisions

•Neither the establishment of this Plan, nor any modification thereof, nor the payment of any severance and benefits hereunder, shall be construed as giving to any Eligible Member, or other

person, any legal or equitable right against the Company or any current or former officer, director, or employee thereof, and in no event shall the terms and conditions of employment by the Company of any Eligible Member be modified or in any way affected by this Plan.

•The records of the Company with respect to employment history, compensation, absences, illnesses, and all other relevant matters shall be conclusive for all purposes of this Plan.

•The respective terms and provisions of the Plan shall be construed, whenever possible, to be in conformity with the requirements of ERISA, or any subsequent laws or amendments thereto. To the extent not to conflict with the preceding sentence, the construction and administration of the Plan shall be in accordance with the laws of the state of New York applicable to contracts made and to be performed within the state of New York (without reference to its conflicts of law provisions).

•Nothing contained in this Plan shall be held or construed to create any liability upon the Company to retain any employee in its service or to change the employee-at-will status of any employee. All employees shall remain subject to discharge or discipline to the same extent as if the Plan had not been put into effect. An employee’s failure to qualify for or receive a severance and benefits hereunder shall not establish any right to (i) continuation or reinstatement, or (ii) any benefits in lieu of severance and benefits.

Definitions


Terms			Definitions
Base Salary			The Eligible Member’s annual base salary as in effect from time to time.
Cause			•the willful failure by the Eligible Member to perform his or her duties or responsibilities (other than due to Disability); •the Eligible Member’s engaging in serious misconduct that is injurious to the Company including, but not limited to, damage to its reputation or standing in its industry; •the Eligible Member’s having been convicted of, or entered a plea of guilty or nolo contendere to, a crime that constitutes a felony, or a crime that constitutes a misdemeanor involving moral turpitude; •the material breach by the Eligible Member of any written covenant or agreement with the Company not to disclose any information pertaining to the Company; or •the breach by the Eligible Member of the Code of Conduct, the Supplemental Code of Conduct, any material provision of the Plan, or any material provision of the following the Company policies: non-discrimination, substance abuse, workplace violence, nepotism, travel and entertainment, corporation information security, antitrust/competition law, enterprise risk management, accounting, contracts, purchasing, communications, investor relations, immigration, privacy, insider trading, financial process and reporting procedures, financial approval authority, whistleblower, anti-corruption and other similar the Company policies, whether currently in effect or adopted after the Effective Date of the Plan.
Company			Mastercard International Incorporated.
Company Entity			Any entity (including any subsidiary, affiliate or joint venture) in which the Company has a direct or indirect ownership interest of not less than 20%.
Disability			Disability shall be defined as set forth under the Mastercard Long-Term Disability Benefits Plan, as it may be amended from time to time. Any dispute concerning whether the Eligible Member is deemed to have suffered a Disability for purposes of the Plan shall be resolved in accordance with the dispute resolution procedures set forth in the Mastercard Long-Term Disability Benefits Plan.


Good Reason			The occurrence of any of the following without the prior written consent of the Eligible Member: •the assignment to a position for which the Eligible Member is not qualified or a materially lesser position than the position held by the Eligible Member (although duties may differ without giving rise to a termination by the Eligible Member for Good Reason); •a material reduction in the Eligible Member’s annual Base Salary except that a 10 percent reduction, in the aggregate, over the period of the Eligible Member’s employment shall not be treated as a material reduction; •the relocation of the Eligible Member’s principal place of employment to a location more than fifty (50) miles from the Eligible Member’s principal place of employment (unless such relocation does not increase the Eligible Member’s commute by more than twenty (20) miles), except for required travel on the Company’s business to an extent substantially consistent with the Eligible Member’s business travel obligations as of the date of relocation.
Mandatory Retirement			The last day of the calendar year in which the Eligible Member attains the age of sixty-five (65).
Mastercard			Mastercard International Incorporated.
Plan Administrator			Executive Vice President, Total Rewards (or her functional successor)
Date of Termination			The date on which the Eligible Member incurs a termination of employment as described in the “Qualification” section or such other date on which an Eligible Member incurs a “separation from service” determined using the default provisions set forth in Section 1.409A-1(h) of the Treasury Regulations. Pursuant to such default provisions, an Eligible Member will be treated as no longer performing services for the Company when the level of services he or she performs for the Company decreases to a level equal to 20% or less of the average level of services performed by such Eligible Member during the immediately preceding 36 months.

Your Rights Under ERISA

The Department of Labor has issued regulations that require the Company to provide you with a statement of your rights under ERISA with respect to this Plan. The following statement was designated by the Department of Labor to satisfy this requirement and is presented accordingly.

As a participant in the Plan, you are entitled to certain rights and protections under ERISA. ERISA provides that all Plan participants are entitled to:

Receive Information About Your Plan and Benefits

1.Examine, without charge, all Plan documents and copies of all documents filed by the Company with the Department of Labor. This includes annual reports and Plan descriptions. All such documents are available for review in your Human Resources Department.

2.Obtain, upon written request to the Plan Administrator, copies of documents governing the operation of the Plan, including copies of the latest annual report (Form 5500 Series) and an updated summary plan description. The Plan Administrator may charge you a reasonable fee for the copies.

3.Receive a summary of the Plan’s annual financial report. Once each year, the Plan Administrator will send you a Summary Annual Report of the Plan’s financial activities at no charge.

Prudent Action by Fiduciaries

In addition to creating rights for Plan participants, ERISA imposes duties upon the people who are responsible for the operation of the Plan. The people who operate your Plan, called fiduciaries of the Plan, have a duty to do so prudently and in the interest of you and other Plan participants.

No one, including your employer or any other person, may fire you or otherwise discriminate against you in any way to prevent you from obtaining a pension or welfare benefit or exercising your rights under ERISA.

Enforcing Your Rights

If your claim for severance and benefits is denied or ignored in whole or in part, you have a right to receive a written explanation of the reason for the denial, to obtain copies of documents related to the decision without charge, and to appeal any denial, all within certain time schedules. You have the right to have your claim reviewed and reconsidered. You also have the right to request a review of the denial of your claim as explained in the “Appeal Procedures” section. No one, including your employer or any other person, may discriminate against you in any way to prevent you from obtaining severance and benefits under the Plan or exercising your rights under ERISA.

Under ERISA, there are steps you can take to enforce the above rights. For instance, if you request materials from the Plan and do not receive them within thirty (30) days, you may file suit in a federal court. In such a case, the court may require the Plan Administrator to provide the materials and pay you up to $110 a day until you receive the materials, unless the materials were not sent because of reasons beyond the control of the Plan Administrator. If you have a claim for severance and benefits which is denied or ignored, in whole or in part, you may file suit in a state or federal court after you have exhausted the Plan’s claims and appeal procedures as described in the section “Claims and Appeal Procedures” hereof. If it should happen that Plan fiduciaries misuse the Plan’s money, or if you are discriminated against for asserting your rights, you may seek assistance from the Department of Labor, or you may file suit in a federal court.

The court will decide who should pay court costs and legal fees. If you are successful, the court may order the person you sued to pay these costs and fees. If you lose, the court may order you to pay these costs and fees, for example, if it finds your claim is frivolous.

Assistance with Your Questions

If you have any questions about the Plan, you should contact the Plan Administrator through your Human Resources Department. They will be glad to help you. If you have any questions about this statement or about your rights under ERISA, or if you need assistance in obtaining documents from the Plan Administrator, you should contact the nearest Area Office of the Employee Benefits Security Administration, Department of Labor, listed in your telephone directory, or you may contact:

The Division of Technical Assistance and Inquiries

Employee Benefits Security Administration,

Department of Labor

200 Constitution Avenue, N.W., Room 5N625

Washington, DC 20210

1-866-444-EBSA (1-866-444-3272)

www.dol.gov/ebsa (for general information)

www.askebsa.dol.gov (for electronic inquiries)

You may also obtain certain publications about your rights and responsibilities under ERISA by calling the publications hotline of the Employee Benefits Security Administration at 1-866-444-3272.

Administrative Facts


Topic			Description
Plan Name			Amended and Restated Mastercard International Incorporated Executive Severance Plan
Plan Sponsor			Mastercard International Incorporated 2000 Purchase Street Purchase, NY 10577 USA
Source of Contributions to Plan			Employer payments from corporate assets
Employer Identification Number			____________
Plan Number			______
Plan Administrator			Executive Vice President, Total Rewards (or her functional successor) Mastercard International Incorporated 2000 Purchase Street Purchase, NY 10577 USA ________________
Agent for Receiving Service of Legal Process			General Counsel Mastercard International Incorporated 2000 Purchase Street Purchase, NY 10577 USA _____________

Contact Information

If you have questions about this Plan, please contact your department’s HR Business Partner or Mastercard’s Chief Human Resources Officer.

EXHIBIT 31.1

CERTIFICATION PURSUANT TO

RULE 13a-14(a)/15d-14(a),

AS ADOPTED PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Michael Miebach, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Mastercard Incorporated for the three months ended March 31, 2021;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


			Date:			April 29, 2021

			By:			/s/ Michael Miebach
						Michael Miebach
						President and Chief Executive Officer

EXHIBIT 31.2

CERTIFICATION PURSUANT TO

RULE 13a-14(a)/15d-14(a),

AS ADOPTED PURSUANT TO SECTION 302

OF THE SARBANES-OXLEY ACT OF 2002

I, Sachin Mehra, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Mastercard Incorporated for the three months ended March 31, 2021;

b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.


			Date:			April 29, 2021

			By:			/s/ Sachin Mehra
						Sachin Mehra
						Chief Financial Officer

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of Mastercard Incorporated (the "Company") on Form 10-Q for the three month period ended March 31, 2021 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael Miebach, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

1.The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.



April 29, 2021

/s/ Michael Miebach
Michael Miebach
President and Chief Executive Officer

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of Mastercard Incorporated (the "Company") on Form 10-Q for the three month period ended March 31, 2021 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Sachin Mehra, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:

1.The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.



April 29, 2021

/s/ Sachin Mehra
Sachin Mehra
Chief Financial Officer

EXHIBIT 99.1

Section 13(r) Disclosure

Mastercard Incorporated ("Mastercard") has established a risk-based compliance program designed to prevent us from having business dealings with Iran, as well as other prohibited countries, regions, individuals or entities. This includes obligating issuers and acquirers to screen account holders and merchants, respectively, against the U.S. Office of Foreign Assets Control’s (“OFAC”) sanctions lists, including the List of Specially Designated Nationals (“SDN list”).

We identified through our compliance program that for the period covered by this Report, Mastercard processed transactions resulting from one acquirer located in the Europe region having acquired transactions for an Iranian airline, which accepted Mastercard cards in this region.

OFAC regulations and other legal authorities provide exemptions for certain activities involving dealings with Iran. However, Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012 requires us to disclose whether we, or any of our affiliates, have knowingly engaged in certain transactions or dealings involving the Government of Iran or with certain persons or entities found on the SDN list, regardless of whether these dealings constitute a violation of OFAC regulations.

We do not calculate net revenues or net profits associated with specific merchants (our customers’ customers). However, we used our fee schedule and the aggregate number and amount of transactions involving the Iranian airline to estimate the net revenue and net profit we obtained during the three months ended March 31, 2021. Both the number of transactions and our estimated net revenue and net profits for this period are de minimis.