10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

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

For the quarterly period ended March 31, 2013

Or

¨ 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)

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  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted 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 and post such files).    Yes  x     No  ¨

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

Large accelerated filer	x	Accelerated filer	o
Non-accelerated filer	o (do not check if a smaller reporting company)	Smaller reporting company	o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes  ¨    No  x

As ofApril 25, 2013, there were 116,857,519 shares outstanding of the registrant’s Class A common stock, par value $0.0001 per share; and 4,710,704 shares outstanding of the registrant’s Class B common stock, par value $0.0001 per share.

MASTERCARD INCORPORATED

FORM 10-Q

TABLE OF CONTENTS

	Page
PART I — FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)	4
Consolidated Balance Sheet — March 31, 2013 and December 31, 2012	4
Consolidated Statement of Operations — Three Months Ended March 31, 2013 and 2012	5
Consolidated Statement of Comprehensive Income — Three Months Ended March 31, 2013 and 2012	6
Consolidated Statement of Changes in Equity — Three Months Ended March 31, 2013	6
Consolidated Statement of Cash Flows — Three Months Ended March 31, 2013 and 2012	7
Notes to Consolidated Financial Statements	8
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	25
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	36
ITEM 4. CONTROLS AND PROCEDURES	36
Report of Independent Registered Public Accounting Firm	37
PART II — OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS	38
ITEM 1A. RISK FACTORS	38
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	38
ITEM 6. EXHIBITS	38
SIGNATURES	39

2

In this 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 (d/b/a MasterCard Worldwide).

Forward-Looking Statements

This Report on Form 10-Q 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. These forward-looking statements relate to the Company’s future prospects, developments and business strategies and include, without limitation, statements relating to:

• the Company’s focus on growing its credit, debit, prepaid, commercial and payment transaction processing offerings;

• the Company’s focus on diversifying its business (including seeking new areas of growth, expanding acceptance points and maintaining unsurpassed acceptance and successfully working with new business partners);

• the Company’s focus on building new businesses through technology and strategic efforts and alliances focused on innovative payment methods;

• the stability of economies around the globe;

• the Company’s advertising and marketing strategy and investment;

• the Company's belief that its existing cash, cash equivalents and investment securities balances, its cash flow generating capabilities, its borrowing capacity and its access to capital resources are sufficient to satisfy its future operating cash needs, capital asset purchases, outstanding commitments and other liquidity requirements associated with its existing operations and potential obligations; and

• the manner and amount of purchases by the Company pursuant to its share repurchase program, dependent upon price and market conditions.

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. We believe there are certain risk factors that are important to our business, and these could cause actual results to differ from our expectations. Such risk factors include: legislation, regulatory proceedings, central bank regulation and litigation related to interchange fees and other practices; regulations established by the Dodd-Frank Wall Street Reform and Consumer Protection Act in the United States; introduction of the no-surcharge rule; requirement to permit U.S. merchants to surcharge credit cards (subject to final approval of the U.S. merchant class litigation); regulation or other legislative or regulatory activity with respect to the payments industry in one jurisdiction or of one product resulting in regulation (or impact on pending regulatory proceedings) in other jurisdictions or of other products; competitive issues caused by preferential or protective government actions; regulation of the payments industry, consumer privacy, data use and/or security; potential or incurred liability and limitations on business resulting from litigation; potential changes in tax laws; substantial and increasingly intense competition in the payments industry; potential future changes in the competitive landscape; competitive pressure on pricing; banking industry consolidation; loss of significant business from significant customers; merchant activity; the relationship of our competitors with our customers; our relationship with our customers; brand perceptions and reputation; global economic events and the overall business environment; decline in cross-border travel; the effect of general economic and global political conditions on consumer spending trends; exposure to loss or illiquidity due to guarantees of settlement and certain other third-party obligations; impact of a failure or breach of our security systems or infrastructure as a result of cyber attacks; disruptions to our transaction processing systems and other services; account data breaches; reputation damage from increases in fraudulent activity; the challenges resulting from rapid technological developments in the payments industry; the effect of adverse currency fluctuation; acquisition, entry into new businesses and other integration issues; and issues relating to our Class A common stock and corporate governance structure. Please see a complete discussion of these risk factors in Item 1A (Risk Factors) in Part I of the Company's Annual Report on Form 10-K for the year ended December 31, 2012. 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.

3

PART I — FINANCIAL INFORMATION

Item 1.     Consolidated Financial Statements (Unaudited)

MASTERCARD INCORPORATED

CONSOLIDATED BALANCE SHEET

(UNAUDITED)

	March 31, 2013			December 31, 2012
	(in millions, except share data)
ASSETS
Cash and cash equivalents	$	1,984		$	2,052
Restricted cash for litigation settlement	724			726
Investment securities available-for-sale, at fair value	3,036			2,951
Accounts receivable	941			925
Settlement due from customers	670			1,117
Restricted security deposits held for customers	812			777
Prepaid expenses and other current assets	488			681
Deferred income taxes	128			128
Total Current Assets	8,783			9,357
Property, plant and equipment, net	468			472
Deferred income taxes	59			60
Goodwill	1,042			1,092
Other intangible assets, net of accumulated amortization of $627 and $596, respectively	637			672
Other assets	820			809
Total Assets	$	11,809		$	12,462
LIABILITIES AND EQUITY
Accounts payable	$	262		$	357
Settlement due to customers	624			1,064
Restricted security deposits held for customers	812			777
Accrued litigation	724			726
Accrued expenses	1,703			1,748
Other current liabilities	289			234
Total Current Liabilities	4,414			4,906
Deferred income taxes	99			104
Other liabilities	540			523
Total Liabilities	5,053			5,533
Commitments and Contingencies
Stockholders’ Equity
Class A common stock, $0.0001 par value; authorized 3,000,000,000 shares, 133,837,376 and 133,604,903 shares issued and 117,171,534 and 118,405,075 outstanding, respectively	—			—
Class B common stock, $0.0001 par value; authorized 1,200,000,000 shares, 4,736,468 and 4,838,840 issued and outstanding, respectively	—			—
Additional paid-in-capital	3,648			3,641
Class A treasury stock, at cost, 16,665,842 and 15,199,828 shares, respectively	(4,902		)	(4,139		)
Retained earnings	8,047			7,354
Accumulated other comprehensive income (loss)	(50		)	61
Total Stockholders’ Equity	6,743			6,917
Non-controlling interests	13			12
Total Equity	6,756			6,929
Total Liabilities and Equity	$	11,809		$	12,462

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

4

MASTERCARD INCORPORATED

CONSOLIDATED STATEMENT OF OPERATIONS

(UNAUDITED)

	Three Months Ended March 31,
	2013			2012
	(in millions, except per share data)
Net Revenue	$	1,906		$	1,758
Operating Expenses
General and administrative	608			579
Advertising and marketing	129			125
Depreciation and amortization	62			54
Total operating expenses	799			758
Operating income	1,107			1,000
Other Income (Expense)
Investment income	8			9
Interest expense	(5		)	(6		)
Other income (expense)	(8		)	(3		)
Total other income (expense)	(5		)	—
Income before income taxes	1,102			1,000
Income tax expense	336			318
Net Income	$	766		$	682
Basic Earnings per Share	$	6.25		$	5.38
Basic Weighted-Average Shares Outstanding	123			127
Diluted Earnings per Share	$	6.23		$	5.36
Diluted Weighted-Average Shares Outstanding	123			127

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

5

MASTERCARD INCORPORATED

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

(UNAUDITED)

	Three Months Ended March 31,
	2013			2012
	(in millions)
Net Income	$	766		$	682
Other comprehensive income (loss):
Foreign currency translation adjustments	(112		)	77
Defined benefit pension and other postretirement plans	1			1
Income tax effect	—			—
Defined benefit pension and other postretirement plans, net of income tax effect	1			1
Investment securities available-for-sale	—			3
Income tax effect	—			(1		)
Investment securities available-for-sale, net of income tax effect	—			2
Other comprehensive income (loss), net of tax	(111		)	80
Comprehensive Income	$	655		$	762

MASTERCARD INCORPORATED

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

(UNAUDITED)

	Total			Retained Earnings			Accumulated Other Comprehensive Income (Loss), Net of Tax			Common Stock				Additional Paid-In Capital		Class A Treasury Stock			Non- Controlling Interests
										Class A		Class B
	(in millions, except per share data)
Balance at December 31, 2012	$	6,929		$	7,354		$	61		$	—	$	—	$	3,641	$	(4,139	)	$	12
Net income	766			766			—			—		—		—		—			—
Activity related to non-controlling interests	1			—			—			—		—		—		—			1
Other comprehensive income (loss), net of tax	(111		)	—			(111		)	—		—		—		—			—
Cash dividends declared on Class A and Class B common stock, $0.60 per share	(73		)	(73		)	—			—		—		—		—			—
Purchases of treasury stock	(766		)	—			—			—		—		—		(766		)	—
Share-based payments	10			—			—			—		—		7		3			—
Balance at March 31, 2013	$	6,756		$	8,047		$	(50	)	$	—	$	—	$	3,648	$	(4,902	)	$	13

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

6

MASTERCARD INCORPORATED

CONSOLIDATED STATEMENT OF CASH FLOWS

(UNAUDITED)

	Three Months Ended March 31,
	2013			2012
	(in millions)
Operating Activities
Net income	$	766		$	682
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	62			54
Share-based payments	(23		)	(53		)
Deferred income taxes	(5		)	(14		)
Other	16			8
Changes in operating assets and liabilities:
Accounts receivable	(25		)	7
Income taxes receivable	149			—
Settlement due from customers	433			(43		)
Prepaid expenses	(7		)	(53		)
Accounts payable	(93		)	(88		)
Settlement due to customers	(423		)	(88		)
Accrued expenses	(30		)	1
Net change in other assets and liabilities	52			14
Net cash provided by operating activities	872			427
Investing Activities
Purchases of investment securities available-for-sale	(934		)	(398		)
Purchases of property, plant and equipment	(20		)	(12		)
Capitalized software	(22		)	(39		)
Proceeds from sales of investment securities available-for-sale	576			43
Proceeds from maturities of investment securities available-for-sale	257			111
Proceeds from maturities of investment securities held-to-maturity	36			—
Investment in nonmarketable equity investments	(2		)	(7		)
Other investing activities	2			—
Net cash used in investing activities	(107		)	(302		)
Financing Activities
Purchases of treasury stock	(766		)	(248		)
Dividends paid	(37		)	(19		)
Tax benefit for share-based compensation	14			33
Cash proceeds from exercise of stock options	5			14
Other financing activities	1			—
Net cash used in financing activities	(783		)	(220		)
Effect of exchange rate changes on cash and cash equivalents	(50		)	45
Net decrease in cash and cash equivalents	(68		)	(50		)
Cash and cash equivalents - beginning of period	2,052			3,734
Cash and cash equivalents - end of period	$	1,984		$	3,684

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

7

MASTERCARD INCORPORATED

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 and businesses worldwide, enabling them to use electronic forms of payment instead of cash and checks. MasterCard offers a wide range of payment solutions, that enable the development and implementation of credit, debit, prepaid, commercial and related payment programs and solutions for consumers and merchants. The Company's customers encompass a vast array of entities, including financial institutions and others that act as "issuers" and "acquirers", as well as merchants, governments, telecommunications companies and other businesses. MasterCard manages a family of well-known, widely accepted payment brands, including MasterCard®, Maestro® and Cirrus®, which its customers use in their payment programs and solutions. The Company processes payment transactions over the MasterCard Worldwide Network and provides support services to its customers and others.  

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 for which the Company is the primary beneficiary. Intercompany transactions and balances have been eliminated in consolidation. Certain prior period amounts have been reclassified to conform to the 2013 presentation. The Company follows accounting principles generally accepted in the United States of America (“GAAP”).

The balance sheet as of December 31, 2012 was derived from the audited consolidated financial statements as of December 31, 2012. The consolidated financial statements for the three months ended March 31, 2013 and 2012 and as of March 31, 2013 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, 2013 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 requirements for Quarterly Reports on Form 10-Q and, consequently, do not include all of the disclosures required by GAAP. Reference should be made to the MasterCard Incorporated Annual Report on Form 10-K for the year ended December 31, 2012 for additional disclosures, including a summary of the Company’s significant accounting policies.

Non-controlling interest amounts are included in the consolidated statement of operations within other income (expense). For the three months ended March 31, 2013 and 2012, non-controlling interest amounts were an expense of $1 million and income of $1 million, respectively.

In December 2012, the Company made a $726 million payment into a qualified settlement fund related to its U.S. merchant class litigation. The Company has presented these funds as restricted cash for litigation settlement since the use of the funds under the qualified settlement fund is restricted for payment under a preliminary settlement agreement that is subject to court approval. All or a portion of the funds would be returned to the Company in the event that the settlement is not finalized or certain merchants opt out of the settlement agreement. See Note 11 (Legal and Regulatory Proceedings) for further discussion of the U.S. merchant class litigation.

Recent accounting pronouncements

Comprehensive income - In February 2013, new accounting guidance was issued by the Financial Accounting Standards Board ("FASB") that requires disclosure of amounts reclassified from accumulated other comprehensive income to net income. The Company adopted the revised accounting guidance effective January 1, 2013. See Note 8 (Accumulated Other Comprehensive Income) for additional disclosures related to the new guidance.

Balance Sheet Offsetting - In January 2013, the FASB issued accounting guidance clarifying the scope of its previously issued requirements to disclose gross and net amounts of eligible financial assets and financial liabilities recognized on the balance sheet. The Company adopted the revised accounting guidance effective January 1, 2013. See Note 13 (Foreign Exchange Risk Management) for additional disclosures related to the new guidance.

8

MASTERCARD INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)

Note 2. Earnings Per Share

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

	Three Months Ended March 31,
	2013		2012
	(in millions, except per share data)
Numerator:
Net income	$	766	$	682
Denominator:
Basic EPS weighted-average shares outstanding	123		127
Dilutive stock options and stock units	—		—
Diluted EPS weighted-average shares outstanding *	123		127
Earnings per Share
Basic	$	6.25	$	5.38
Diluted	$	6.23	$	5.36

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

Note 3. Fair Value andInvestment Securities

Financial Instruments – Recurring Measurements

In accordance with accounting requirements for financial instruments, the Company is disclosing the estimated fair values as of March 31, 2013 and December 31, 2012 of the financial instruments that are within the scope of the accounting guidance, as well as the methods and significant assumptions used to estimate the fair value of those financial instruments. Furthermore, the Company classifies its fair value measurements in the Valuation Hierarchy. No transfers were made among the three levels in the Valuation Hierarchy during the three months ended March 31, 2013.

9

MASTERCARD INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)

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

	March 31, 2013
	Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value
	(in millions)
Municipal securities 1	$	—	$	528	$	—	$	528
U.S. Government and Agency securities 2	—		586		—		586
Taxable short-term bond funds	210		—		—		210
Corporate securities	—		1,314		—		1,314
Asset-backed securities	—		325		—		325
Auction rate securities	—		—		32		32
Other	—		57		—		57
Total	$	210	$	2,810	$	32	$	3,052
	December 31, 2012
	Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value
	(in millions)
Municipal securities 1	$	—	$	531	$	—	$	531
U.S. Government and Agency securities 2	—		582		—		582
Taxable short-term bond funds	210		—		—		210
Corporate securities	—		1,246		—		1,246
Asset-backed securities	—		316		—		316
Auction rate securities	—		—		32		32
Other	—		63		—		63
Total	$	210	$	2,738	$	32	$	2,980

¹ Available-for-sale municipal securities are carried at fair value and are included in the above tables. However, a held-to-maturity municipal bond was carried at amortized cost and excluded from the above table at December 31, 2012.

² Excludes amounts held in escrow for the preliminary U.S. merchant class litigation settlement of $724 million and $726 million at March 31, 2013 and December 31, 2012, respectively, which would be included in Levels 1 and 2 of the Valuation Hierarchy. See Note 6 (Accrued Expenses) and Note 11 (Legal and Regulatory Proceedings) for further details.

The fair value of the Company's taxable short-term bond funds are based on quoted prices for identical investments in active markets and are therefore included in Level 1 of the Valuation Hierarchy.

The fair value of the Company's available-for-sale municipal securities, U.S. Government and Agency securities, corporate securities, asset-backed securities and other fixed income securities included in the Other category are based on quoted prices for similar assets in active markets and are therefore included in Level 2 of the Valuation Hierarchy. The Company's foreign currency derivative contracts have also been classified within Level 2 in the Other category of the Valuation Hierarchy, as the fair value is based on broker quotes for the same or similar derivative instruments. See Note 13 (Foreign Exchange Risk Management) for further details.

The Company's auction rate securities (“ARS”) investments have been classified within Level 3 of the Valuation Hierarchy as their valuation requires substantial judgment and estimation of factors that are not currently observable in the market due to the lack of trading in the securities. This valuation may be revised in future periods as market conditions evolve. The Company has considered the lack of liquidity in the ARS market and the lack of comparable, orderly transactions when estimating the fair value of its ARS portfolio. Therefore, the Company used the income approach, which included a discounted cash flow analysis of the estimated future cash flows adjusted by a risk premium for the ARS portfolio, to estimate the fair value of its ARS portfolio. The Company estimated the fair value of its ARS portfolio to be a 10% discount to the par value as of March 31, 2013 and December 31, 2012. The Company did not realize any material losses on its ARS portfolio during the three months ended March

10

MASTERCARD INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)

31, 2013 and 2012. When a determination is made to classify a financial instrument within Level 3, the determination is based upon the significance of the unobservable parameters to the overall fair value measurement. However, the fair value determination for Level 3 financial instruments may include observable components.

Financial Instruments - Non-Recurring Measurements

Certain financial instruments are carried on the consolidated balance sheet at cost, which approximates fair value due to their short-term, highly liquid nature. These instruments include cash and cash equivalents, restricted cash, accounts receivable, settlement due from customers, restricted security deposits held for customers, prepaid expenses, accounts payable, settlement due to customers and accrued expenses. In addition, nonmarketable equity investments are measured at fair value on a nonrecurring basis for purposes of initial recognition and impairment testing.

Settlement and Other Guarantee Liabilities

The Company estimates the fair value of its settlement and other guarantees using the market pricing approach which applies market assumptions for relevant though not directly comparable undertakings, as the latter are not observable in the market given the proprietary nature of such guarantees. At March 31, 2013 and December 31, 2012, the carrying value and fair value of settlement and other guarantee liabilities were not material. Settlement and other guarantee liabilities are classified as Level 3 of the fair value hierarchy as their valuation requires substantial judgment and estimation of factors that are not currently observable in the market. For additional information regarding the Company's settlement and other guarantee liabilities, see Note 12 (Settlement and Other Risk Management).

Refunding Revenue Bonds

The Company holds refunding revenue bonds with the same payment terms, and which contain the right of set-off with a capital lease obligation related to the Company's global technology and operations center located in O'Fallon, Missouri. The Company has netted the refunding revenue bonds and the corresponding capital lease obligation in the consolidated balance sheet and estimates that the carrying value approximates the fair value for these bonds.

Non-Financial Instruments

Certain assets and liabilities are measured at fair value on a nonrecurring basis for purposes of initial recognition and impairment testing. The Company's non-financial assets and liabilities measured at fair value on a nonrecurring basis include property, plant and equipment, goodwill and other intangible assets. These assets are not measured at fair value on an ongoing basis; however, they are subject to fair value adjustments in certain circumstances, such as when there is evidence of impairment.

The valuation methods for goodwill and other intangible assets involve assumptions concerning comparable company multiples, discount rates, growth projections and other assumptions of future business conditions. The Company uses a weighted income and market approach for estimating the fair value of its reporting unit, when necessary. As the assumptions employed to measure these assets on a nonrecurring basis are based on management's judgment using internal and external data, these fair value determinations are classified in Level 3 of the Valuation Hierarchy.

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MASTERCARD INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)

Amortized Costs and Fair Values – Available-for-Sale Investment Securities

The major classes of the Company’s available-for-sale investment securities, for which unrealized gains and losses are recorded as a separate component of other comprehensive income on the consolidated statement of comprehensive income, and their respective amortized cost basis and fair values as of March 31, 2013 and December 31, 2012 were as follows:

	March 31, 2013
	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss 1			Fair Value
	(in millions)
Municipal securities	$	519	$	9	$	—		$	528
U.S. Government and Agency securities	586		—		—			586
Taxable short-term bond funds	209		1		—			210
Corporate securities	1,313		1		—			1,314
Asset-backed securities	325		—		—			325
Auction rate securities2	35		—		(3		)	32
Other	73		—		—			73
Total	$	3,060	$	11	$	(3	)	$	3,068
	December 31, 2012
	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss 1			Fair Value
	(in millions)
Municipal securities	$	522	$	9	$	—		$	531
U.S. Government and Agency securities	582		—		—			582
Taxable short-term bond funds	209		1		—			210
Corporate securities	1,245		2		(1		)	1,246
Asset-backed securities	316		—		—			316
Auction rate securities2	35		—		(3		)	32
Other	66		—		—			66
Total	$	2,975	$	12	$	(4	)	$	2,983

¹ The unrealized losses primarily relate to ARS, which have been in an unrealized loss position longer than 12 months,

but have not been deemed other-than-temporarily impaired.

² Included in other assets on the consolidated balance sheet. See Note 4 (Prepaid Expenses and Other Assets).

The municipal securities are primarily comprised of tax-exempt bonds and are diversified across states and sectors. The U.S. government and agency securities are primarily invested in U.S. government treasury bills and bonds and U.S. government sponsored agency bonds and discount notes. Taxable short-term bond funds are primarily invested in U.S. government and sponsored agency securities, corporate bonds and mortgage-backed securities. Corporate securities are comprised of commercial paper and corporate bonds. The asset-backed securities are investments in bonds which are collateralized primarily by automobile loan receivables. The ARS are exempt from U.S. federal income tax and are fully collateralized by student loans with guarantees (ranging from approximately 95% to 98% of principal and interest) by the U.S. government via the Department of Education.

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Investment Maturities

The maturity distribution based on the contractual terms of the Company’s investment securities at March 31, 2013 was as follows:

	Available-For-Sale
	Amortized Cost		Fair Value
	(in millions)
Due within 1 year	$	1,548	$	1,549
Due after 1 year through 5 years	1,220		1,228
Due after 5 years through 10 years	48		49
Due after 10 years	35		32
No contractual maturity	209		210
Total	$	3,060	$	3,068

All the securities due after ten years are ARS. Taxable short-term bond funds have been included in the table above in the no contractual maturity category, as these investments do not have a stated maturity date; however, the short-term bond funds have daily liquidity.

Investment Income

Investment income was $8 million and $9 million for the three months ended March 31, 2013 and 2012, respectively. Investment income primarily consisted of interest income generated from cash, cash equivalents, investment securities available-for-sale and investment securities held-to-maturity. Dividend income and gross realized gains and losses were not significant.

Note 4. Prepaid Expenses and Other Assets

Prepaid expenses and other current assets consisted of the following:

	March 31, 2013		December 31, 2012
	(in millions)
Customer and merchant incentives	$	291	$	222
Investment securities held-to-maturity	—		36
Prepaid income taxes	12		77
Income taxes receivable	12		163
Other	173		183
Total prepaid expenses and other current assets	$	488	$	681

Other assets consisted of the following:

	March 31, 2013		December 31, 2012
	(in millions)
Customer and merchant incentives	$	414	$	404
Nonmarketable equity investments	243		249
Auction rate securities available-for-sale, at fair value	32		32
Income taxes receivable	74		72
Other	57		52
Total other assets	$	820	$	809

Certain customer and merchant business agreements provide incentives upon entering into the agreement. Customer and merchant incentives represent payments made or amounts to be paid to customers and merchants under business agreements. Amounts to be paid for these incentives and the related liability were included in accrued expenses and other liabilities. Once the payment is made, the liability is relieved. Costs directly related to entering into such an agreement are deferred and amortized over the life of the agreement.

Investments for which the equity method or historical cost method of accounting are used are recorded in other assets on the consolidated balance sheet. MasterCard’s share of net earnings or losses of entities accounted for under the equity method of

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accounting is included in other income (expense) on the consolidated statement of operations. The Company accounts for nonmarketable equity investments under the historical cost method of accounting when those investments do not qualify for the equity method of accounting. The decrease in investment securities held-to-maturity from December 31, 2012 to March 31, 2013 was due to contractual maturities during the period.

Note 5. Property, Plant and Equipment

Property, plant and equipment consisted of the following:

	March 31, 2013			December 31, 2012
	(in millions)
Property, plant and equipment	$	873		$	858
Less accumulated depreciation and amortization	(405		)	(386		)
Property, plant and equipment, net	$	468		$	472

Note 6. Accrued Expenses

Accrued expenses consisted of the following:

	March 31, 2013		December 31, 2012
	(in millions)
Customer and merchant incentives	$	1,096	$	1,058
Personnel costs	177		354
Advertising	77		122
Income and other taxes	250		94
Other	103		120
Total accrued expenses	$	1,703	$	1,748

As of March 31, 2013 and December 31, 2012, the Company's provision related to the U.S. merchant class litigation was $724 million and $726 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. The decrease in restricted cash for litigation settlement and accrued litigation for the U.S. merchant class litigation is due to net expenses paid by the fund related to administrative settlement activities. See Note 11 (Legal and Regulatory Proceedings) for further discussion of the U.S. merchant class litigation.

Note 7. Stockholders’ Equity

In June 2012, the Company’s Board of Directors approved a share repurchase program authorizing the Company to repurchase up to $1.5 billion of its Class A common stock (the "June 2012 Share Repurchase Program"). This program became effective in June 2012 at the completion of the Company’s previously announced $2 billion Class A share repurchase program (this $2 billion repurchase program consisted of $1 billion authorized in September 2010 and $1 billion authorized in April 2011).

On February 5, 2013, the Company's Board of Directors approved a new share repurchase program authorizing the Company to repurchase up to $2 billion of its Class A common stock (the "February 2013 Share Repurchase Program").  The new share repurchase program became effective at the completion of the June 2012 Share Repurchase Program, which occurred in March 2013. 

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The following table summarizes the Company's share repurchase authorizations of its Class A common stock through March 31, 2013, as well as historical purchases:

	Authorization Dates
	February 2013		June 2012		April 20111		Total
	(in millions, except average price data)
Board authorization	$	2,000	$	1,500	$	2,000	$	5,500
Dollar value of shares repurchased during the three months ended March 31, 2012	**		**		$	248	$	248
Remaining authorization at December 31, 2012	**		$	604	$	—	$	604
Dollar value of shares repurchased during the three months ended March 31, 2013	$	162	$	604	$	—	$	766
Remaining authorization at March 31, 2013	$	1,838	$	—	$	—	$	1,838
Shares repurchased during the three months ended March 31, 2012	**		**		0.65		0.65
Average price paid per share during the three months ended March 31, 2012	**		**		$	379.68	$	379.68
Shares repurchased during the three months ended March 31, 2013	0.31		1.17		—		1.48
Average price paid per share during the three months ended March 31, 2013	$	522.87	$	517.16	$	—	$	518.36
Cumulative shares repurchased through March 31, 2013	0.31		3.11		6.54		9.96
Cumulative average price paid per share	$	522.87	$	481.58	$	305.60	$	367.34

^** Not applicable

¹The initial authorization in September 2010 for $1 billion was amended in April 2011 to increase the authorization to $2 billion.

As of April 25, 2013, the cumulative repurchases by the Company under the February 2013 Share Repurchase Program totaled approximately 0.7 million shares of its Class A common stock for an aggregate cost of approximately $344 million at an average price of $527.57 per share of Class A common stock.

Note 8. Accumulated Other Comprehensive Income

The changes in the balances of each component of accumulated other comprehensive income, net of tax, for the three months ended March 31, 2013 were as follows:

	Foreign Currency Translation Adjustments			Defined Benefit Pension and Other Postretirement Plans			Investment Securities Available-for-Sale		Accumulated Other Comprehensive Income (Loss)
	(in millions)
Balance at December 31, 2012	$	93		$	(37	)	$	5	$	61
Current period other comprehensive income (loss)*	(112		)	1			—		(111		)
Balance at March 31, 2013	$	(19	)	$	(36	)	$	5	$	(50	)

^*During the three months ended March 31, 2013, $1 million of deferred costs related to the Company's Defined Benefit Pension Plan were reclassified from accumulated other comprehensive income to general and administrative expenses. In addition, $1 million of net gains on available-for-sale investment securities were recognized in investment income during the three months ended March 31, 2013. Tax amounts related to these items are insignificant.

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Note 9. Share-Based Payments

During the three months ended March 31, 2013, the Company granted the following awards under the MasterCard Incorporated 2006 Long Term Incentive Plan, as amended and restated (“LTIP”). The LTIP is a shareholder-approved omnibus plan that permits the grant of various types of equity awards to employees.

	Granted	Weighted-Average Grant-Date Fair Value
	(in thousands)
Non-qualified stock options	183	$123
Restricted stock units	143	$511
Performance stock units	18	$560

Stock options vest in four equal annual installments beginning one year after the date of grant, and have a term of ten years. The Company used the Black-Scholes option pricing model to estimate the grant date fair value of stock options. Beginning in 2013, the Company calculated the expected term and the expected volatility based on historical MasterCard information. As a result, the expected term of stock options granted in the first quarter of 2013 was five years, while the expected volatility was determined to be 27.1%.

Vesting of the shares underlying the restricted stock units and performance stock units will generally occur three years after the date of grant. The fair value of restricted stock units 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 Monte Carlo simulation valuation model was used to determine the grant date fair value of performance stock units granted in the first quarter of 2013.

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 10. Income Taxes

The effective income tax rates were 30.5% and 31.8% for the three months ended March 31, 2013 and 2012, respectively. The effective tax rate for the three months ended March 31, 2013 was lower than the effective tax rate for the three months ended March 31, 2012 due primarily to a more favorable geographic mix of earnings, a larger benefit from the domestic production activities deduction in the U.S. related to our authorization software and various discrete items, including retroactive benefits from the signing of the American Taxpayer Relief Act of 2012 on January 2, 2013.

The Company conducts operations in multiple countries and, as a result, is subjected to tax examinations in various jurisdictions, including the United States.  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 statute of limitations.  The Company has effectively settled its U.S. federal income tax obligations through 2008.  With limited exception, the Company is no longer subject to state and local or non-U.S. audits by taxing authorities for years through 2002.  It is possible that the amount of unrecognized benefit with respect to the Company's uncertain tax positions may change within the next twelve months. An estimate of the range of the possible change cannot be made until the issues are further developed, the examinations close, or the statutes expire.

Note 11. 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.  Further, except as discussed below, MasterCard has not established reserves for any of these proceedings.  Except as identified below, MasterCard does not believe that the outcome of any existing legal or regulatory proceedings to which it is a party will have a material adverse effect on its results of operations, financial condition or overall business.  However, with respect to the matters discussed below, an adverse judgment or other outcome or settlement with respect to any such proceedings 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 damage awards in amounts that could be significant.

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Any of these events could have a material adverse effect on MasterCard's results of operations, financial condition and overall business.

Department of Justice Antitrust Litigation and Related Private Litigations

In October 1998, the U.S. Department of Justice (“DOJ”) filed suit against MasterCard International, Visa U.S.A., Inc. and Visa International Corp. in the U.S. District Court for the Southern District of New York alleging that both MasterCard's and Visa's governance structure and policies violated U.S. federal antitrust laws. The DOJ challenged (1) “dual governance”, where a financial institution has a representative on the Board of Directors of MasterCard or Visa while a portion of its card portfolio is issued under the brand of the other association, and (2) both MasterCard's Competitive Programs Policy (“CPP”) and a Visa bylaw provision that prohibited financial institutions participating in the respective associations from issuing competing proprietary payment cards (such as American Express or Discover). In October 2001, the judge issued an opinion upholding the legality and pro-competitive nature of dual governance. However, the judge also held that MasterCard's CPP and the Visa bylaw constituted unlawful restraints of trade under the federal antitrust laws. The judge subsequently issued a final judgment that ordered MasterCard to repeal the CPP and enjoined MasterCard from enacting or enforcing any bylaw, rule, policy or practice that prohibits its issuers from issuing general purpose credit or debit cards in the United States on any other general purpose card network.

In April 2005, a complaint was filed in California state court on behalf of a putative class of consumers under California unfair competition law (Section 17200) and the Cartwright Act (the “Attridge action”). The claims in this action seek to piggyback on the portion of the DOJ antitrust litigation discussed above with regard to the District Court's findings concerning MasterCard's CPP and Visa's related bylaw. The Court granted the defendants' motion to dismiss the plaintiffs' Cartwright Act claims but denied the defendants' motion to dismiss the plaintiffs' Section 17200 unfair competition claims. The parties have proceeded with discovery. In September 2009, MasterCard executed a settlement agreement that is subject to court approval in the separate California consumer litigations (see “U.S. Merchant and Consumer Litigations”). The agreement includes a release that the parties believe encompasses the claims asserted in the Attridge action. In August 2010, the Court in the California consumer actions granted final approval to the settlement. The plaintiff from the Attridge action and three other objectors filed appeals of the settlement approval. In January 2012, the Appellate Court reversed the trial court's settlement approval and remanded the matter to the trial court for further proceedings. In August 2012, the parties in the California consumer actions filed a motion seeking approval of a revised settlement agreement. The trial court granted final approval of the settlement in April 2013. This approval is subject to appeal.

U.S. Merchant and Consumer Litigations

Commencing in October 1996, several class action suits were brought by a number of U.S. merchants against MasterCard International and Visa U.S.A., Inc. challenging certain aspects of the payment card industry under U.S. federal antitrust law. The plaintiffs claimed that MasterCard's “Honor All Cards” rule (and a similar Visa rule), which required merchants who accept MasterCard cards to accept for payment every validly presented MasterCard card, constituted an illegal tying arrangement in violation of Section 1 of the Sherman Act. In June 2003, MasterCard International signed a settlement agreement to settle the claims brought by the plaintiffs in this matter, which the Court approved in December 2003. Pursuant to the settlement, MasterCard agreed, among other things, to create two separate “Honor All Cards” rules in the United States - one for debit cards and one for credit cards.

In addition, individual or multiple complaints have been brought in 19 states and the District of Columbia alleging state unfair competition, consumer protection and common law claims against MasterCard International (and Visa) on behalf of putative classes of consumers. The claims in these actions largely mirror the allegations made in the U.S. merchant lawsuit and assert that merchants, faced with excessive interchange fees, have passed these overhead charges to consumers in the form of higher prices on goods and services sold. MasterCard has successfully resolved the cases in all of the jurisdictions except California, where there continues to be outstanding cases. As discussed above under “Department of Justice Antitrust Litigation and Related Private Litigations,” in September 2009, the parties to the California state court actions executed a settlement agreement which required a payment by MasterCard of $6 million, subject to approval by the California state court. In August 2010, the court granted final approval of the settlement, subsequent to which MasterCard made the payment required by the settlement agreement. The plaintiff from the Attridge action described above under “Department of Justice Antitrust Litigation and Related Private Litigations” and three other objectors filed appeals of the settlement approval order. In January 2012, the Appellate Court reversed the trial court's settlement approval and remanded the matter to the trial court for further proceedings. As noted above, in August 2012, the parties in the California consumer actions filed a motion seeking approval of a revised settlement agreement. The trial court granted final approval of the settlement in April 2013. This approval is subject to appeal.

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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 ATM terminals 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 charged 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.  Plaintiffs have not quantified their damages although they allege that they expect damages to be in the tens of millions of dollars. 

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 described above, 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.  Plaintiffs have not quantified their damages although they allege that they expect damages to be in the tens of millions of dollars. 

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. MasterCard has moved to dismiss the complaints for failure to state a claim. Oral argument on the motion was heard by the court in September 2012. In February 2013, the district court granted MasterCard's motion to dismiss the complaints and the plaintiffs have since filed a motion seeking approval to amend their complaints.

Interchange Litigation and Regulatory Proceedings

Interchange fees represent a sharing of payment system costs among the financial institutions participating in a four-party payment card system such as MasterCard's. Typically, interchange fees are paid by the acquirer to the issuer in connection with purchase transactions initiated with the payment system's cards. These fees reimburse the issuer for a portion of the costs incurred by it in providing services which are of benefit to all participants in the system, including acquirers and merchants. MasterCard or its customer financial institutions establish default interchange fees in certain circumstances that apply when there is no other interchange fee arrangement between the issuer and the acquirer. MasterCard establishes a variety of interchange rates depending on such considerations as the location and the type of transaction, and collects the interchange fee on behalf of the institutions entitled to receive it and remits the interchange fee to eligible institutions. MasterCard's interchange fees and other practices are subject to regulatory and/or legal review and/or challenges in a number of jurisdictions, including the proceedings described below. At this time, it is not possible to determine the ultimate resolution of, or estimate the liability related to, any of these interchange proceedings (except as otherwise indicated below), as the proceedings involve complex claims and/or substantial uncertainties and, in some cases, could include unascertainable damages or fines. Except as described below, no provision for losses has been provided in connection with them. Some of the proceedings described below could have a significant impact on our customers in the applicable country and on MasterCard's level of business in those countries. The proceedings reflect the significant and intense legal, regulatory and legislative scrutiny worldwide that interchange fees and acceptance practices have been receiving. 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 are styled as class actions, although a few complaints are filed on behalf of individual merchant plaintiffs) against MasterCard International Incorporated, Visa U.S.A., Inc., Visa International Service Association and a number of customer financial institutions. Taken together, the claims in the complaints are generally brought under both Sections 1 and 2 of the Sherman Act, which prohibit monopolization and attempts or conspiracies to monopolize a particular industry, and some of these complaints contain unfair competition law claims under state law. The complaints allege, among other things, that MasterCard, Visa, and certain of their customer 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. The cases have been consolidated for pre-trial proceedings in the U.S. District Court for the Eastern District of New York in MDL No.

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1720. The plaintiffs have filed a consolidated class action complaint that seeks treble damages, as well as attorneys' fees and injunctive relief.

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 its customer financial institutions in connection with the IPO: (1) violate U.S. antitrust laws and (2) constitute a fraudulent conveyance because the customer financial institutions are allegedly attempting to release, without adequate consideration, MasterCard's right to assess them for MasterCard's litigation liabilities. In November 2008, the district court granted MasterCard's motion to dismiss the plaintiffs' supplemental complaint in its entirety with leave to file an amended complaint. The class plaintiffs repled their complaint. The causes of action and claims for relief in the complaint generally mirror those in the plaintiffs' original IPO-related complaint although the plaintiffs have attempted to expand their factual allegations based upon discovery that has been garnered in the case. The class plaintiffs seek treble damages and injunctive relief including, but not limited to, an order reversing and unwinding the IPO. In July 2009, the class plaintiffs and individual plaintiffs served confidential expert reports detailing the plaintiffs' theories of liability and alleging damages in the tens of billions of dollars. The defendants served their expert reports in December 2009 rebutting the plaintiffs' assertions both with respect to liability and damages.

In February 2011, MasterCard and MasterCard International Incorporated 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 customer financial institutions; and (2) a MasterCard settlement and judgment sharing agreement with a number of customer financial institutions.  The agreements provide for the apportionment of certain costs and liabilities which MasterCard, the Visa parties and the customer financial institutions may incur, jointly and/or severally, in the event of an adverse judgment or settlement of one or all of the cases in the interchange merchant litigations.  Among a number of scenarios addressed by the agreements, in the event of a global settlement involving the Visa parties, the customer 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 customer financial institutions with respect to their issuance of MasterCard cards, MasterCard would pay 36% of the monetary portion of such settlement. 

On July 13, 2012, MasterCard entered into a Memorandum of Understanding (“MOU”) to settle the merchant class litigation, and separately agreed in principle to settle all claims brought by the individual merchant plaintiffs. The MOU sets out a binding obligation to enter into a settlement agreement, and is subject to: (1) the successful completion of certain appendices, (2) the successful negotiation of a settlement agreement with the individual merchant plaintiffs, (3) final court approval of the class settlement, and (4) any necessary internal approvals for the parties. MasterCard's financial portion of the settlements is estimated to total $790 million on a pre-tax basis. Of that total, MasterCard recorded a pre-tax charge of $770 million in the fourth quarter of 2011 and an additional $20 million pre-tax charge in the second quarter of 2012. In addition to the financial portion of the settlement, U.S. merchant class members would also receive a 10 basis point reduction in default credit interchange fees for a period of eight months, funded by a corresponding reduction in the default credit interchange fees paid by acquirers to issuers. MasterCard would also be required to modify its No Surcharge Rule to permit U.S. merchants to surcharge MasterCard credit cards, subject to certain limitations set forth in the class settlement agreement. On October 19, 2012, the parties entered into a definitive settlement agreement with respect to the merchant class litigation (consistent with the terms of the MOU), and separately also entered into a settlement agreement with the individual merchant plaintiffs. The merchant class litigation settlement agreement is subject to court approval. The parties to the merchant class litigation filed a motion seeking preliminary approval of the settlement on October 19, 2012, and the court granted preliminary approval of the settlement on November 27, 2012 and scheduled a final approval hearing for September 2013. In April 2013, the parties filed briefs in support of their motion for final approval of the settlement. In 2012, the Company paid $790 million with respect to the settlements, of which $726 million was paid into a qualified settlement fund related to the merchant class litigations. Rule practice changes required by the settlement were implemented in late January 2013. In the event that the merchant class litigation settlement agreement is not approved by the court, or if the class settlement agreement is otherwise terminated by the defendants pursuant to the conditions in the settlement agreement and the litigations are not settled, a negative outcome in the litigation could have a material adverse effect on MasterCard's results of operations, financial position and cash flows.

Canada. In December 2010, the Canadian Competition Bureau (the “CCB”) filed an application with the Canadian Competition Tribunal to strike down certain MasterCard rules related to point-of-sale acceptance, including the “honor all cards” and “no surcharge” rules. The hearing on the matter was held before the Canadian Competition Tribunal and was completed in June 2012. The parties are awaiting a decision from the Canadian Competition Tribunal. In December 2010, a complaint styled as a class action lawsuit was commenced against MasterCard in Quebec on behalf of Canadian merchants. That suit essentially repeated the allegations and arguments of the CCB application to the Canadian Competition Tribunal and sought compensatory and punitive damages in unspecified amounts, as well as injunctive relief. In March 2011, a second purported class action lawsuit

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was commenced in British Columbia against MasterCard, Visa and a number of large Canadian financial institutions, and in May 2011 a third purported class action lawsuit was commenced in Ontario against the same defendants. These suits allege that MasterCard, Visa and the financial institutions have engaged in a conspiracy to increase or maintain the fees paid by merchants on credit card transactions and establish rules which force merchants to accept all MasterCard and Visa credit cards and prevent merchants from charging more for payments with MasterCard and Visa premium cards. The British Columbia suit seeks compensatory damages in unspecified amounts, and the Ontario suit seeks compensatory damages of $5 billion. The British Columbia and Ontario suits also seek punitive damages in unspecified amounts, as well as injunctive relief, interest and legal costs. In April 2012, the Quebec suit was amended to include the same defendants and similar claims as in the British Columbia and Ontario suits. With respect to status of the proceedings: (1) the Quebec suit was stayed in June 2012 until June 2013, (2) the Ontario suit is being temporarily suspended while the British Columbia suit proceeds, and (3) the British Columbia court held a class certification hearing in April 2013. Additional complaints styled as class actions have been filed in Saskatchewan and Alberta. The claims in these complaints largely mirror the claims in the British Columbia and Ontario suits. If the CCB's challenges and/or the class action law suits are ultimately successful, negative decisions could have a significant adverse impact on the revenue of MasterCard's Canadian customers and on MasterCard's overall business in Canada and, in the case of the private lawsuits, could result in substantial damage awards.

European Union. In September 2003, the European Commission issued a Statement of Objections challenging MasterCard Europe's cross-border default interchange fees and, in June 2006, it issued a supplemental Statement of Objections covering credit, debit and commercial card fees. In December 2007, the European Commission announced a decision that applies to MasterCard's default cross-border interchange fees for MasterCard and Maestro branded consumer payment card transactions in the European Economic Area (“EEA”) (the European Commission refers to these as “MasterCard's MIF”), but not to commercial card transactions (the European Commission stated publicly that it has not yet finished its investigation of commercial card interchange fees). The decision required MasterCard to stop applying the MasterCard MIF, to refrain from repeating the conduct, and not apply its then recently adopted (but never implemented) Maestro SEPA and Intra-Eurozone default interchange fees to debit card payment transactions within the Eurozone. The decision did not impose a fine on MasterCard, but provides for a daily penalty of up to 3.5% of MasterCard's daily consolidated global turnover in the preceding business year (which MasterCard estimates to be approximately $0.7 million per day) in the event that MasterCard fails to comply. To date, MasterCard has not been assessed any such penalty. In March 2008, MasterCard filed an application for annulment of the European Commission's decision with the General Court of the European Union.

Following discussions with the European Commission, MasterCard announced that, effective June 21, 2008, MasterCard would temporarily repeal its then current default intra-EEA cross-border consumer card interchange fees in conformity with the decision. In October 2008, MasterCard received an information request from the European Commission in connection with the decision concerning certain pricing changes that MasterCard implemented as of October 1, 2008. In March 2009, MasterCard gave certain undertakings to the European Commission and, in response, in April 2009, the Commissioner for competition policy and DG Competition informed MasterCard that, subject to MasterCard's fulfilling its undertakings, they do not intend to pursue proceedings for non-compliance with or circumvention of the December 2007 decision or for infringing the antitrust laws in relation to the October 2008 pricing changes, the introduction of new cross-border consumer default interchange fees or any of the other MasterCard undertakings. MasterCard's undertakings include: (1) repealing the October 2008 pricing changes; (2) adopting a specific methodology for the setting of cross-border consumer default interchange fees; (3) establishing new default cross-border consumer card interchange fees as of July 1, 2009 such that the weighted average interchange fee for credit card transactions does not exceed 30 basis points and for debit card transactions does not exceed 20 basis points; (4) introducing a new rule prohibiting its acquirers from requiring merchants to process all of their MasterCard and Maestro transactions with the acquirer; and (5) introducing a new rule requiring its acquirers to provide merchants with certain pricing information in connection with MasterCard and Maestro transactions. The undertakings were effective until the European Union General Court issued a judgment in May 2012.

In May 2012, the General Court of the European Union issued a judgment dismissing the Company's appeal and upholding the European Commission's decision. The Company appealed the judgment to the European Union Court of Justice in August 2012. Subject to ongoing discussion with the European Commission, MasterCard intends to continue to comply with the terms of the interim agreement with the European Commission, even though that agreement, by its terms, formally ended on the day of the judgment.

Although MasterCard believes that any other business practices it would implement in response to the decision would be in compliance with the December 2007 decision, the European Commission may deem any such practice not in compliance with the decision, or in violation of European competition law, in which case MasterCard may be assessed fines for the period that it is not in compliance. Furthermore, because a balancing mechanism like default cross-border interchange fees constitutes an essential

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MASTERCARD INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)

element of MasterCard Europe's operations, the December 2007 decision could also significantly impact MasterCard International's European customers' and MasterCard Europe's business. The European Commission decision could also lead to additional competition authorities in European Union member states commencing investigations or proceedings regarding domestic interchange fees or initiating regulation. The possibility of such actions has increased due to the judgment of the General Court. The judgment also increases the possibility of an adverse outcome for the Company in related and pending matters (such as the interchange proceedings in Hungary, Italy and Poland, as further described below). In addition, the European Commission's decision could lead, and in the case of the United Kingdom and Belgium has led, to the filing of private actions against MasterCard Europe by merchants and/or consumers which, if MasterCard is unsuccessful in its appeal of the General Court decision, could result in MasterCard owing substantial damages.

In April 2013, the European Commission announced that it has opened proceedings to investigate: (1) MasterCard's interregional interchange fees that apply when a card outside the EEA is used at a merchant location in the EEA, (2) central acquiring rules, which apply when a merchant uses the services of an acquirer established in another country and (3) other business rules and practices (including the "honor all cards" rule).

Additional Litigations in Europe. In the United Kingdom, since May 2012, a number of retailers have filed claims against MasterCard for unspecified damages with respect to MasterCard's cross-border and U.K. and Ireland domestic interchange fees. In March 2013, the court heard arguments on MasterCard's motion to stay the proceedings pending the result of MasterCard's appeal of the European Union General Court's judgment discussed above. In Belgium, a retailer filed claims in December 2012 for unspecified damages with respect to MasterCard's cross-border and domestic interchange fees paid in Belgium, Greece and Luxembourg.

Additional Interchange Proceedings. Regulatory authorities in a number of other jurisdictions around the world have commenced competition-related proceedings or inquiries into interchange fees and acceptance practices. These matters include:

• France. In 2009, the French Competition Authority (the “FCA”) sent an information request to MasterCard as part of an investigation concerning its domestic interchange rates. The investigation was initially suspended until the judgment of the General Court of the European Union with respect to MasterCard's appeal of the December 2007 cross-border interchange fee decision of the European Commission. In January 2013, the investigation was re-opened and the FCA informed MasterCard that it intends to commence a formal proceeding and issue a statement of objections unless MasterCard offers commitments to reduce its interchange fees.

• Hungary. In December 2009, the Hungarian Competition Authority (the “HCA”) issued a formal decision that MasterCard's (and Visa's) historic domestic interchange fees violated Hungarian competition law and fined each of MasterCard Europe and Visa Europe approximately $3 million, which was paid during the fourth quarter of 2009. MasterCard appealed the decision to the Hungarian courts, which has stayed the proceeding until the completion of MasterCard's appeal to the European Union Court of Justice. If the HCA's decision is not reversed on appeal, it could have a significant adverse impact on the revenue of MasterCard's Hungarian customers and on MasterCard's overall business in Hungary. In June 2012, the HCA commenced a separate investigation of MasterCard's alleged abuse of dominant position in what it refers to as the domestic bankcard market during the period beginning in December 2010.

• Italy. In November 2010, the Italian Competition Authority (the “ICA”) adopted a decision in which it determined that MasterCard Europe's domestic interchange fees violate European Union competition law, fined MasterCard 2.7 million euro (approximately $4 million) and ordered MasterCard to refrain in the future from maintaining interchange fees that are not based on economic justifications linked to efficiency criteria and to eliminate any anticompetitive clauses from its licensing agreements. MasterCard appealed the ICA's infringement decision to the Administrative Court, and the decision was annulled by the Administrative Court in July 2011. The ICA has appealed the Administrative Court's judgment to the Council of State. If the ICA's infringement decision ultimately stands, it could have a significant adverse impact on the revenue of MasterCard's Italian customers and on MasterCard's overall business in Italy.

• Poland. In January 2007, the Polish Office for Protection of Competition and Consumers (the “PCA”) issued a decision that MasterCard's (and Visa Europe's) domestic credit and debit default interchange fees are unlawful under Polish competition law, and imposed fines on MasterCard's (and Visa Europe's) licensed financial institutions, the entities responsible for setting the fees. As part of this decision, the PCA decided that MasterCard (and Visa Europe) had not violated the law because they were not responsible for setting the fees. The decision is currently being appealed. If on appeal the PCA's decision is ultimately allowed to stand, it could have a significant adverse impact on the revenue of MasterCard's Polish customers and on MasterCard's overall business in Poland.

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MASTERCARD INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)

• United Kingdom. In February 2007, the Office for Fair Trading of the United Kingdom (the “OFT”) commenced an investigation of MasterCard's current U.K. default credit card interchange fees and so-called “immediate debit” cards to determine whether such fees contravene U.K. and European Union competition law. The OFT had informed MasterCard that it did not intend to issue a Statement of Objections or otherwise commence formal proceedings with respect to the investigation prior to the judgment of the General Court of the European Union with respect to MasterCard's appeal of the December 2007 cross-border interchange fee decision of the European Commission, and this period was extended until the completion of MasterCard's appeal to the Court of Justice. If the OFT ultimately determines that any of MasterCard's U.K. interchange fees contravene U.K. and European Union competition law, it may issue a new decision and possibly levy fines accruing from the date of its first decision. Such a decision could lead to the filing of private actions against MasterCard by merchants and/or consumers which could result in an award or awards of substantial damages and could have a significant adverse impact on the revenue of MasterCard International's U.K. customers and MasterCard's overall business in the U.K.

Regulatory authorities and/or central banks in certain other jurisdictions, including Brazil, Chile, Germany, Latvia, Portugal, Russia, Singapore and South Africa, are reviewing MasterCard's and/or its customers' interchange fees and/or other practices and may seek to commence proceedings related to, or otherwise regulate, the establishment of such fees and/or such practices.

Other Regulatory Proceedings

In addition to challenges to interchange fees, MasterCard's other standards and operations are also subject to regulatory and/or legal review and/or challenges in a number of jurisdictions from time to time.  These proceedings tend to reflect the increasing global regulatory focus to which the payments industry is subject and, when taken as a whole with other regulatory and legislative action, such actions could result in the imposition of costly new compliance burdens on MasterCard and its customers and may lead to increased costs and decreased transaction volumes and revenue.

Note 12. Settlement and Other Risk Management

MasterCard's rules guarantee the settlement of many of the MasterCard, Cirrus and Maestro branded transactions between its issuers and acquirers ("settlement risk"). Settlement exposure is the outstanding 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. Settlement exposure is primarily estimated using the average daily card volume during the quarter multiplied by the estimated number of days to settle. The Company has global risk management policies and procedures, which include risk standards, to provide a framework for managing the Company's settlement risk. Customer-reported transaction data and the transaction clearing data underlying the settlement exposure calculation may be revised in subsequent reporting periods.

In the event that MasterCard effects a payment on behalf of a failed customer, MasterCard may seek an assignment of the underlying receivables of the failed customer. Subject to approval by the Board of Directors, customers may be charged for the amount of any settlement loss incurred during these ordinary course activities of the Company.

The Company's global risk management policies and procedures are aimed at managing the settlement exposure. These risk management procedures include interaction with the bank regulators of countries in which it operates, requiring customers to make adjustments to settlement processes, and requiring collateral from customers. MasterCard requires certain customers that are not in compliance with the Company's risk standards in effect at the time of review to post collateral, typically in the form of cash, letters of credit, or guarantees. This requirement is based on management's review of the individual risk circumstances for each customer that is out of compliance. In addition to these amounts, MasterCard holds collateral to cover variability and future growth in customer programs. The Company may also hold collateral to pay merchants in the event of merchant bank/acquirer failure. Although the Company is not contractually obligated under its rules to effect such payments to merchants, the Company may elect to do so to protect brand integrity. 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.

22

MASTERCARD INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)

The Company's estimated settlement exposure from MasterCard, Cirrus and Maestro branded transactions was as follows:

	March 31, 2013			December 31, 2012
	(in millions)
Gross settlement exposure	$	38,077		$	37,768
Collateral held for settlement exposure	(4,565		)	(3,775		)
Net uncollateralized settlement exposure	$	33,512		$	33,993

MasterCard-branded travelers cheques are no longer being issued. For previously issued travelers cheques, MasterCard guarantees the payment of MasterCard-branded travelers cheques in the event of issuer default. The term of the guarantee is unlimited, while the exposure is limited to the cheques issued but not yet cashed. The notional amount of cheques issued, but not yet cashed was $527 million and $539 million at March 31, 2013 and December 31, 2012, respectively, of which $424 million and $434 million at March 31, 2013 and December 31, 2012, respectively, is mitigated by collateral arrangements.

Beginning in 2008, many of the Company's financial institution customers have been directly and adversely impacted by the events that have occurred in the financial markets around the world. The ongoing economic turmoil presents increased risk that the Company may have to perform under its settlement and travelers cheque guarantees. General economic conditions and political conditions in countries in which MasterCard operates also affect the Company's settlement risk. For example, the European sovereign debt crisis has introduced a heightened level of risk to the Company. This risk could increase if economic and financial market conditions deteriorate further. The Company's aggregate gross settlement exposures to Greece, Italy, Portugal and Spain, four of the countries significantly impacted by the eurozone crisis, are less than 5% of MasterCard's total gross settlement exposure as of March 31, 2013 and are being managed through various planning and mitigation practices. The Company's global risk management policies and procedures are revised and enhanced from time to time. Historically, the Company has experienced a low level of losses from customer financial institution failures.

MasterCard also provides guarantees to customers and certain other companies indemnifying them from losses stemming from failures of third parties to perform duties. In addition, the Company enters into business 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 13. Foreign Exchange Risk Management

The Company enters into foreign currency forward contracts to manage risk associated with anticipated receipts and disbursements which are either transacted in a non-functional currency or valued based on a currency other than its functional currencies. The Company also enters into foreign currency forward contracts to offset possible changes in value due to foreign exchange fluctuations of assets and liabilities denominated in currencies other than the functional currency of the entity holding the assets and liabilities. 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. The notional value of commitments to sell foreign currency was $1.9 billion and $1.6 billion at March 31, 2013 and December 31, 2012, respectively.

The Company does not designate foreign currency derivatives as hedging instruments pursuant to the accounting guidance for derivative instruments and hedging activities. The Company records the change in the estimated fair value of the outstanding derivatives at the end of the reporting period to its consolidated balance sheet and consolidated statement of operations.

23

MASTERCARD INCORPORATED

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) – (Continued)

As of March 31, 2013, all forward contracts to purchase and sell foreign currency had been entered into with customers of MasterCard. MasterCard’s derivative contracts are summarized below:

	March 31, 2013					December 31, 2012
	Notional		Estimated Fair Value			Notional		Estimated Fair Value
	(in millions)
Commitments to purchase foreign currency	$	100	$	(2	)	$	76	$	(1	)
Commitments to sell foreign currency	1,870		(14		)	1,571		(2		)
Balance Sheet Location:
Accounts Receivable*			$	15				$	12
Other Current Liabilities*			(31		)			(15		)

* The fair value of derivative contracts are presented on a gross basis on the balance sheet and are subject to enforceable master netting arrangements, which contain various netting and setoff provisions.

The amount of gain (loss) recognized in income for the contracts to purchase and sell foreign currency are summarized below: 

	Three Months Ended March 31,
	2013			2012
	(in millions)
Foreign currency derivative contracts
General and administrative	$	(23	)	$	(6	)
Net revenue	—			(4		)
Total	$	(23	)	$	(10	)

The fair value of the foreign currency forward contracts generally reflects the estimated amounts that the Company would receive (or pay), on a pre-tax basis, to terminate the contracts at the reporting date based on broker quotes for the same or similar instruments. The terms of the foreign currency forward contracts are generally less than 18 months. The Company had no deferred gains or losses related to foreign exchange in accumulated other comprehensive income as of March 31, 2013 and December 31, 2012 as there were no derivative contracts accounted for under hedge accounting.

The Company’s derivative financial instruments are subject to both market and counterparty credit risk. Market risk is the risk of loss due to the potential change in an instrument’s value caused by fluctuations in interest rates and other variables related to currency exchange rates. The effect of a hypothetical 10% adverse change in foreign currency rates could result in a fair value loss of approximately $199 million on the Company's foreign currency derivative contracts outstanding at March 31, 2013 related to the hedging program. Counterparty credit risk is the risk of loss due to failure of the counterparty to perform its obligations in accordance with contractual terms. To mitigate counterparty credit risk, the Company enters into derivative contracts with 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.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis supplements management's discussion and analysis of MasterCard Incorporated for the year ended December 31, 2012 as contained in the Company's Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission on February 14, 2013. 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, 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.

Overview

MasterCard is a technology company in the global payments industry that connects consumers, financial institutions, merchants, governments and businesses worldwide, enabling them to use electronic forms of payment instead of cash and checks. We make payments more convenient, secure and efficient by creating solutions that meet the needs of all of our stakeholders, and thereby drive preference for electronic payments. We offer a wide range of payment solutions that enable the development and implementation of credit, debit, prepaid, commercial and related payment programs and solutions for consumers and merchants. Our customers encompass a vast array of entities, including financial institutions and other entities that act as “issuers” and “acquirers”, merchants, governments, telecommunications companies and other businesses. We manage a family of well-known, widely-accepted payment brands, including MasterCard, Maestro and Cirrus, which our customers use in their payment programs and solutions. We process payment transactions over the MasterCard Worldwide Network and provide support services to our customers and others. We establish and enforce a common set of standards for adherence by our customers for the efficient and secure use of our payments network.

We generate revenue from the fees that we charge our customers for providing transaction processing and other payment-related services and by assessing our customers based primarily on the dollar volume of activity on the cards and other devices that carry our brands. Changes in cardholder spending behavior, influenced by economic conditions, impact our ability to grow our revenue. Our revenue depends heavily upon the overall level of consumer, business and government spending. While cardholder and merchant relationships are generally managed by our customers, we work with merchants to help provide value to them and benefits to consumers. We do not issue cards, extend credit to cardholders, determine the interest rates (if applicable) or other fees charged to cardholders by issuers, or establish the "merchant discount" rate charged by acquirers in connection with the acceptance of cards that carry our brands.

Our ability to grow is based on three drivers:

• personal consumption expenditure growth;

• the trend within the global payments industry from paper-based forms of payment, such as cash and checks, toward electronic forms of payment (such as those made via payment cards and other devices); and

• our share in electronic payments through innovative solutions and new technology.

We support our focus on these drivers by continuing to:

• grow our core businesses globally, including credit, debit, prepaid and commercial programs and solutions, as well as the processing of payment transactions over the MasterCard Worldwide Network;

• diversify our business by seeking new areas of growth in markets around the world, expanding points of acceptance globally, seeking to maintain unsurpassed acceptance, and deepening existing relationships or entering into new relationships with payments industry participants, such as merchants, governments and telecommunications companies; and

• build new businesses through technology and continued strategic efforts and alliances focused on innovative payment methods like electronic commerce (e-Commerce) and mobile capabilities.

See “-Business Environment” for a discussion of considerations related to our long-term strategic objectives.

We recorded net income of $766 million, or $6.23 per diluted share, for the three months ended March 31, 2013 versus net income of $682 million, or $5.36 per diluted share, for the three months ended March 31, 2012.

Our net revenue increased 8% for the three months ended March 31, 2013 versus the comparable period in 2012, primarily driven by increased growth in dollar volume of activity on cards carrying our brands and the number of transactions. For the three months ended March 31, 2013, volume-based revenue (domestic assessments and cross-border volume fees) and transaction-based

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revenue (transaction processing fees) increased from the comparable period in 2012 by 10%. For the three months ended March 31, 2013, our processed transactions increased 12% and our volumes increased 12%on a local currency basis compared to the three months ended March 31, 2012. This compares to increased processed transactions of 29% and increased volumes of 18% on a local currency basis for the three months ended March 31, 2012 compared to the three months ended March 31, 2011. Rebates and incentives as a percentage of gross revenue were 26% for the three months ended March 31, 2013, versus 25% for the comparable period in 2012.

Operating expenses increased 6% for the three months ended March 31, 2013 versus the comparable period in 2012, primarily due to higher general and administrative expenses. We generated net cash flows from operations of $872 million for the three months ended March 31, 2013, compared to $427 million for the comparable period in 2012.

The following table provides a summary of our operating results for the three months ended March 31, 2013 and 2012:

	Three Months Ended March 31,						Percent Increase (Decrease)
	2013			2012
	(in millions, except per share data and percentages)
Net revenue	$	1,906		$	1,758		8%
Operating expenses	799			758			6%
Operating income	1,107			1,000			11%
Operating margin	58.1		%	56.9		%	**
Income tax expense	336			318			6%
Effective income tax rate	30.5		%	31.8		%	**
Net income	$	766		$	682		12%
Diluted earnings per share	$	6.23		$	5.36		16%
Diluted weighted-average shares outstanding	123			127			(3)%

^** Not Meaningful

Business Environment

We process transactions from more than 210 countries and territories and in more than 150 currencies. Net revenue generated in the United States was approximately 39% and 40% of total revenue for the three months ended March 31, 2013 and 2012, respectively. No individual country, other than the United States, generated more than 10% of total revenue in either period, but differences in market growth, economic health and foreign exchange fluctuations in certain countries have increased the proportion of revenue generated outside the United States over time. While the global nature of our business helps protect our operating results from adverse economic conditions in a single or a few countries, the significant concentration of our revenue generated in the United States makes our business particularly susceptible to adverse economic conditions in the United States.

The competitive and evolving nature of the global payments industry provides both challenges to and opportunities for the continued growth of our business. Unprecedented events which began during 2008 impacted the financial markets around the world, including continued distress in the credit environment, continued equity market volatility and additional government intervention. The economies of the United States and numerous countries around the world were significantly impacted by this economic turmoil. Countries have experienced credit ratings actions by ratings agencies, including several in Europe as well as the United States. In addition, some existing customers have been placed in receivership or administration or have a significant amount of their stock owned by their governments. Many financial institutions are facing increased regulatory and governmental influence, including potential further changes in laws and regulations. Many of our financial institution customers, merchants that accept our brands and cardholders who use our brands have been directly and adversely impacted.

MasterCard’s financial results may be negatively impacted by actions taken by individual financial institutions or by governmental or regulatory bodies. The condition of the economic environments may accelerate the timing of or increase the

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impact of risks to our financial performance. As a result, our revenue may be negatively impacted, or the Company may be impacted in several ways. MasterCard continues to monitor the extent and pace of economic recovery around the world to identify opportunities for the continued growth of our business and to evaluate the evolution of the global payments industry. For example, in our Asia Pacific and Latin American regions, we continue to see significant increases in dollar volume of activity on cards carrying our brands in those regions while in the United States and Europe we have experienced growth in dollar volume despite mixed economic indicators. Notwithstanding recent encouraging trends, the extent and pace of economic recovery in various regions remains uncertain and the overall business environment may present challenges for MasterCard to grow its business. For a full discussion see, "Risk Factors - Business Risks" in Part I, Item 1A of the Company's Annual Report on Form 10-K for the year ended December 31, 2012.

In addition, our business and our customers’ businesses are subject to regulation in many countries. Regulatory bodies may seek to impose rules and price controls on certain aspects of our business and the payments industry. See Note 11 (Legal and Regulatory Proceedings) to the consolidated financial statements included in Part I, Item 1 and our risk factor in "Risk Factors - Legal and Regulatory Risks" in Part I, Item 1A of the Company's Annual Report on Form 10-K for the year ended December 31, 2012 for further discussion. Further, information security risks for global payments and technology companies such as MasterCard have significantly increased in recent years. Although to date we have not experienced any material impacts relating to cyber-attacks or other information security breaches, there can be no assurance that we will be immune to these risks and not suffer such losses in the future. See our risk factor in "Risk Factors - Business Risks" in Part I, Item 1A of the Company's Annual Report on Form 10-K for the year ended December 31, 2012 related to a failure or breach of our security systems or infrastructure as a result of cyber-attacks.

Impact of Foreign Currency Rates

Our overall operating results are impacted by changes in foreign currency exchange rates, especially the strengthening or weakening of the U.S. dollar versus the euro and Brazilian real. The functional currency of MasterCard Europe, our principal European operating subsidiary, is the euro, and the functional currency of our Brazilian subsidiary is the Brazilian real. Accordingly, the strengthening or weakening of the U.S. dollar versus the euro and Brazilian real impacts the translation of our European and Brazilian subsidiaries’ operating results into the U.S. dollar. For the three months ended March 31, 2013, as compared to the same period in 2012, the U.S. dollar strengthened against the Brazilian real but weakened against the euro. Accordingly, the net foreign currency impact of changes in the U.S. dollar average exchange rates against the euro and Brazilian real reduced net revenue by approximately 1 percentage point and operating expenses by less than 1 percentage point for the three months ended March 31, 2013.

In addition, changes in foreign 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 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, 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 primarily non-European local currencies and the strengthening or weakening of the euro versus primarily European local currencies. 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, 2013, as compared to the same period in 2012, GDV on a U.S. dollar converted basis increased 11% versus GDV growth on a local currency basis of 12%. The Company attempts to manage these foreign currency exposures through its foreign exchange risk management activities, which are discussed further in Note 13 (Foreign Exchange Risk Management) to the consolidated financial statements included in Part I, Item 1 of this Report.

The Company generates revenue and has financial assets in countries at risk for currency devaluation. While these revenues and financial assets are not material to MasterCard on a consolidated basis, they could be negatively impacted if a devaluation of local currencies occurs relative to the U.S. dollar.

Revenue

Revenue Description

MasterCard’s business model involves four participants in addition to us: cardholders, merchants, issuers (the cardholders’ financial institutions) and acquirers (the merchants’ financial institutions). Our gross revenue is typically generated from the fees that we charge our customers for providing transaction processing and other payment-related services and by assessing our customers based primarily on the dollar volume of activity on the cards and other devices that carry our brands. Our revenue is

27

based upon transactional information accumulated by our systems or reported by our customers. Our primary revenue billing currencies are the U.S. dollar, euro and Brazilian real.

Our pricing is complex and is dependent on the nature of the volumes, types of transactions and other products and services we offer to our customers. The following factors impact pricing:

• Domestic or cross-border

• Signature-based (credit and debit) or PIN-based (debit, including automated teller machine (“ATM”) cash withdrawals and retail purchases)

• Tiered rates that fluctuate based on volume/transaction hurdles

• Geographic region or country

• Retail purchase or cash withdrawal

• Processed or not processed by MasterCard

In general, a cross-border transaction generates higher revenue than a domestic transaction since cross-border fees are higher than domestic fees, and in most cases also include fees for currency conversion.

We review our pricing and implement pricing changes on an ongoing basis. In addition, standard pricing varies among our regions, and such standard pricing can be modified for our customers through customer-specific incentive and rebate agreements.

The Company classifies its net revenue into the following five categories:

1. Domestic assessments: Domestic assessments are fees charged to issuers and acquirers based primarily on the volume of activity on cards and other devices that carry our brands where the merchant country and the issuer country are the same. A portion of these assessments is estimated based on aggregate transaction information collected from our systems and projected customer performance and is calculated by converting the aggregate volume of usage (purchases, cash disbursements, balance transfers and convenience checks) from local currency to the billing currency and then multiplying by the specific price. In addition, domestic assessments include items such as card assessments, which are fees charged on the number of cards issued or assessments for specific purposes, such as acceptance development or market development programs. Acceptance development fees are charged primarily to U.S. issuers based on components of volume, and support our focus on developing merchant relationships and promoting acceptance at the point of sale. Market development fees are charged primarily to issuers and acquirers based on components of volume, and support our focus on building brand awareness and card activation, increasing purchase volumes, cross-border card usage, and other general marketing purposes.

2. Cross-border volume fees: Cross-border volume fees are charged to issuers and acquirers based on the volume of activity on cards that carry our brands where the merchant country and the issuer country are different. Cross-border volume fees are calculated by converting the aggregate volume of usage (purchases and cash disbursements) from local currency to the billing currency and then multiplying by the specific price. Cross-border volume fees also include fees charged to issuers for performing currency conversion services.

3. Transaction processing fees: Transaction processing fees are charged for both domestic and cross-border transactions and are primarily based on the number of transactions. These fees are calculated by multiplying the number and type of transactions by the specific price for each service. Transaction processing fees include charges for the following:

• Transaction Switching – Authorization, Clearing and Settlement.

◦ Authorization refers to the process by which a transaction is routed to the issuer for approval and then a decision whether or not to approve the transaction is made by the issuer or, in certain circumstances such as when the issuer's systems are unavailable or cannot be contacted, by MasterCard or others on behalf of the issuer in accordance with either the issuer's instructions or applicable rules (also known as "stand-in"). Our standards, which may vary across regions, establish the circumstances under which merchants and acquirers must seek authorization of transactions. Fees for authorization are primarily paid by issuers.

◦ Clearing refers to the exchange of financial transaction information between issuers and acquirers after a transaction has been successfully conducted at the point of interaction. MasterCard clears transactions among customers through our central and regional processing systems. Fees for clearing are primarily paid by issuers.

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◦ Settlement. Once transactions have been authorized and cleared, MasterCard helps to settle the transactions by facilitating the exchange of funds between parties. Once clearing is completed, a daily reconciliation is provided to each customer involved in settlement, detailing the net amounts by clearing cycle and a final settlement position. Fees for settlement are primarily paid by issuers.

• Connectivity fees are charged to issuers and acquirers for network access, equipment and the transmission of authorization and settlement messages. These fees are based on the size of the data being transmitted through and the number of connections to the Company’s network.

4. Other revenues: Other revenues for other payment-related services are primarily dependent on the nature of the products or services provided to our customers but are also impacted by other factors, such as contractual agreements. Examples of other revenues are fees associated with the following:

• Cardholder services fees are for benefits provided with MasterCard-branded cards, such as insurance, telecommunications assistance for lost cards and locating ATMs.

• Consulting and research fees are primarily generated by MasterCard Advisors, the Company’s professional advisory services group. The Company’s business agreements with certain customers and merchants may include consulting services.

• Fraud products and services used to prevent or detect fraudulent transactions. This includes warning bulletin fees which are charged to issuers and acquirers for listing invalid or fraudulent accounts either electronically or in paper form and for distributing this listing to merchants.

• Program management services provided to prepaid card issuers.  This primarily includes foreign exchange margin, commissions, load fees and ATM withdrawal fees paid by cardholders on the sale and encashment of prepaid cards.

• The Company also charges for a variety of other payment-related services, including rules compliance, account and transaction enhancement services, holograms and publications.

5. Rebates and incentives (contra-revenue): Rebates and incentives are provided to certain MasterCard customers and are recorded as contra-revenue in the same period that revenue is earned or performance occurs. Performance periods vary depending on the type of rebate or incentive, including commitments to the agreement term, hurdles for volumes, transactions or issuance of new cards, launch of new programs, or the execution of marketing programs. Rebates and incentives are calculated based on estimated performance, the timing of new and renewed agreements and the terms of the related business agreements.

Revenue Analysis

In the three months ended March 31, 2013, gross revenue increased $217 million, or 9%, versus the comparable period in 2012. Revenue growth in the three months ended March 31, 2013 was primarily driven by increased growth in dollar volume of activity on cards carrying our brands and increased transactions. Rebates and incentives in the three months ended March 31, 2013 increased $68 million, or 12%, versus the comparable period in 2012. Our net revenue increased 8% for the three months ended March 31, 2013 versus the comparable period in 2012.

Our revenue is primarily based on volumes and transactions, which are driven by the dollar volume of activity on cards and other devices carrying our brands and the number of transactions. During the three months ended March 31, 2013, our processed transactions increased 12% and our GDV increased 12% on a local currency basis.

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The following table provides a summary of the trend in volume growth:

	Three Months Ended March 31,
	2013				2012
	Growth (USD)		Growth (Local)		Growth (USD)		Growth (Local)
MasterCard-Branded GDV1	11	%	12	%	17	%	18	%
Asia Pacific/Middle East/Africa	20	%	22	%	25	%	24	%
Canada	4	%	5	%	8	%	10	%
Europe	13	%	13	%	13	%	19	%
Latin America	11	%	15	%	17	%	24	%
United States	4	%	4	%	14	%	14	%
Cross-border GDV Growth			16	%			18	%

¹ GDV generated by Maestro and Cirrus cards is not included.

A significant portion of our revenue is concentrated among our five largest customers. The loss of any of these customers or their significant card programs could adversely impact our revenue. In addition, as part of our business strategy, MasterCard, among other efforts, enters into business agreements with customers. These agreements can be terminated in a variety of circumstances.

The significant components of our net revenue for the three months ended March 31, 2013 and 2012 were as follows:

	Three Months Ended March 31,						Percent Increase (Decrease)
	2013			2012
	(in millions, except percentages)
Domestic assessments	$	901		$	840		7%
Cross-border volume fees	607			531			14%
Transaction processing fees	775			714			9%
Other revenues	280			262			7%
Gross revenue	2,563			2,347			9%
Rebates and incentives (contra-revenue)	(657		)	(589		)	12%
Net revenue	$	1,906		$	1,758		8%

The following table summarizes the primary drivers of net revenue growth in the three months ended March 31, 2013 versus the three months ended March 31, 2012:

	For the Three Months Ended March 31,
	Volume				Pricing				Foreign Currency1				Other						Total
	2013		2012		2013		2012		2013		2012		2013			2012			2013		2012
Domestic assessments	11	%	16	%	(1	)%	2	%	(1	)%	(2	)%	(2	)%		—	%		7	%	16	%
Cross-border volume fees	13	%	15	%	2	%	1	%	(1	)%	(2	)%	—	%		1	%		14	%	15	%
Transaction processing fees	10	%	23	%	(1	)%	4	%	(1	)%	(2	)%	1	%		(4	)%		9	%	21	%
Other revenues	**		**		5	%	4	%	—	%	(1	)%	2	%	2	26	%	2	7	%	29	%
Rebates and incentives	10	%	12	%	(2	)%	1	%	(1	)%	(1	)%	5	%	3	12	%	3	12	%	24	%
Net revenue	10	%	18	%	1	%	3	%	(1	)%	(2	)%	(2	)%		(2	)%		8	%	17	%

** Not applicable

¹ Reflects translation from the euro and Brazilian real to the U.S. dollar.

² Other revenues were positively impacted by acquisitions (11 percentage points in 2012) and increased consulting fees, fraud service fees and other payment-related services in 2013 and 2012.

³ Rebates and incentives, other includes the impact from new and renewed agreements and reductions from terminated and expired agreements.

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Operating Expenses

Our operating expenses are comprised of general and administrative, advertising and marketing, and depreciation and amortization expenses. Operating expenses increased $41 million, or 6%, for the three months ended March 31, 2013, versus the comparable period in 2012, primarily due to higher general and administrative expenses. The components of operating expenses for the three months ended March 31, 2013 and 2012 were as follows:

	Three Months Ended March 31,						Percent Increase (Decrease)
	2013			2012
	(in millions, except percentages)
General and administrative	$	608		$	579		5%
Advertising and marketing	129			125			4%
Depreciation and amortizaton	62			54			14%
Total operating expenses	$	799		$	758		6%
Total operating expenses as a percentage of net revenue	41.9		%	43.1		%

General and Administrative

General and administrative expenses increased $29 million, or 5%, for the three months ended March 31, 2013 versus the comparable period in 2012, primarily due to an increase in personnel expenses.

The major components of general and administrative expenses for the three months ended March 31, 2013 and 2012 were as follows:

	Three Months Ended March 31,					Percent Increase (Decrease)
	2013			2012
	(in millions, except percentages)
Personnel	$	412		$	377	9%
Professional fees	46			48		(4)%
Data processing and telecommunications	53			47		12%
Foreign exchange activity	(1		)	13		*
Other	98			94		5%
General and administrative expenses	$	608		$	579	5%

^* Not Meaningful

• Personnel expense increased 9% for the three months ended March 31, 2013 versus the comparable period in 2012. The increase was primarily due to higher salary and benefits costs, including increased compensation related to an increase in the number of employees to support the Company's strategic initiatives.

• Professional fees consist primarily of third-party consulting services, legal costs to defend our outstanding litigation and the evaluation of regulatory developments that impact our industry and company. Professional fees decreased 4% for the three months ended March 31, 2013 versus the comparable period in 2012, primarily due to reduced consulting expenses associated with acquisitions and other strategic initiatives and legal costs related to regulatory developments.

• Data processing and telecommunications expense consists of expenses to support our global payments network infrastructure, expenses to operate and maintain our computer systems and other telecommunication needs. These expenses vary with business volume growth, system upgrades and usage.

• 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 13 (Foreign Exchange Risk Management) to the consolidated financial statements included in Part I, Item 1 of this Report. Since the Company does not designate foreign currency derivatives as hedging instruments pursuant to the accounting standards for derivative instruments and hedging activities, it records gains and losses on foreign exchange derivatives on a current basis in general and administrative expenses, with the associated offset being recognized as the exposures materialize.

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• Other expenses include loyalty and rewards solutions, travel and entertainment, rental expense for our facilities, litigation settlements not related to the U.S. merchant class litigation and other miscellaneous operating expenses. Other expenses increased for the three months ended March 31, 2013 versus the comparable period in 2012, primarily due to increased costs related to loyalty and rewards solutions and other increased operating expenses associated with expanding business operations.

Advertising and Marketing

Our brands, principally MasterCard, are valuable strategic assets that drive card acceptance and usage and facilitate our ability to successfully introduce new service offerings and access new markets globally. Our advertising and marketing strategy is to increase global MasterCard brand awareness, preference and usage through integrated advertising, sponsorship, promotional, interactive media and public relations programs on a global scale. We will continue to invest in marketing programs at the regional and local levels and sponsor diverse events aimed at multiple target audiences. Advertising and marketing expenses increased $4 million, or 4%, for the three months ended March 31, 2013 versus the comparable period in 2012, mainly due to new and renewed sponsorships.

Depreciation and Amortization

Depreciation and amortization expenses increased $8 million, or 14%, for the three months ended March 31, 2013 versus the comparable period in 2012. The increase in depreciation and amortization expense was primarily due to increased amortization of capitalized software costs.

Other Income (Expense)

Other income (expense) was comprised primarily of investment income, interest expense, our share of income (losses) from equity method investments and other gains and losses. The increase of $5 million for the three months ended March 31, 2013 in other expense versus the comparable period in 2012 was primarily due to increased expenses from investments in joint ventures.

Income Taxes

The effective income tax rates were 30.5% and 31.8% for the three months ended March 31, 2013 and 2012, respectively. The effective tax rate for the three months ended March 31, 2013 was lower than the effective tax rate for the three months ended March 31, 2012 due primarily to a more favorable geographic mix of earnings, a larger benefit from the domestic production activities deduction in the U.S. related to our authorization software and various discrete items, including retroactive benefits from the signing of the American Taxpayer Relief Act of 2012 on January 2, 2013.

Liquidity and Capital Resources

We need liquidity and access to capital to fund our global operations, to provide for credit and settlement risk, to finance capital expenditures, to make continued investments in our business and to service our current and potential obligations. The Company generates the cash required to meet these needs through operations. The following table summarizes the cash, cash equivalents and investment securities balances and credit available to the Company at March 31, 2013 and December 31, 2012:

	March 31, 2013		December 31, 2012
	(in millions)
Cash, cash equivalents and available-for-sale investment securities1	$	5,020	$	5,003
Unused line of credit2	3,000		3,000

¹ The March 31, 2013 and December 31, 2012 balances exclude $724 million and $726 million, respectively, held in escrow to fund the Company's share of the U.S. merchant class litigation.

² The Company did not use any funds from the line of credit during the periods presented, except for business continuity planning and related purposes.

Cash, cash equivalents and available-for-sale investment securities held by our foreign subsidiaries (i.e., any entities where earnings would be subject to U.S. tax upon repatriation) was $2.9 billion and $2.5 billion at March 31, 2013 and December 31, 2012, respectively, or 57% and 50% of our total cash, cash equivalents and available-for-sale investment securities as of such dates.  It is our present intention to permanently reinvest the undistributed earnings associated with our foreign subsidiaries as of December 31, 2012 outside of the United States (as disclosed in Note 17 (Income Tax) 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, 2012), and our current plans do not require repatriation of these earnings. If these earnings are needed for U.S operations or can no longer be permanently reinvested outside of the United States, the Company would be subject to U.S. tax upon repatriation.

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Our liquidity and access to capital could be negatively impacted by global credit market conditions. The Company guarantees the settlement of many of the MasterCard, Cirrus and Maestro branded transactions between our issuers and acquirers. See Note 12 (Settlement and Other Risk Management) to the consolidated financial statements in Part I, Item 1 of this Report for a description of these guarantees. Historically, payments under these guarantees have not been significant; however, historical trends may not be an indication of the future. The risk of loss on these guarantees is specific to individual customers, but may also be driven significantly by regional or global economic conditions, including, but not limited to the health of the financial institutions in a country or region.

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. See Item 1A (Risk Factors) in Part I of the Company's Annual Report on Form 10-K for the year ended December 31, 2012 and Note 11 (Legal and Regulatory Proceedings) to the consolidated financial statements included in Part I, Item 1 of this Report; and “-Business Environment” for additional discussion of these and other risks facing our business.

Cash Flow

The table below shows a summary of the cash flows from operating, investing and financing activities for the three months ended March 31, 2013 and 2012:

	Three Months Ended March 31,
	2013			2012
	(in millions)
Cash Flow Data:
Net cash provided by operating activities	$	872		$	427
Net cash used in investing activities	(107		)	(302		)
Net cash used in financing activities	(783		)	(220		)

Net cash provided by operating activities for the three months ended March 31, 2013 was $872 million versus $427 million for the comparable period in 2012. Net cash provided by operating activities for the three months ended March 31, 2013 was primarily due to net income and the collection of income tax receivables. Net cash provided by operating activities for the three months ended March 31, 2012 was primarily due to net income, partially offset by the net change in customer settlements and a reduction in accounts payable.

Net cash used in investing activities for the three months ended March 31, 2013 and 2012 primarily related to the purchases of investment securities, partially offset by net proceeds from sales and maturities of investment securities.

Net cash used in financing activities for the three months ended March 31, 2013 and 2012 primarily related to the repurchase of the Company’s Class A common stock.

The table below shows a summary of the balance sheet data at March 31, 2013 and December 31, 2012:

	March 31, 2013		December 31, 2012
	(in millions)
Balance Sheet Data:
Current assets	$	8,783	$	9,357
Current liabilities	4,414		4,906
Long-term liabilities	639		627
Equity	6,756		6,929

The Company believes that its existing cash, cash equivalents and investment securities balances, its cash flow generating capabilities, its borrowing capacity and its access to capital resources are sufficient to satisfy its future operating cash needs, capital asset purchases, outstanding commitments and other liquidity requirements associated with its existing operations and potential obligations.

Credit Availability

On November 16, 2012, the Company entered into a committed five-year unsecured $3 billion revolving credit facility (the “Credit Facility”), which expires on November 16, 2017. The Credit Facility replaced the Company's prior credit facility. Borrowings under the Credit Facility are available to provide liquidity for general corporate purposes, including providing liquidity

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in the event of one or more settlement failures by the Company's customers. In addition, for business continuity planning and related purposes, we may borrow and repay amounts under the Credit Facility from time to time. The facility fee and borrowing cost under the Credit Facility are contingent upon the Company's credit rating. At March 31, 2013, the applicable facility fee was 10 basis points on the average daily commitment (whether or not utilized). In addition to the facility fee, interest on borrowings under the Credit Facility would be charged at the London Interbank Offered Rate (LIBOR) plus an applicable margin of 90 basis points, or an alternate base rate. MasterCard had no borrowings under the Credit Facility at March 31, 2013 or December 31, 2012.

The Credit Facility contains customary representations, warranties, events of default and affirmative and negative covenants, including a financial covenant limiting the maximum level of consolidated debt to earnings before interest, taxes, depreciation and amortization. MasterCard was in compliance in all material respects with the covenants of the Credit Facility at March 31, 2013 and December 31, 2012. The majority of Credit Facility lenders are customers or affiliates of customers of MasterCard.

On August 2, 2012, the Company filed a universal shelf registration statement to provide additional access to capital, if needed.  Pursuant to the shelf registration statement, the Company may from time to time offer to sell debt securities, preferred stock, Class A common stock, depository shares, purchase contracts, units or warrants in one or more offerings.

Dividends and Share Repurchases

MasterCard has historically paid quarterly dividends on its 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. However, 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.

On December 4, 2012, our Board of Directors declared a quarterly cash dividend of $0.30 per share paid on February 8, 2013 to holders of record on January 9, 2013 of our Class A common stock and Class B common stock. The aggregate amount of this dividend was $37 million.

On February 5, 2013, our Board of Directors declared a quarterly cash dividend of $0.60 per share payable on May 9, 2013 to holders of record on April 9, 2013 of our Class A common stock and Class B common stock. The aggregate amount of this dividend was $73 million.

Aggregate payments for quarterly dividends totaled $37 million and $19 million for the three months ended March 31, 2013 and 2012, respectively.

Shares in the Company's common stock that are repurchased are considered treasury stock. The timing and actual number of additional shares repurchased will depend on a variety of factors, including the operating needs of the business, legal requirements, price and economic and market conditions. The following table summarizes the Company's share repurchase authorizations of its Class A common stock through March 31, 2013, as well as historical purchases:

	Authorization Dates
	February 2013		June 2012		April 20111		Total
	(in millions, except average price data)
Board authorization	$	2,000	$	1,500	$	2,000	$	5,500
Remaining authorization at December 31, 2012	**		$	604	$	—	$	604
Dollar value of shares repurchased during the three months ended March 31, 2013	$	162	$	604	$	—	$	766
Remaining authorization at March 31, 2013	$	1,838	$	—	$	—	$	1,838
Shares repurchased during the three months ended March 31, 2013	0.31		1.17		—		1.48
Average price paid per share during the three months ended March 31, 2013	$	522.87	$	517.16	$	—	$	518.36
Cumulative shares repurchased through March 31, 2013	0.31		3.11		6.54		9.96
Cumulative average price paid per share	$	522.87	$	481.58	$	305.60	$	367.34

^** Not applicable

¹The initial authorization in September 2010 for $1 billion was amended in April 2011 to increase the authorization to $2 billion.

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On February 5, 2013, our Board of Directors approved a new share repurchase program authorizing the Company to repurchase up to $2 billion of its Class A common stock.  The new share repurchase program became effective at the completion of the Company's June 2012 Share Repurchase Program.  As of April 25, 2013, the cumulative repurchases by the Company under the February 2013 Share Repurchase Program totaled approximately 0.7 million shares of its Class A common stock for an aggregate cost of approximately $344 million at an average price of $527.57 per share of Class A common stock.

See Note 7 (Stockholders' Equity) to the consolidated financial statements included in Part I, Item 1 of this Report for further discussion.

Off-Balance Sheet Arrangements

MasterCard has no off-balance sheet debt other than lease arrangements and other commitments as presented in the future obligations table in Item 7 (Liquidity and Capital Resources) in Part II of the Company's Annual Report on Form 10-K for the year ended December 31, 2012.

Recent Accounting Pronouncements

Refer to Note 1 (Summary of Significant Accounting Policies) to the consolidated financial statements included in Part I, Item 1.

35

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 market factors such as interest rates, foreign currency exchange rates and equity price risk. Our exposure to market risk from changes in interest rates, foreign exchange rates and equity price risk is limited. Management establishes and oversees the implementation of policies governing our funding, investments and use of derivative financial instruments. We monitor risk exposures on an ongoing basis. The effect of a hypothetical 10% adverse change in foreign currency rates could result in a fair value loss of approximately $199 million on our foreign currency derivative contracts outstanding at March 31, 2013 related to the hedging program. A 100 basis point adverse change in interest rates would not have had a material impact on the Company's financial assets or liabilities at March 31, 2013 or December 31, 2012. In addition, there was no material equity price risk at March 31, 2013 or December 31, 2012. The Dodd-Frank Wall Street Reform and Consumer Protection Act in the United States includes provisions related to derivative financial instruments and the Company is determining what impact, if any, such provisions will have on the Company's financial position or results of operations.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

MasterCard Incorporated’s management, including the President and Chief Executive Officer and Chief Financial Officer, carried out an evaluation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this Report. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. Based on that evaluation, the Company’s President and Chief Executive Officer and Chief Financial Officer concluded that MasterCard Incorporated’s disclosure controls and procedures were effective as of the end of the period covered by this Report at the reasonable assurance level to accomplish their objectives of (i) recording, processing, summarizing and reporting information that is required to be disclosed in its reports under the Securities Exchange Act of 1934, as amended, within the time periods specified in the Securities and Exchange Commission’s rules and forms and (ii) ensuring that information required to be disclosed in such reports is accumulated and communicated to MasterCard Incorporated’s management, including its President and Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding disclosure.

Changes in Internal Control over Financial Reporting

In connection with the evaluation by the Company’s President and Chief Executive Officer and its Chief Financial Officer of changes in internal control over financial reporting that occurred during the Company’s last fiscal quarter, no change in the Company’s internal control over financial reporting was identified that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

Other Financial Information

With respect to the unaudited consolidated financial information of MasterCard Incorporated and its subsidiaries as of March 31, 2013 and for the three months ended March 31, 2013 and 2012, PricewaterhouseCoopers LLP reported that they have applied limited procedures in accordance with professional standards for a review of such information. However, their report dated May 1, 2013 appearing below, states that they did not audit and they do not express an opinion on that unaudited financial information. Accordingly, the degree of reliance on their report on such information should be restricted in light of the limited nature of the review procedures applied. PricewaterhouseCoopers LLP is not subject to the liability provisions of Section 11 of the Securities Act of 1933 (the “Act”) for their report on the unaudited consolidated financial information because that report is not a “report” or a “part” of a registration statement prepared or certified by PricewaterhouseCoopers LLP within the meaning of Sections 7 and 11 of the Act.

36

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders

of MasterCard Incorporated:

We have reviewed the consolidated balance sheet of MasterCard Incorporated and its subsidiaries (the “Company”) as of March 31, 2013, and the related consolidated statements of operations and comprehensive income for the three-month periods ended March 31, 2013 and 2012, and the consolidated statement of changes in equity for the three-month period ended March 31, 2013, and the consolidated statement of cash flows for the three-month periods ended March 31, 2013 and 2012 included within Part I, Item 4 of this Form 10-Q. These interim financial statements are the responsibility of the Company’s management.

We conducted our review in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States), the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to the accompanying consolidated interim financial information for them to be in conformity with accounting principles generally accepted in the United States of America.

We previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet as of December 31, 2012, and the related consolidated statement of operations, of comprehensive income, of changes in equity, and of cash flows for the year then ended (not presented herein), and in our report dated February 14, 2013, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying consolidated balance sheet as of December 31, 2012, is fairly stated in all material respects in relation to the consolidated balance sheet from which it has been derived.

/s/ PricewaterhouseCoopers LLP

New York, New York

May 1, 2013

37

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

Refer to Note 11 (Legal and Regulatory Proceedings) to the consolidated financial statements included in Part I, Item 1.

Item 1A. Risk Factors

For a discussion of the Company's risk factors, see Item 1A (Risk Factors) in Part I of the Company's Annual Report on Form 10-K for the year ended December 31, 2012.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

ISSUER PURCHASES OF EQUITY SECURITIES

During the first quarter of 2013, MasterCard repurchased a total of approximately 1.5 million shares for $766 million at an average price of $518.36 per share of Class A common stock. See Note 7 (Stockholders' Equity) to the consolidated financial statements included in Part I, Item 1 of this Report for further discussion with respect to the Company's share repurchase programs. The Company’s repurchase activity during the first quarter of 2013 consisted of open market share repurchases and is summarized in the following table:

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	390,263	$	512.34	390,263	$	404,385,336
February 1 – 28	522,400	$	519.81	522,400	$	2,132,834,077
March 1 – 31	566,007	$	521.15	566,007	$	1,837,857,375
Total	1,478,670	$	518.36	1,478,670

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

Item 6. Exhibits

Refer to the Exhibit Index included herein.

38

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:	May 1, 2013	By:	/S/ AJAY BANGA
			Ajay Banga
			President and Chief Executive Officer
			(Principal Executive Officer)
Date:	May 1, 2013	By:	/S/ MARTINA HUND-MEJEAN
			Martina Hund-Mejean
			Chief Financial Officer
			(Principal Financial Officer)
Date:	May 1, 2013	By:	/S/ ANDREA FORSTER
			Andrea Forster
			Corporate Controller
			(Principal Accounting Officer)

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EXHIBIT INDEX

Exhibit Number	Exhibit Description
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, 2013).
10.2+	Form of Stock Option Agreement for awards under 2006 Long Term Incentive Plan (effective for awards granted on and subsequent to March 1, 2013).
10.3+	Form of Performance Unit Agreement for awards under 2006 Long Term Incentive Plan (effective for awards granted on and subsequent to March 1, 2013).
12.1	Computation of Ratio of Earnings to Fixed Charges.
15	Awareness Letter from the Company’s Independent Registered Public Accounting Firm.
31.1	Certification of Ajay Banga, President and Chief 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 Martina Hund-Mejean, 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	Certification of Ajay Banga, President and Chief 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 Martina Hund-Mejean, Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Scheme 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.

Any agreements or 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.

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EX-10.1

Exhibit 10.1

FORM OF RESTRICTED STOCK UNIT AGREEMENT

[ ] GRANT

THIS AGREEMENT, dated as of [ ], (“Grant Date”) is between MasterCard Incorporated, a Delaware Corporation (“Company”), and you (“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 (“Plan”).

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

WHEREAS, the Human Resources 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 you the number of Units reflected in your 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 your 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.

(a)Subject to (b) and (c) below, the interest of the Employee in the Units shall vest on [ ], conditioned upon the Employee's continued employment with the Company or an Affiliated Employer as of [ ].

(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 the Employee's employment with the Company or an Affiliated Employer terminates due to Disability or Retirement six months or longer after the Grant Date, 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). In the event Employee's employment with the Company or an Affiliated Employer terminates for any other reason, unvested Units shall be forfeited.

(c)In the event that the Employee's employment with the Company or an Affiliated Employer, or successor thereto, is terminated (within the meaning of Code section 409A) without Cause or by the Employee with Good Reason, 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).

1

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 Employee's Units vest and the Company has issued Common Shares relating to such Units, 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, 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 in the number and kind of outstanding stock by reason of any recapitalization, reorganization, merger, consolidation, stock split or any similar change affecting the Common Shares (other than a dividend payable in Common Shares) the Company shall make an appropriate adjustment in the number and terms of the Units credited to the Employee's Account as provided in the Plan.

6.Form and Timing of Payment.

(a)The Company shall pay within 60 days of the [ ], 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 vesting.

(b)In the event of vesting under section 2(b) above due to an Employee's death, payment shall be made within 60 days following death.

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

7.Compliance with Law.

No Common Shares will be delivered to 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.

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 or beneficiary.

9.Taxes.

The Employee shall be liable for any and all taxes, including withholding taxes, arising out of this grant or the issuance of the Common Shares on vesting of Units hereunder. The Company is authorized to

2

deduct from the total number of Common Shares Employee is to receive on settlement of the Units the total value equal to the amount necessary to satisfy any such withholding obligation at the minimum applicable withholding rate, or to obtain withholdings in any other method permitted by the Plan. To the extent necessary to meet any obligation to withhold Federal Insurance Contributions Act taxes before settlement of the Units, the Company is authorized to deduct those taxes from other current wages.

10.Discretionary Nature of Plan.

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.

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. 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.

To the extent the Company determines that this agreement is subject to Code section 409A, but does not conform with the requirements of Code section 409A the Company may at its sole discretion amend or replace the agreement to cause the agreement to comply with Code section 409A. The agreement shall be construed and administered consistent with Code section 409A or an exemption from Code section 409A.

13.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: Group Head, Global 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.

3

The value of the Units granted hereunder is an extraordinary item of compensation outside the scope of the Employee's 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)This Agreement, along with the incorporated grant statement, an executed MasterCard LTIP Non-Competition Agreement, and any special provisions for 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 /s/_______________________________

Name:

Title:

4

EX-10.2

Exhibit 10.2

FORM OF STOCK OPTION AGREEMENT

[ ] GRANT

THIS AGREEMENT, dated as of [ ], (“Grant Date”) is between MasterCard Incorporated, a Delaware Corporation (“Company”), and you (“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 (“Plan”).

WHEREAS, the Company has established the Plan, the terms of which Plan, but not the standard terms and conditions of Section 6.4 of such Plan, 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 you a nonqualified stock option (“Stock Option”) to purchase from time to time all or any part of the number of common shares of the Company's Class A Common Stock (“Common Shares”) reflected in your grant statement, the terms of which grant statement 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 six months after the Grant Date, 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 taxes required to be withheld. 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 by Employees 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.

3.Vesting.

(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.

(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, 100 percent of the Employee's

1

interest in the Stock Option shall vest. In the event the Employee's employment with the Company or an Affiliated Employer terminates due to Disability or Retirement six months or longer after the Grant Date, the Employee's interest in the Stock Option shall continue to vest as if there was no termination of Employment. In the event Employee's employment with the Company or an Affiliated Employer terminates for any other reason, the Employee's unvested interest in the Stock Option shall be forfeited.

(c)In the event that the Employee's employment with the Company or an Affiliated Employer, or successor thereto, is terminated without Cause or by the Employee with Good Reason, 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.

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, 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 in the number and kind of outstanding shares of stock by reason of any recapitalization, reorganization, merger, consolidation, stock split or any similar change affecting the Common Shares (other than a dividend payable in Common Shares) the Company shall make an appropriate adjustment in the terms of the Stock Option, which adjustments shall be made in a manner so as to ensure continued exemption from or compliance with Code section 409A.

2

8.Compliance with Law.

No Common Shares will be delivered to 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.

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 withholding taxes, arising out of the transfer of Common Shares on exercise of the Stock Option. The Employee may satisfy such taxes 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 authorized to deduct from the total number of Common Shares Employee is to receive on exercise of the Stock Option the total value equal to the amount necessary to satisfy any such withholding obligation at the minimum applicable withholding rate.

11.Discretionary Nature of Plan.

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, the payment of dividend equivalents, and vesting provisions.

12.Section 409A.

To the extent the Company determines that this agreement is subject to Code section 409A, but does not conform with the requirements of Code 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 Code section 409A. The agreement shall be construed and administered consistent with Code section 409A or an exemption from Code section 409A.

13.Consent to On-Line Grant and Acceptance.

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. 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.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.

3

(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: Group Head, Global 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 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)This Agreement, along with the incorporated grant statement, an executed MasterCard LTIP Non-Competition Agreement, and any special provisions for 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 /s/_______________________________

Name:

Title:

4

EX-10.3

Exhibit 10.3

FORM OF PERFORMANCE UNIT AGREEMENT

[ ] GRANT

THIS AGREEMENT, dated as of [ ], (“Grant Date”) is between MasterCard Incorporated, a Delaware Corporation (“Company”), and you (“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 (“Plan”).

WHEREAS, the Company has established the Plan, the terms of which Plan, 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 you the number of Units reflected in your 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 Stock”) that varies depending on the level of performance achieved on specified performance criteria during the performance period [ ], through [ ].

2.Vesting Schedule.

(a)Subject to (b) and (c) below, the interest of the Employee in the Units shall vest on [ ], conditioned upon the Employee's continued employment with the Company or an Affiliated Employer as of [ ], and the achievement of the performance goals established by the Committee and set forth in your grant statement. Vesting in Units is subject to the Committee's exercise of downward discretion to reduce the amounts earned on achievement of performance goals.

(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), at a target level of performance. In the event the Employee's employment with the Company or an Affiliated Employer terminates due to Disability or Retirement six months or longer after the Grant Date, unvested Units shall continue to vest as if there had been no termination of employment, subject to the achievement of performance goals, and shall be paid as set forth in section 6(a), 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. In the event Employee's employment with the Company or an Affiliated Employer terminates for any other reason, unvested Units shall be forfeited.

(c)In the event of a Change in Control, vesting and payment will be as set forth in sections 2(a) and 6(a) to the extent the achievement of performance goals can continue to be measured

1

after the Change in Control. To the extent the achievement of performance goals is no longer capable of measurement following a Change in Control, 100 percent of the Employee's unvested Units shall vest on [ ], conditioned upon the Employee's continued employment with the Company or an Affiliated Employer, or successor thereto, as of [ ], and shall be paid at a target level of performance at the time set forth in section 6(a). In the event the Employee's employment with the Company or an Affiliated Employer, or successor thereto, is terminated (within the meaning of Code section 409A) without Cause or by the Employee with Good Reason, 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) at a target level of performance.

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 Employee's Units vest and the Company has issued Common Shares relating to such Units, 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, 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 in the number and kind of outstanding stock by reason of any recapitalization, reorganization, merger, consolidation, stock split or any similar change affecting the Common Shares (other than a dividend payable in Common Shares) the Company shall make an appropriate adjustment in the number and terms of the Units credited to the Employee's Account as provided in the Plan.

6.Form and Timing of Payment.

(a)The Company shall pay within 60 days following the [ ], vesting date set forth in section 2(a) above, a number of Common Shares equal to the aggregate number of Units determined to have been earned.

(b)In the event of vesting under section 2(b) above due to an Employee's death, payment shall be made within 60 days following death.

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

2

7.Compliance with Law.

No Common Shares will be delivered to 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.

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 or beneficiary.

9.Recoupment Policy.

In the event of a restatement of materially inaccurate financial results, the Committee has the discretion to recover from you stock or cash equal to the value of the stock issued on settlement of these Units to the extent the vesting schedule of the Units under section 2(a) 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, to the extent permitted by law, recover from you stock or cash equal to the portion of the stock issued in excess of the amount that would have been paid based on the restated financial results. A recovery under this section 9 can be made by withholding compensation otherwise due to you. The Company will not seek to recover amounts paid under this Agreement more than three years after the date the Company files the report with the Securities and Exchange Commission that contained the incorrect financial results. This Recoupment Policy is in addition to, and not in lieu of, any requirements under the Sarbanes-Oxley Act 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 withholding taxes, arising out of this grant or the issuance of the Common Shares on vesting of Units hereunder. The Company is authorized to deduct from the total number of Common Shares Employee is to receive on settlement of the Units the total value equal to the amount necessary to satisfy any such withholding obligation at the minimum applicable withholding rate, or to obtain withholdings in any other method permitted by the Plan. To the extent necessary to meet any obligation to withhold Federal Insurance Contributions Act taxes before settlement of the Units, the Company is authorized to deduct those taxes from other current wages.

11.Discretionary Nature of Plan.

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.

12.Consent to On-Line Grant and Acceptance.

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. Employee further acknowledges and agrees

3

that execution of any documents through such system shall have the same force and effect as if executed in writing.

13.Section 409A.

To the extent the Company determines that this Agreement is subject to Code section 409A, but does not conform with the requirements of Code section 409A the Company may at its sole discretion amend or replace the Agreement to cause the Agreement to comply with Code section 409A. The Agreement shall be construed and administered consistent with Code section 409A or an exemption from Code 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: Group Head, Global 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 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)This Agreement, along with the incorporated grant statement, an executed MasterCard LTIP Non-Competition Agreement, and any special provisions for 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 /s/_______________________________

Name:

Title:

4

EX-12.1

EXHIBIT 12.1

MASTERCARD INCORPORATED

COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES

	Three Months Ended		Years Ended December 31,
	March 31, 2013		2012		2011		2010		2009		2008
	(in millions, except ratios)
Pre-tax income (loss) before adjustment for non-controlling interests	$	1,103	$	3,932	$	2,746	$	2,757	$	2,218	$	(383	)
Loss attributable to non-controlling interests and equity investments	6		25		18		1		3		2
Add: Fixed charges	6		25		29		56		120		109
Earnings (loss)	$	1,115	$	3,982	$	2,793	$	2,814	$	2,341	$	(272	)
Fixed charges:
Interest expense	$	5	$	20	$	25	$	52	$	115	$	104
Portion of rental expense under operating leases deemed to be the equivalent of interest 1	1		5		4		4		5		5
Total fixed charges	$	6	$	25	$	29	$	56	$	120	$	109
Ratio of earnings to fixed charges	185.8		159.3		96.3		50.3		19.5		- 2

¹ Portion of rental expense under operating leases deemed to be the equivalent of interest at an appropriate interest factor.

² The ratio coverage was less than 1:1. MasterCard would have needed to generate additional earnings of $381 million to achieve a coverage of 1:1 in 2008.

EX-15

EXHIBIT 15

May 1, 2013

Securities and Exchange Commission

100 F Street, N.E.

Washington, DC 20549

Commissioners:

We are aware that our report dated May 1, 2013 on our review of interim financial information of MasterCard Incorporated and its subsidiaries (the “Company”) as of March 31, 2013 and for the three month periods ended March 31, 2013 and 2012 and included in the Company's quarterly report on Form 10-Q for the quarter ended March 31, 2013 is incorporated by reference in its Registration Statements on Form S-8 dated June 30, 2006 (File No. 333-135572), August 9, 2006 (File No. 333-136460), and June 15, 2007 (File No. 333-143777), and the Registration Statement on Form S-3 dated August 2, 2012 (No. 333-183021).

Very truly yours,

/s/ PricewaterhouseCoopers LLP

New York, New York

EX-31.1

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, Ajay Banga, certify that:

1.I have reviewed this quarterly report on Form 10-Q of MasterCard Incorporated for the three months ended March 31, 2013;

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:	May 1, 2013
By:	/s/ Ajay Banga
	Ajay Banga
	President and Chief Executive Officer

EX-31.2

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, Martina Hund-Mejean, certify that:

1.I have reviewed this quarterly report on Form 10-Q of MasterCard Incorporated for the three months ended March 31, 2013;

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:	May 1, 2013
By:	/s/ Martina Hund-Mejean
	Martina Hund-Mejean
	Chief Financial Officer

EX-32.1

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, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Ajay Banga, 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.

May 1, 2013

/s/ Ajay Banga

Ajay Banga

President and Chief Executive Officer

EX-32.2

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, 2013 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Martina Hund-Mejean, 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.

May 1, 2013

/s/ Martina Hund-Mejean

Martina Hund-Mejean

Chief Financial Officer

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Prepaid Expenses and Other Assets Schedule of Prepaid Expenses (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Prepaid Expenses [Abstract]
Customer and merchant incentives	$ 291	$ 222
Investment securities held-to-maturity	0	36
Prepaid income taxes	12	77
Income taxes receivable	12	163
Other	173	183
Total prepaid expense and other current assets	$ 488	$ 681

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Legal and Regulatory Proceedings (Details)				1 Months Ended		3 Months Ended		6 Months Ended					1 Months Ended		12 Months Ended	18 Months Ended	12 Months Ended	3 Months Ended
	Mar. 31, 2013 USD ($)	Dec. 31, 2012 USD ($)	Jul. 13, 2012	Feb. 07, 2011 Event Involving Visa Parties, Member Banks and MasterCard [Member]	Feb. 07, 2011 Event Involving Member Banks and MasterCard [Member]	Dec. 31, 2009 Hungarian Competition Authority [Member] USD ($)	Mar. 31, 2008 Cross Border [Member] USD ($)	Jun. 30, 2008 Cross Border [Member]	Nov. 03, 2010 Italian Competition Authority [Member] USD ($)	Nov. 03, 2010 Italian Competition Authority [Member] EUR (€)	Mar. 31, 2013 Canadian Competition Bureau [Member] USD ($)	Sep. 30, 2009 State Unfair Competition [Member] USD ($)	Mar. 31, 2009 Undertakings to European Commission [Member] Debit Card Transactions [Member]	Mar. 31, 2009 Undertakings to European Commission [Member] Credit Card Transactions [Member]	Dec. 31, 2012 U.S. Merchant Lawsuit Settlement [Member] USD ($)	Mar. 31, 2013 U.S. Merchant Lawsuit Settlement [Member] USD ($)	Dec. 31, 2012 U.S. merchant litigation - class litigation [Member] USD ($)	Mar. 31, 2012 Scenario, Forecast [Member] USD ($)	Dec. 31, 2011 Scenario, Forecast [Member] USD ($)
Legal And Regulatory [Line Items]
Compensatory damages sought, Canadian Competition Bureau											$ 5,000,000,000
Percent of settlement MasterCard would pay				12.00%	36.00%
Provision for litigation settlement																		20,000,000	770,000,000
Estimated Litigation Liability, Current	724,000,000	726,000,000
Daily penalty upon failure to comply European Commission's decision, percentage								3.50%
Daily penalty upon failure to comply European Commission's decision							700,000
Weighted Average Interchange Fee Transaction Basis Point													0.20%	0.30%
Payments for Legal Settlements						3,000,000									790,000,000	790,000,000	726,000,000
Accrued litigation payment												6,000,000
Amount of fine									$ 4,000,000	€ 2,700,000
Reduction in the default credit interchange fees			0.10%

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Share Based Payments (Narrative) (Details) (USD $) In Thousands, except Per Share data, unless otherwise specified			3 Months Ended
	Mar. 31, 2013 Class A Common Stock [Member]	Dec. 31, 2012 Class A Common Stock [Member]	Mar. 31, 2013 Non-qualified stock options [Member] numberofinstallments	Mar. 31, 2013 Restricted stock units [Member]	Mar. 31, 2013 Performance stock units [Member]
Share-based Compensation [Line Items]
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Term			5 years
Stock granted under Long-Term Incentive Plan (LTIP)			183	143	18
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period, Weighted-Average Grant-Date Fair Value				$ 511	$ 560
Class A common stock, par value	$ 0.0001	$ 0.0001
Fair value of stock options, per share, estimated using a Black-Scholes option pricing model			$ 123
Stock options vested, number of annual installments			4
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Volatility Rate			27.10%
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period			1 year		3 years
Share Based Compensation Arrangement By Share Based Payment Award Options Term			10 years

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Summary of Significant Accounting Policies Consolidation and basis of presentation (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended		12 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Dec. 31, 2012 U.S. merchant litigation - class litigation [Member]
Consolidation and Basis of Presentation [Line Items]
Non-controlling interest amounts included within other income (expense)	$ 1	$ 1
Payments for Legal Settlements			$ 726

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Prepaid Expenses and Other Assets (Tables)

3 Months Ended

Mar. 31, 2013

Prepaid Expenses [Abstract]

Schedule of Other Current Assets [Table Text Block]

Prepaid expenses and other current assets consisted of the following:

	March 31, 2013		December 31, 2012
	(in millions)
Customer and merchant incentives	$	291	$	222
Investment securities held-to-maturity	—		36
Prepaid income taxes	12		77
Income taxes receivable	12		163
Other	173		183
Total prepaid expenses and other current assets	$	488	$	681

Schedule of Other Assets, Noncurrent

Other assets consisted of the following:

	March 31, 2013		December 31, 2012
	(in millions)
Customer and merchant incentives	$	414	$	404
Nonmarketable equity investments	243		249
Auction rate securities available-for-sale, at fair value	32		32
Income taxes receivable	74		72
Other	57		52
Total other assets	$	820	$	809

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Settlement and Other Risk Management Estimated Settlement Exposure and Portion of Uncollateralized Settlement Exposure for MasterCard-Branded Transactions (Details) (Guarantee Obligations [Member], USD $) In Millions, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Guarantee Obligations [Member]
Risks Inherent in Servicing Assets and Servicing Liabilities [Line Items]
Gross settlement exposure	$ 38,077	$ 37,768
Collateral held for settlement exposure	(4,565)	(3,775)
Net uncollateralized settlement exposure	$ 33,512	$ 33,993

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Accrued Expenses (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Accrued Liabilities [Abstract]
Customer and merchant incentives	$ 1,096	$ 1,058
Personnel costs	177	354
Advertising	77	122
Income and other taxes	250	94
Other	103	120
Total accrued expenses	$ 1,703	$ 1,748

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Fair Value and Investment Securities Available-for-Sale Investment Securities, Unrealized Gains and Losses (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2013		Dec. 31, 2012
Investment Identifier [Line Items]
Amortized Cost	$ 3,060		$ 2,975
Gross Unrealized Gain	11		12
Gross Unrealized Loss	(3)	[1]	(4)	[1]
Fair Value	3,068		2,983
Municipal securities [Member]
Investment Identifier [Line Items]
Amortized Cost	519		522
Gross Unrealized Gain	9		9
Gross Unrealized Loss	0	[1]	0	[1]
Fair Value	528		531
U.S. Government and Agencies securities [Member]
Investment Identifier [Line Items]
Amortized Cost	586		582
Gross Unrealized Gain	0		0
Gross Unrealized Loss	0	[1]	0	[1]
Fair Value	586		582
Taxable short-term bond funds [Member]
Investment Identifier [Line Items]
Amortized Cost	209		209
Gross Unrealized Gain	1		1
Gross Unrealized Loss	0	[1]	0	[1]
Fair Value	210		210
Corporate securities [Member]
Investment Identifier [Line Items]
Amortized Cost	1,313		1,245
Gross Unrealized Gain	1		2
Gross Unrealized Loss	0	[1]	(1)	[1]
Fair Value	1,314		1,246
Asset-backed securities [Member]
Investment Identifier [Line Items]
Amortized Cost	325		316
Gross Unrealized Gain	0		0
Gross Unrealized Loss	0	[1]	0	[1]
Fair Value	325		316
Auction rate securities [Member]
Investment Identifier [Line Items]
Amortized Cost	35	[2]	35	[2]
Gross Unrealized Gain	0	[2]	0	[2]
Gross Unrealized Loss	(3)	[1],[2]	(3)	[1],[2]
Fair Value	32	[2]	32	[2]
Other [Member]
Investment Identifier [Line Items]
Amortized Cost	73		66
Gross Unrealized Gain	0		0
Gross Unrealized Loss	0	[1]	0	[1]
Fair Value	$ 73		$ 66

[1] The unrealized losses primarily relate to ARS, which have been in an unrealized loss position longer than 12 months, but have not been deemed other-than-temporarily impaired.

[2] Included in other assets on the consolidated balance sheet. See Note 4 (Prepaid Expenses and Other Assets).

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Foreign Exchange Risk Management Classification of Outstanding Forward Contracts (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2013		Dec. 31, 2012
Accounts Receivable [Member]
Foreign Exchange Risk Management [Line Items]
Foreign Currency Derivatives at Fair Value, Net	$ 15	[1]	$ 12	[1]
Other Current Liabilities [Member]
Foreign Exchange Risk Management [Line Items]
Foreign Currency Derivatives at Fair Value, Net	31	[1]	15	[1]
Commitments [Member]
Foreign Exchange Risk Management [Line Items]
Commitments to purchase foreign currency - Notional	100		76
Commitments to sell foreign currency - Notional	1,870		1,571
Commitments to purchase foreign currency - estimated fair value	(2)		(1)
Commitments to sell foreign currency - Estimated Fair Value	$ (14)		$ (2)

[1] The fair value of derivative contracts are presented on a gross basis on the balance sheet and are subject to enforceable master netting arrangements, which contain various netting and setoff provisions.

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Income Taxes (Details)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Income Tax Expense (Benefit) [Abstract]
Effective income tax rate	30.50%	31.80%

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Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2013

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

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 and businesses worldwide, enabling them to use electronic forms of payment instead of cash and checks. MasterCard offers a wide range of payment solutions, that enable the development and implementation of credit, debit, prepaid, commercial and related payment programs and solutions for consumers and merchants. The Company's customers encompass a vast array of entities, including financial institutions and others that act as "issuers" and "acquirers", as well as merchants, governments, telecommunications companies and other businesses. MasterCard manages a family of well-known, widely accepted payment brands, including MasterCard®, Maestro® and Cirrus®, which its customers use in their payment programs and solutions. The Company processes payment transactions over the MasterCard Worldwide Network and provides support services to its customers and others.  

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 for which the Company is the primary beneficiary. Intercompany transactions and balances have been eliminated in consolidation. Certain prior period amounts have been reclassified to conform to the 2013 presentation. The Company follows accounting principles generally accepted in the United States of America (“GAAP”).

The balance sheet as of December 31, 2012 was derived from the audited consolidated financial statements as of December 31, 2012. The consolidated financial statements for the three months ended March 31, 2013 and 2012 and as of March 31, 2013 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, 2013 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 requirements for Quarterly Reports on Form 10-Q and, consequently, do not include all of the disclosures required by GAAP. Reference should be made to the MasterCard Incorporated Annual Report on Form 10-K for the year ended December 31, 2012 for additional disclosures, including a summary of the Company’s significant accounting policies.

Non-controlling interest amounts are included in the consolidated statement of operations within other income (expense). For the three months ended March 31, 2013 and 2012, non-controlling interest amounts were an expense of $1 million and income of $1 million, respectively.

In December 2012, the Company made a $726 million payment into a qualified settlement fund related to its U.S. merchant class litigation. The Company has presented these funds as restricted cash for litigation settlement since the use of the funds under the qualified settlement fund is restricted for payment under a preliminary settlement agreement that is subject to court approval. All or a portion of the funds would be returned to the Company in the event that the settlement is not finalized or certain merchants opt out of the settlement agreement. See Note 11 (Legal and Regulatory Proceedings) for further discussion of the U.S. merchant class litigation.

Recent accounting pronouncements

Comprehensive income - In February 2013, new accounting guidance was issued by the Financial Accounting Standards Board ("FASB") that requires disclosure of amounts reclassified from accumulated other comprehensive income to net income. The Company adopted the revised accounting guidance effective January 1, 2013. See Note 8 (Accumulated Other Comprehensive Income) for additional disclosures related to the new guidance.

Balance Sheet Offsetting - In January 2013, the FASB issued accounting guidance clarifying the scope of its previously issued requirements to disclose gross and net amounts of eligible financial assets and financial liabilities recognized on the balance sheet. The Company adopted the revised accounting guidance effective January 1, 2013. See Note 13 (Foreign Exchange Risk Management) for additional disclosures related to the new guidance.

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Accrued Expenses Accrued Litigation Expense (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Accrued Expenses [Abstract]
Accrued litigation	$ 724	$ 726

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Accumulated Other Comprehensive Income (Tables)

3 Months Ended

Mar. 31, 2013

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

Schedule of Accumulated Other Comprehensive Income (Loss) [Table Text Block]

The changes in the balances of each component of accumulated other comprehensive income, net of tax, for the three months ended March 31, 2013 were as follows:

	Foreign Currency Translation Adjustments			Defined Benefit Pension and Other Postretirement Plans			Investment Securities Available-for-Sale		Accumulated Other Comprehensive Income (Loss)
	(in millions)
Balance at December 31, 2012	$	93		$	(37	)	$	5	$	61
Current period other comprehensive income (loss)*	(112		)	1			—		(111		)
Balance at March 31, 2013	$	(19	)	$	(36	)	$	5	$	(50	)

^*During the three months ended March 31, 2013, $1 million of deferred costs related to the Company's Defined Benefit Pension Plan were reclassified from accumulated other comprehensive income to general and administrative expenses. In addition, $1 million of net gains on available-for-sale investment securities were recognized in investment income during the three months ended March 31, 2013. Tax amounts related to these items are insignificant.

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Stockholders' Equity Stockholders' Equity (Tables)

27 Months Ended

Mar. 31, 2013

Equity [Abstract]

schedule of share repurchases and authorizations [Table Text Block]

The following table summarizes the Company's share repurchase authorizations of its Class A common stock through March 31, 2013, as well as historical purchases:

	Authorization Dates
	February 2013		June 2012		April 20111		Total
	(in millions, except average price data)
Board authorization	$	2,000	$	1,500	$	2,000	$	5,500
Dollar value of shares repurchased during the three months ended March 31, 2012	**		**		$	248	$	248
Remaining authorization at December 31, 2012	**		$	604	$	—	$	604
Dollar value of shares repurchased during the three months ended March 31, 2013	$	162	$	604	$	—	$	766
Remaining authorization at March 31, 2013	$	1,838	$	—	$	—	$	1,838
Shares repurchased during the three months ended March 31, 2012	**		**		0.65		0.65
Average price paid per share during the three months ended March 31, 2012	**		**		$	379.68	$	379.68
Shares repurchased during the three months ended March 31, 2013	0.31		1.17		—		1.48
Average price paid per share during the three months ended March 31, 2013	$	522.87	$	517.16	$	—	$	518.36
Cumulative shares repurchased through March 31, 2013	0.31		3.11		6.54		9.96
Cumulative average price paid per share	$	522.87	$	481.58	$	305.60	$	367.34

^** Not applicable

¹The initial authorization in September 2010 for $1 billion was amended in April 2011 to increase the authorization to $2 billion.

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Stockholders' Equity (Details) (USD $) Share data in Millions, except Per Share data, unless otherwise specified	3 Months Ended		27 Months Ended	1 Months Ended	3 Months Ended		12 Months Ended	27 Months Ended		1 Months Ended	3 Months Ended	12 Months Ended	27 Months Ended	1 Months Ended		3 Months Ended		12 Months Ended		27 Months Ended		1 Months Ended	3 Months Ended		27 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Mar. 31, 2013	Apr. 28, 2011 Class A Common Stock [Member]	Mar. 31, 2013 Class A Common Stock [Member]	Mar. 31, 2012 Class A Common Stock [Member]	Dec. 31, 2012 Class A Common Stock [Member]	Mar. 31, 2013 Class A Common Stock [Member]	Mar. 31, 2013 Class A Common Stock [Member]	Jun. 30, 2012 2012 repurchase plan [Member] Class A Common Stock [Member]	Mar. 31, 2013 2012 repurchase plan [Member] Class A Common Stock [Member]	Dec. 31, 2012 2012 repurchase plan [Member] Class A Common Stock [Member]	Mar. 31, 2013 2012 repurchase plan [Member] Class A Common Stock [Member]	Apr. 30, 2011 2010 repurchase plan [Member] Class A Common Stock [Member]	Sep. 30, 2010 2010 repurchase plan [Member] Class A Common Stock [Member]	Mar. 31, 2013 2010 repurchase plan [Member] Class A Common Stock [Member]	Mar. 31, 2012 2010 repurchase plan [Member] Class A Common Stock [Member]	Dec. 31, 2012 2010 repurchase plan [Member] Class A Common Stock [Member]	Dec. 31, 2011 2010 repurchase plan [Member] Class A Common Stock [Member]	Mar. 31, 2013 2010 repurchase plan [Member] Class A Common Stock [Member]	Mar. 31, 2013 2010 repurchase plan [Member] Class A Common Stock [Member]	Feb. 28, 2013 2013 Share repurchase plan [Domain] Class A Common Stock [Member]	Apr. 25, 2013 2013 Share repurchase plan [Domain] Class A Common Stock [Member]	Mar. 31, 2013 2013 Share repurchase plan [Domain] Class A Common Stock [Member]	Mar. 31, 2013 2013 Share repurchase plan [Domain] Class A Common Stock [Member]
Class of Stock [Line Items]
Board authorization									$ 5,500,000,000	$ 1,500,000,000					$ 1,000,000,000				$ 2,000,000,000		$ 2,000,000,000	$ 2,000,000,000
Additional amount approved for repurchase				1,000,000,000										1,000,000,000
Shares repurchased during period		0.65				0.65										0					6.54		0.70	0.31
Stock Repurchased During Period, Value																							344,000,000
Dollar value of shares repurchased during period	766,000,000					248,000,000					604,000,000					0	248,000,000							162,000,000
Remaining authorization			$ 1,838,000,000				$ 604,000,000					$ 604,000,000	$ 0					$ 0		$ 0					$ 1,838,000,000
Average price paid per share					$ 518.36			$ 367.34			$ 517.16		$ 481.58			$ 0.00	$ 379.68			$ 305.60			$ 527.57	$ 522.87	$ 522.87
Shares repurchased					1.48			9.96			1.17		3.11												0.31

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Share Based Payment and Other Benefits Awards granted (Tables)

3 Months Ended

Mar. 31, 2013

Share-Based Awards [Abstract]

Schedule of Compensation Cost for Share-based Payment Arrangements, Allocation of Share-based Compensation Costs by Plan [Table Text Block]

During the three months ended March 31, 2013, the Company granted the following awards under the MasterCard Incorporated 2006 Long Term Incentive Plan, as amended and restated (“LTIP”). The LTIP is a shareholder-approved omnibus plan that permits the grant of various types of equity awards to employees.

	Granted	Weighted-Average Grant-Date Fair Value
	(in thousands)
Non-qualified stock options	183	$123
Restricted stock units	143	$511
Performance stock units	18	$560

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Settlement and Other Risk Management (Tables)

3 Months Ended

Mar. 31, 2013

Settlement and Other Risk Management [Abstract]

Estimated Settlement Exposure and Portion of Uncollateralized Settlement Exposure for MasterCard-Branded Transactions

The Company's estimated settlement exposure from MasterCard, Cirrus and Maestro branded transactions was as follows:

	March 31, 2013			December 31, 2012
	(in millions)
Gross settlement exposure	$	38,077		$	37,768
Collateral held for settlement exposure	(4,565		)	(3,775		)
Net uncollateralized settlement exposure	$	33,512		$	33,993

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Consolidated Statement of Cash Flows (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Operating Activities
Net income	$ 766	$ 682
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	62	54
Share-based payments	(23)	(53)
Deferred income taxes	(5)	(14)
Other	16	8
Changes in operating assets and liabilities:
Accounts receivable	(25)	7
Income taxes receivable	149	0
Settlement due from customers	433	(43)
Prepaid expenses	(7)	(53)
Accounts payable	(93)	(88)
Settlement due to customers	(423)	(88)
Accrued expenses	(30)	1
Net change in other assets and liabilities	52	14
Net cash provided by operating activities	872	427
Investing Activities
Purchases of investment securities available-for-sale	(934)	(398)
Purchases of property, plant and equipment	(20)	(12)
Capitalized software	(22)	(39)
Proceeds from sales of investment securities available-for-sale	576	43
Proceeds from maturities of investment securities available-for-sale	257	111
Proceeds from maturities of investment securities held-to-maturity	36	0
Investment in nonmarketable equity investments	(2)	(7)
Other investing activities	2	0
Net cash used in investing activities	(107)	(302)
Financing Activities
Purchases of treasury stock	(766)	(248)
Dividends paid	(37)	(19)
Tax benefit for share-based compensation	14	33
Cash proceeds from exercise of stock options	5	14
Other financing activities	1	0
Net cash used in financing activities	(783)	(220)
Effect of exchange rate changes on cash and cash equivalents	(50)	45
Net decrease in cash and cash equivalents	(68)	(50)
Cash and cash equivalents - beginning of period	2,052	3,734
Cash and cash equivalents - end of period	$ 1,984	$ 3,684

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Foreign Exchange Risk Management (Tables)

3 Months Ended

Mar. 31, 2013

Foreign Currency Derivatives [Abstract]

Classification of Outstanding Forward Contracts by Functional Currency

MasterCard’s derivative contracts are summarized below:

	March 31, 2013					December 31, 2012
	Notional		Estimated Fair Value			Notional		Estimated Fair Value
	(in millions)
Commitments to purchase foreign currency	$	100	$	(2	)	$	76	$	(1	)
Commitments to sell foreign currency	1,870		(14		)	1,571		(2		)
Balance Sheet Location:
Accounts Receivable*			$	15				$	12
Other Current Liabilities*			(31		)			(15		)

* The fair value of derivative contracts are presented on a gross basis on the balance sheet and are subject to enforceable master netting arrangements, which contain various netting and setoff provisions.

Foreign Exchange Risk Management

The amount of gain (loss) recognized in income for the contracts to purchase and sell foreign currency are summarized below: 

	Three Months Ended March 31,
	2013			2012
	(in millions)
Foreign currency derivative contracts
General and administrative	$	(23	)	$	(6	)
Net revenue	—			(4		)
Total	$	(23	)	$	(10	)

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Prepaid Expenses and Other Assets Schedule of Other Assets (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Prepaid Expenses [Abstract]
Customer and merchant incentives	$ 414	$ 404
Nonmarketable equity investments	243	249
Auction rate securities available-for-sale, at fair value	32	32
Income taxes receivable	74	72
Other	57	52
Total other assets	$ 820	$ 809

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Foreign Exchange Risk Management Foreign Exchange Risk Management (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Derivatives Not Designated As Hedging Instruments
Terms of the foreign currency forward contracts and foreign currency option contracts	18 months
Effect of 10% adverse change in foreign currency rates	$ 199
Foreign Currency Derivative Contracts [Member]
Derivatives Not Designated As Hedging Instruments
Total	(23)	(10)
Foreign Currency Derivative Contracts [Member] | General and administrative [Member]
Derivatives Not Designated As Hedging Instruments
Foreign Currency Derivative Contracts	(23)	(6)
Foreign Currency Derivative Contracts [Member] | Net revenue [Member]
Derivatives Not Designated As Hedging Instruments
Foreign Currency Derivative Contracts	$ 0	$ (4)

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Consolidated Balance Sheet (USD $) In Millions, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
ASSETS
Cash and cash equivalents	$ 1,984	$ 2,052
Restricted cash for litigation settlement	724	726
Investment securities available-for-sale, at fair value	3,036	2,951
Accounts receivable	941	925
Settlement due from customers	670	1,117
Restricted security deposits held for customers	812	777
Prepaid expenses and other current assets	488	681
Deferred income taxes	128	128
Total Current Assets	8,783	9,357
Property, plant and equipment, net	468	472
Deferred income taxes	59	60
Goodwill	1,042	1,092
Other intangible assets, net of accumulated amortization of $627 and $596, respectively	637	672
Other assets	820	809
Total Assets	11,809	12,462
LIABILITIES AND EQUITY
Accounts payable	262	357
Settlement due to customers	624	1,064
Restricted security deposits held for customers	812	777
Accrued litigation	724	726
Accrued expenses	1,703	1,748
Other current liabilities	289	234
Total Current Liabilities	4,414	4,906
Deferred income taxes	99	104
Other liabilities	540	523
Total Liabilities	5,053	5,533
Commitments and Contingencies
Stockholders' Equity
Additional paid-in-capital	3,648	3,641
Class A treasury stock, at cost, 16,665,842 and 15,199,828 shares, respectively	(4,902)	(4,139)
Retained earnings	8,047	7,354
Accumulated other comprehensive income (loss)	(50)	61
Total Stockholders' Equity	6,743	6,917
Non-controlling interests	13	12
Total Equity	6,756	6,929
Total Liabilities and Equity	11,809	12,462
Class A Common Stock [Member]
Stockholders' Equity
Common stock value	0	0
Class B Common Stock [Member]
Stockholders' Equity
Common stock value	$ 0	$ 0

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Accumulated Other Comprehensive Income (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2013		Mar. 31, 2012
Balance at December 31, 2012, Foreign Currency Translation Adjustments	$ 93
Balance at December 31, 2012, Defined Benefit Pension and Other Postretirement Plans	(37)
Balance at December 31, 2012, Investment Securities Available-for-Sale	5
Balance at December 31, 2012, Accumulated Other Comprehensive Income (Loss)	61
Current period other comprehensive income (loss), Foreign Currency Translation Adjustments	(112)	[1]	77
Current period other comprehensive income (loss), Defined Benefit Pension and Other Postretirement Plans	(1)	[1]	(1)
Current period other comprehensive income (loss), Investment Securities Available-for-Sale	0	[1]	2
Current period other comprehensive income (loss), Accumulated Other Comprehensive Income (Loss)	(111)	[1]	80
Balance at March 31, 2013, Foreign Currency Translation Adjustments	(19)
Balance at March 31, 2013, Defined Benefit Pension and Other Postretirement Plans	(36)
Balance at March 31, 2013, Investment Securities Available-for-Sale	5
Balance at March 31, 2013, Accumulated Other Comprehensive Income (Loss)	(50)
deferred costs related to the Company's Defined Benefit Pension Plan reclassified from accumulated other comprehensive income to general and administrative expenses	1
net gains on available-for-sale investment securities recognized in investment income	$ 1

[1] During the three months ended March 31, 2013, $1 million of deferred costs related to the Company's Defined Benefit Pension Plan were reclassified from accumulated other comprehensive income to general and administrative expenses. In addition, $1 million of net gains on available-for-sale investment securities were recognized in investment income during the three months ended March 31, 2013. Tax amounts related to these items are insignificant.

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Consolidated Statement of Changes in Equity (USD $) In Millions	Total		Retained Earnings [Member]	Accumulated Other Comprehensive Income (Loss), Net of Tax [Member]	Additional Paid-In Capital [Member]	Class A Treasury Stock [Member]	Non-Controlling Interests [Member]
Balance at Dec. 31, 2012	$ 6,929		$ 7,354	$ 61	$ 3,641	$ (4,139)	$ 12
Net income	766		766				0
Activity related to non-controlling Interests	1						1
Other comprehensive income (loss), net of tax	(111)	[1]		(111)
Cash dividends declared on Class A and Class B common stock, $0.60 per share	(73)		(73)
Purchases of treasury stock	(766)					(766)
Share-based payments	10				7	3
Balance at Mar. 31, 2013	$ 6,756		$ 8,047	$ (50)	$ 3,648	$ (4,902)	$ 13

[1] During the three months ended March 31, 2013, $1 million of deferred costs related to the Company's Defined Benefit Pension Plan were reclassified from accumulated other comprehensive income to general and administrative expenses. In addition, $1 million of net gains on available-for-sale investment securities were recognized in investment income during the three months ended March 31, 2013. Tax amounts related to these items are insignificant.

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Fair Value and Investment Securities Narrative (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Dec. 31, 2012
Fair Value By Balance Sheet Grouping [Line Items]
Investment Income, Net	$ 8	$ 9
Percentage of fair value of investments using discounted cash flow pricing model	10.00%		10.00%
Minimum [Member]
Fair Value By Balance Sheet Grouping [Line Items]
Collateral Requirements Minimum Percentage Collateral To Fair Value Of Securities Loaned Under Security Lending Transactions	95.00%
Maximum [Member]
Fair Value By Balance Sheet Grouping [Line Items]
Collateral Requirements Minimum Percentage Collateral To Fair Value Of Securities Loaned Under Security Lending Transactions	98.00%

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Summary of Significant Accounting Policies Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2013

Accounting Policies [Abstract]

Organization

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 and businesses worldwide, enabling them to use electronic forms of payment instead of cash and checks. MasterCard offers a wide range of payment solutions, that enable the development and implementation of credit, debit, prepaid, commercial and related payment programs and solutions for consumers and merchants. The Company's customers encompass a vast array of entities, including financial institutions and others that act as "issuers" and "acquirers", as well as merchants, governments, telecommunications companies and other businesses. MasterCard manages a family of well-known, widely accepted payment brands, including MasterCard®, Maestro® and Cirrus®, which its customers use in their payment programs and solutions. The Company processes payment transactions over the MasterCard Worldwide Network and provides support services to its customers and others.  

Consolidation and basis of presentation

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 for which the Company is the primary beneficiary. Intercompany transactions and balances have been eliminated in consolidation. Certain prior period amounts have been reclassified to conform to the 2013 presentation. The Company follows accounting principles generally accepted in the United States of America (“GAAP”).

The balance sheet as of December 31, 2012 was derived from the audited consolidated financial statements as of December 31, 2012. The consolidated financial statements for the three months ended March 31, 2013 and 2012 and as of March 31, 2013 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, 2013 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 requirements for Quarterly Reports on Form 10-Q and, consequently, do not include all of the disclosures required by GAAP. Reference should be made to the MasterCard Incorporated Annual Report on Form 10-K for the year ended December 31, 2012 for additional disclosures, including a summary of the Company’s significant accounting policies.

Non-controlling interest amounts are included in the consolidated statement of operations within other income (expense). For the three months ended March 31, 2013 and 2012, non-controlling interest amounts were an expense of $1 million and income of $1 million, respectively.

In December 2012, the Company made a $726 million payment into a qualified settlement fund related to its U.S. merchant class litigation. The Company has presented these funds as restricted cash for litigation settlement since the use of the funds under the qualified settlement fund is restricted for payment under a preliminary settlement agreement that is subject to court approval. All or a portion of the funds would be returned to the Company in the event that the settlement is not finalized or certain merchants opt out of the settlement agreement. See Note 11 (Legal and Regulatory Proceedings) for further discussion of the U.S. merchant class litigation.

Recent Accounting Pronouncements

Recent accounting pronouncements

Comprehensive income - In February 2013, new accounting guidance was issued by the Financial Accounting Standards Board ("FASB") that requires disclosure of amounts reclassified from accumulated other comprehensive income to net income. The Company adopted the revised accounting guidance effective January 1, 2013. See Note 8 (Accumulated Other Comprehensive Income) for additional disclosures related to the new guidance.

Balance Sheet Offsetting - In January 2013, the FASB issued accounting guidance clarifying the scope of its previously issued requirements to disclose gross and net amounts of eligible financial assets and financial liabilities recognized on the balance sheet. The Company adopted the revised accounting guidance effective January 1, 2013. See Note 13 (Foreign Exchange Risk Management) for additional disclosures related to the new guidance.

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Fair Value and Investment Securities Distribution of Financial Instruments, Measured at Fair Value on a Recurring Basis (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2013		Dec. 31, 2012
Fair Value, Option, Quantitative Disclosures [Line Items]
Amounts held in escrow for the preliminary U.S. merchant class litigation settlement	$ 724		$ 726
Fair Value, Measured on Recurring Basis	3,052		2,980
Fair Value, Inputs, Level 1 [Member]
Fair Value, Option, Quantitative Disclosures [Line Items]
Fair Value, Measured on Recurring Basis	210		210
Fair Value, Inputs, Level 2 [Member]
Fair Value, Option, Quantitative Disclosures [Line Items]
Fair Value, Measured on Recurring Basis	2,810		2,738
Fair Value, Inputs, Level 3 [Member]
Fair Value, Option, Quantitative Disclosures [Line Items]
Fair Value, Measured on Recurring Basis	32		32
Municipal securities [Member]
Fair Value, Option, Quantitative Disclosures [Line Items]
Fair Value, Measured on Recurring Basis	528	[1]	531	[1]
Municipal securities [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Option, Quantitative Disclosures [Line Items]
Fair Value, Measured on Recurring Basis	0	[1]	0	[1]
Municipal securities [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Option, Quantitative Disclosures [Line Items]
Fair Value, Measured on Recurring Basis	528	[1]	531	[1]
Municipal securities [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Option, Quantitative Disclosures [Line Items]
Fair Value, Measured on Recurring Basis	0	[1]	0	[1]
U.S. Government and Agency securities [Member]
Fair Value, Option, Quantitative Disclosures [Line Items]
Fair Value, Measured on Recurring Basis	586	[2]	582	[2]
U.S. Government and Agency securities [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Option, Quantitative Disclosures [Line Items]
Fair Value, Measured on Recurring Basis	0	[2]	0	[2]
U.S. Government and Agency securities [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Option, Quantitative Disclosures [Line Items]
Fair Value, Measured on Recurring Basis	586	[2]	582	[2]
U.S. Government and Agency securities [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Option, Quantitative Disclosures [Line Items]
Fair Value, Measured on Recurring Basis	0	[2]	0	[2]
Taxable short-term bond funds [Member]
Fair Value, Option, Quantitative Disclosures [Line Items]
Fair Value, Measured on Recurring Basis	210		210
Taxable short-term bond funds [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Option, Quantitative Disclosures [Line Items]
Fair Value, Measured on Recurring Basis	210		210
Taxable short-term bond funds [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Option, Quantitative Disclosures [Line Items]
Fair Value, Measured on Recurring Basis	0		0
Taxable short-term bond funds [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Option, Quantitative Disclosures [Line Items]
Fair Value, Measured on Recurring Basis	0		0
Corporate securities [Member]
Fair Value, Option, Quantitative Disclosures [Line Items]
Fair Value, Measured on Recurring Basis	1,314		1,246
Corporate securities [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Option, Quantitative Disclosures [Line Items]
Fair Value, Measured on Recurring Basis	0		0
Corporate securities [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Option, Quantitative Disclosures [Line Items]
Fair Value, Measured on Recurring Basis	1,314		1,246
Corporate securities [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Option, Quantitative Disclosures [Line Items]
Fair Value, Measured on Recurring Basis	0		0
Asset-backed securities [Member]
Fair Value, Option, Quantitative Disclosures [Line Items]
Fair Value, Measured on Recurring Basis	325		316
Asset-backed securities [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Option, Quantitative Disclosures [Line Items]
Fair Value, Measured on Recurring Basis	0		0
Asset-backed securities [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Option, Quantitative Disclosures [Line Items]
Fair Value, Measured on Recurring Basis	325		316
Asset-backed securities [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Option, Quantitative Disclosures [Line Items]
Fair Value, Measured on Recurring Basis	0		0
Auction rate securities [Member]
Fair Value, Option, Quantitative Disclosures [Line Items]
Fair Value, Measured on Recurring Basis	32		32
Auction rate securities [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Option, Quantitative Disclosures [Line Items]
Fair Value, Measured on Recurring Basis	0		0
Auction rate securities [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Option, Quantitative Disclosures [Line Items]
Fair Value, Measured on Recurring Basis	0		0
Auction rate securities [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Option, Quantitative Disclosures [Line Items]
Fair Value, Measured on Recurring Basis	32		32
Other [Member]
Fair Value, Option, Quantitative Disclosures [Line Items]
Fair Value, Measured on Recurring Basis	57		63
Other [Member] | Fair Value, Inputs, Level 1 [Member]
Fair Value, Option, Quantitative Disclosures [Line Items]
Fair Value, Measured on Recurring Basis	0		0
Other [Member] | Fair Value, Inputs, Level 2 [Member]
Fair Value, Option, Quantitative Disclosures [Line Items]
Fair Value, Measured on Recurring Basis	57		63
Other [Member] | Fair Value, Inputs, Level 3 [Member]
Fair Value, Option, Quantitative Disclosures [Line Items]
Fair Value, Measured on Recurring Basis	$ 0		$ 0

[1] Available-for-sale municipal securities are carried at fair value and are included in the above tables. However, a held-to-maturity municipal bond was carried at amortized cost and excluded from the above table at December 31, 2012.

[2] Excludes amounts held in escrow for the preliminary U.S. merchant class litigation settlement of $724 million and $726 million at March 31, 2013 and December 31, 2012, respectively, which would be included in Levels 1 and 2 of the Valuation Hierarchy. See Note 6 (Accrued Expenses) and Note 11 (Legal and Regulatory Proceedings) for further details.

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Fair Value and Investment Securities (Tables)

3 Months Ended

27 Months Ended

Mar. 31, 2013

Mar. 31, 2013

Marketable Securities [Abstract]

Distribution of Financial Instruments, Measured at Fair Value on a Recurring Basis

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

	March 31, 2013
	Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value
	(in millions)
Municipal securities 1	$	—	$	528	$	—	$	528
U.S. Government and Agency securities 2	—		586		—		586
Taxable short-term bond funds	210		—		—		210
Corporate securities	—		1,314		—		1,314
Asset-backed securities	—		325		—		325
Auction rate securities	—		—		32		32
Other	—		57		—		57
Total	$	210	$	2,810	$	32	$	3,052
	December 31, 2012
	Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value
	(in millions)
Municipal securities 1	$	—	$	531	$	—	$	531
U.S. Government and Agency securities 2	—		582		—		582
Taxable short-term bond funds	210		—		—		210
Corporate securities	—		1,246		—		1,246
Asset-backed securities	—		316		—		316
Auction rate securities	—		—		32		32
Other	—		63		—		63
Total	$	210	$	2,738	$	32	$	2,980

¹ Available-for-sale municipal securities are carried at fair value and are included in the above tables. However, a held-to-maturity municipal bond was carried at amortized cost and excluded from the above table at December 31, 2012.

² Excludes amounts held in escrow for the preliminary U.S. merchant class litigation settlement of $724 million and $726 million at March 31, 2013 and December 31, 2012, respectively, which would be included in Levels 1 and 2 of the Valuation Hierarchy. See Note 6 (Accrued Expenses) and Note 11 (Legal and Regulatory Proceedings) for further details.

Available-for-Sale Investment Securities, Unrealized Gains and Losses

The major classes of the Company’s available-for-sale investment securities, for which unrealized gains and losses are recorded as a separate component of other comprehensive income on the consolidated statement of comprehensive income, and their respective amortized cost basis and fair values as of March 31, 2013 and December 31, 2012 were as follows:

	March 31, 2013
	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss 1			Fair Value
	(in millions)
Municipal securities	$	519	$	9	$	—		$	528
U.S. Government and Agency securities	586		—		—			586
Taxable short-term bond funds	209		1		—			210
Corporate securities	1,313		1		—			1,314
Asset-backed securities	325		—		—			325
Auction rate securities2	35		—		(3		)	32
Other	73		—		—			73
Total	$	3,060	$	11	$	(3	)	$	3,068
	December 31, 2012
	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss 1			Fair Value
	(in millions)
Municipal securities	$	522	$	9	$	—		$	531
U.S. Government and Agency securities	582		—		—			582
Taxable short-term bond funds	209		1		—			210
Corporate securities	1,245		2		(1		)	1,246
Asset-backed securities	316		—		—			316
Auction rate securities2	35		—		(3		)	32
Other	66		—		—			66
Total	$	2,975	$	12	$	(4	)	$	2,983

¹ The unrealized losses primarily relate to ARS, which have been in an unrealized loss position longer than 12 months,

but have not been deemed other-than-temporarily impaired.

² Included in other assets on the consolidated balance sheet. See Note 4 (Prepaid Expenses and Other Assets).

Maturity Distribution Based on Contractual Terms of Investment Securities

The maturity distribution based on the contractual terms of the Company’s investment securities at March 31, 2013 was as follows:

	Available-For-Sale
	Amortized Cost		Fair Value
	(in millions)
Due within 1 year	$	1,548	$	1,549
Due after 1 year through 5 years	1,220		1,228
Due after 5 years through 10 years	48		49
Due after 10 years	35		32
No contractual maturity	209		210
Total	$	3,060	$	3,068

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Consolidated Statement of Changes in Equity (Parenthetical) (USD $)	3 Months Ended
	Mar. 31, 2013
Statement of Stockholders' Equity [Abstract]
Cash dividends declared on Class A and Class B common stock, per share	$ 0.60

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Consolidated Balance Sheet (Parenthetical) (USD $) In Millions, except Share data, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Other Intangible Assets, Accumulated Amortization	$ 627	$ 596
Class A treasury stock, shares	16,665,842	15,199,828
Class A Common Stock [Member]
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, authorized	3,000,000,000	3,000,000,000
Common stock, issued	133,837,376	133,604,903
Common stock, outstanding	117,171,534	118,405,075
Class B Common Stock [Member]
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, authorized	1,200,000,000	1,200,000,000
Common stock, issued	4,736,468	4,838,840
Common stock, outstanding	4,736,468	4,838,840

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Share Based Payment and Other Benefits

3 Months Ended

Mar. 31, 2013

Employee Service Share-based Compensation, Aggregate Disclosures [Abstract]

Share-Based Payments

Share-Based Payments

During the three months ended March 31, 2013, the Company granted the following awards under the MasterCard Incorporated 2006 Long Term Incentive Plan, as amended and restated (“LTIP”). The LTIP is a shareholder-approved omnibus plan that permits the grant of various types of equity awards to employees.

	Granted	Weighted-Average Grant-Date Fair Value
	(in thousands)
Non-qualified stock options	183	$123
Restricted stock units	143	$511
Performance stock units	18	$560

Stock options vest in four equal annual installments beginning one year after the date of grant, and have a term of ten years. The Company used the Black-Scholes option pricing model to estimate the grant date fair value of stock options. Beginning in 2013, the Company calculated the expected term and the expected volatility based on historical MasterCard information. As a result, the expected term of stock options granted in the first quarter of 2013 was five years, while the expected volatility was determined to be 27.1%.

Vesting of the shares underlying the restricted stock units and performance stock units will generally occur three years after the date of grant. The fair value of restricted stock units 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 Monte Carlo simulation valuation model was used to determine the grant date fair value of performance stock units granted in the first quarter of 2013.

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.

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Document and Entity Information	3 Months Ended
	Mar. 31, 2013	Apr. 25, 2013 Class A Common Stock [Member]	Apr. 25, 2013 Class B Common Stock [Member]
Entity Registrant Name	MASTERCARD INC
Trading Symbol	MA
Entity Central Index Key	0001141391
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Document Type	10-Q
Document Period End Date	Mar. 31, 2013
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q1
Amendment Flag	false
Entity Common Stock, Shares Outstanding		116,857,519	4,710,704

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Income Taxes

3 Months Ended

Mar. 31, 2013

Income Tax Expense (Benefit) [Abstract]

Income Taxes

Income Taxes

The effective income tax rates were 30.5% and 31.8% for the three months ended March 31, 2013 and 2012, respectively. The effective tax rate for the three months ended March 31, 2013 was lower than the effective tax rate for the three months ended March 31, 2012 due primarily to a more favorable geographic mix of earnings, a larger benefit from the domestic production activities deduction in the U.S. related to our authorization software and various discrete items, including retroactive benefits from the signing of the American Taxpayer Relief Act of 2012 on January 2, 2013.

The Company conducts operations in multiple countries and, as a result, is subjected to tax examinations in various jurisdictions, including the United States.  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 statute of limitations.  The Company has effectively settled its U.S. federal income tax obligations through 2008.  With limited exception, the Company is no longer subject to state and local or non-U.S. audits by taxing authorities for years through 2002.  It is possible that the amount of unrecognized benefit with respect to the Company's uncertain tax positions may change within the next twelve months. An estimate of the range of the possible change cannot be made until the issues are further developed, the examinations close, or the statutes expire.

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Consolidated Statement of Operations (USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2013		Mar. 31, 2012
Income Statement [Abstract]
Net Revenue	$ 1,906		$ 1,758
Operating Expenses
General and administrative	608		579
Advertising and marketing	129		125
Depreciation and amortization	62		54
Total operating expenses	799		758
Operating income	1,107		1,000
Other Income (Expense)
Investment income	8		9
Interest expense	(5)		(6)
Other income (expense)	(8)		(3)
Total other income (expense)	(5)		0
Income before income taxes	1,102		1,000
Income tax expense	336		318
Net Income	$ 766		$ 682
Basic Earnings per Share	$ 6.25		$ 5.38
Basic Weighted-Average Shares Outstanding	123		127
Diluted Earnings per Share	$ 6.23		$ 5.36
Diluted Weighted-Average Shares Outstanding	123	[1]	127	[1]

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

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Prepaid Expenses and Other Assets

3 Months Ended

Mar. 31, 2013

Prepaid Expenses and Other Assets [Abstract]

Prepaid Expenses and Other Assets

Prepaid Expenses and Other Assets

Prepaid expenses and other current assets consisted of the following:

	March 31, 2013		December 31, 2012
	(in millions)
Customer and merchant incentives	$	291	$	222
Investment securities held-to-maturity	—		36
Prepaid income taxes	12		77
Income taxes receivable	12		163
Other	173		183
Total prepaid expenses and other current assets	$	488	$	681

Other assets consisted of the following:

	March 31, 2013		December 31, 2012
	(in millions)
Customer and merchant incentives	$	414	$	404
Nonmarketable equity investments	243		249
Auction rate securities available-for-sale, at fair value	32		32
Income taxes receivable	74		72
Other	57		52
Total other assets	$	820	$	809

Certain customer and merchant business agreements provide incentives upon entering into the agreement. Customer and merchant incentives represent payments made or amounts to be paid to customers and merchants under business agreements. Amounts to be paid for these incentives and the related liability were included in accrued expenses and other liabilities. Once the payment is made, the liability is relieved. Costs directly related to entering into such an agreement are deferred and amortized over the life of the agreement.

Investments for which the equity method or historical cost method of accounting are used are recorded in other assets on the consolidated balance sheet. MasterCard’s share of net earnings or losses of entities accounted for under the equity method of accounting is included in other income (expense) on the consolidated statement of operations. The Company accounts for nonmarketable equity investments under the historical cost method of accounting when those investments do not qualify for the equity method of accounting. The decrease in investment securities held-to-maturity from December 31, 2012 to March 31, 2013 was due to contractual maturities during the period.

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Fair Value

3 Months Ended

Mar. 31, 2013

Financial Instruments, Financial Liabilities, Balance Sheet Groupings [Abstract]

Fair Value and Investment Securities

Fair Value andInvestment Securities

Financial Instruments – Recurring Measurements

In accordance with accounting requirements for financial instruments, the Company is disclosing the estimated fair values as of March 31, 2013 and December 31, 2012 of the financial instruments that are within the scope of the accounting guidance, as well as the methods and significant assumptions used to estimate the fair value of those financial instruments. Furthermore, the Company classifies its fair value measurements in the Valuation Hierarchy. No transfers were made among the three levels in the Valuation Hierarchy during the three months ended March 31, 2013.

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

	March 31, 2013
	Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value
	(in millions)
Municipal securities 1	$	—	$	528	$	—	$	528
U.S. Government and Agency securities 2	—		586		—		586
Taxable short-term bond funds	210		—		—		210
Corporate securities	—		1,314		—		1,314
Asset-backed securities	—		325		—		325
Auction rate securities	—		—		32		32
Other	—		57		—		57
Total	$	210	$	2,810	$	32	$	3,052
	December 31, 2012
	Quoted Prices in Active Markets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Fair Value
	(in millions)
Municipal securities 1	$	—	$	531	$	—	$	531
U.S. Government and Agency securities 2	—		582		—		582
Taxable short-term bond funds	210		—		—		210
Corporate securities	—		1,246		—		1,246
Asset-backed securities	—		316		—		316
Auction rate securities	—		—		32		32
Other	—		63		—		63
Total	$	210	$	2,738	$	32	$	2,980

¹ Available-for-sale municipal securities are carried at fair value and are included in the above tables. However, a held-to-maturity municipal bond was carried at amortized cost and excluded from the above table at December 31, 2012.

² Excludes amounts held in escrow for the preliminary U.S. merchant class litigation settlement of $724 million and $726 million at March 31, 2013 and December 31, 2012, respectively, which would be included in Levels 1 and 2 of the Valuation Hierarchy. See Note 6 (Accrued Expenses) and Note 11 (Legal and Regulatory Proceedings) for further details.

The fair value of the Company's taxable short-term bond funds are based on quoted prices for identical investments in active markets and are therefore included in Level 1 of the Valuation Hierarchy.

The fair value of the Company's available-for-sale municipal securities, U.S. Government and Agency securities, corporate securities, asset-backed securities and other fixed income securities included in the Other category are based on quoted prices for similar assets in active markets and are therefore included in Level 2 of the Valuation Hierarchy. The Company's foreign currency derivative contracts have also been classified within Level 2 in the Other category of the Valuation Hierarchy, as the fair value is based on broker quotes for the same or similar derivative instruments. See Note 13 (Foreign Exchange Risk Management) for further details.

The Company's auction rate securities (“ARS”) investments have been classified within Level 3 of the Valuation Hierarchy as their valuation requires substantial judgment and estimation of factors that are not currently observable in the market due to the lack of trading in the securities. This valuation may be revised in future periods as market conditions evolve. The Company has considered the lack of liquidity in the ARS market and the lack of comparable, orderly transactions when estimating the fair value of its ARS portfolio. Therefore, the Company used the income approach, which included a discounted cash flow analysis of the estimated future cash flows adjusted by a risk premium for the ARS portfolio, to estimate the fair value of its ARS portfolio. The Company estimated the fair value of its ARS portfolio to be a 10% discount to the par value as of March 31, 2013 and December 31, 2012. The Company did not realize any material losses on its ARS portfolio during the three months ended March 31, 2013 and 2012. When a determination is made to classify a financial instrument within Level 3, the determination is based upon the significance of the unobservable parameters to the overall fair value measurement. However, the fair value determination for Level 3 financial instruments may include observable components.

Financial Instruments - Non-Recurring Measurements

Certain financial instruments are carried on the consolidated balance sheet at cost, which approximates fair value due to their short-term, highly liquid nature. These instruments include cash and cash equivalents, restricted cash, accounts receivable, settlement due from customers, restricted security deposits held for customers, prepaid expenses, accounts payable, settlement due to customers and accrued expenses. In addition, nonmarketable equity investments are measured at fair value on a nonrecurring basis for purposes of initial recognition and impairment testing.

Settlement and Other Guarantee Liabilities

The Company estimates the fair value of its settlement and other guarantees using the market pricing approach which applies market assumptions for relevant though not directly comparable undertakings, as the latter are not observable in the market given the proprietary nature of such guarantees. At March 31, 2013 and December 31, 2012, the carrying value and fair value of settlement and other guarantee liabilities were not material. Settlement and other guarantee liabilities are classified as Level 3 of the fair value hierarchy as their valuation requires substantial judgment and estimation of factors that are not currently observable in the market. For additional information regarding the Company's settlement and other guarantee liabilities, see Note 12 (Settlement and Other Risk Management).

Refunding Revenue Bonds

The Company holds refunding revenue bonds with the same payment terms, and which contain the right of set-off with a capital lease obligation related to the Company's global technology and operations center located in O'Fallon, Missouri. The Company has netted the refunding revenue bonds and the corresponding capital lease obligation in the consolidated balance sheet and estimates that the carrying value approximates the fair value for these bonds.

Non-Financial Instruments

Certain assets and liabilities are measured at fair value on a nonrecurring basis for purposes of initial recognition and impairment testing. The Company's non-financial assets and liabilities measured at fair value on a nonrecurring basis include property, plant and equipment, goodwill and other intangible assets. These assets are not measured at fair value on an ongoing basis; however, they are subject to fair value adjustments in certain circumstances, such as when there is evidence of impairment.

The valuation methods for goodwill and other intangible assets involve assumptions concerning comparable company multiples, discount rates, growth projections and other assumptions of future business conditions. The Company uses a weighted income and market approach for estimating the fair value of its reporting unit, when necessary. As the assumptions employed to measure these assets on a nonrecurring basis are based on management's judgment using internal and external data, these fair value determinations are classified in Level 3 of the Valuation Hierarchy.

Amortized Costs and Fair Values – Available-for-Sale Investment Securities

The major classes of the Company’s available-for-sale investment securities, for which unrealized gains and losses are recorded as a separate component of other comprehensive income on the consolidated statement of comprehensive income, and their respective amortized cost basis and fair values as of March 31, 2013 and December 31, 2012 were as follows:

	March 31, 2013
	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss 1			Fair Value
	(in millions)
Municipal securities	$	519	$	9	$	—		$	528
U.S. Government and Agency securities	586		—		—			586
Taxable short-term bond funds	209		1		—			210
Corporate securities	1,313		1		—			1,314
Asset-backed securities	325		—		—			325
Auction rate securities2	35		—		(3		)	32
Other	73		—		—			73
Total	$	3,060	$	11	$	(3	)	$	3,068
	December 31, 2012
	Amortized Cost		Gross Unrealized Gain		Gross Unrealized Loss 1			Fair Value
	(in millions)
Municipal securities	$	522	$	9	$	—		$	531
U.S. Government and Agency securities	582		—		—			582
Taxable short-term bond funds	209		1		—			210
Corporate securities	1,245		2		(1		)	1,246
Asset-backed securities	316		—		—			316
Auction rate securities2	35		—		(3		)	32
Other	66		—		—			66
Total	$	2,975	$	12	$	(4	)	$	2,983

¹ The unrealized losses primarily relate to ARS, which have been in an unrealized loss position longer than 12 months,

but have not been deemed other-than-temporarily impaired.

² Included in other assets on the consolidated balance sheet. See Note 4 (Prepaid Expenses and Other Assets).

The municipal securities are primarily comprised of tax-exempt bonds and are diversified across states and sectors. The U.S. government and agency securities are primarily invested in U.S. government treasury bills and bonds and U.S. government sponsored agency bonds and discount notes. Taxable short-term bond funds are primarily invested in U.S. government and sponsored agency securities, corporate bonds and mortgage-backed securities. Corporate securities are comprised of commercial paper and corporate bonds. The asset-backed securities are investments in bonds which are collateralized primarily by automobile loan receivables. The ARS are exempt from U.S. federal income tax and are fully collateralized by student loans with guarantees (ranging from approximately 95% to 98% of principal and interest) by the U.S. government via the Department of Education.

Investment Maturities

The maturity distribution based on the contractual terms of the Company’s investment securities at March 31, 2013 was as follows:

	Available-For-Sale
	Amortized Cost		Fair Value
	(in millions)
Due within 1 year	$	1,548	$	1,549
Due after 1 year through 5 years	1,220		1,228
Due after 5 years through 10 years	48		49
Due after 10 years	35		32
No contractual maturity	209		210
Total	$	3,060	$	3,068

All the securities due after ten years are ARS. Taxable short-term bond funds have been included in the table above in the no contractual maturity category, as these investments do not have a stated maturity date; however, the short-term bond funds have daily liquidity.

Investment Income

Investment income was $8 million and $9 million for the three months ended March 31, 2013 and 2012, respectively. Investment income primarily consisted of interest income generated from cash, cash equivalents, investment securities available-for-sale and investment securities held-to-maturity. Dividend income and gross realized gains and losses were not significant.

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Earnings Per Share (Tables)

3 Months Ended

Mar. 31, 2013

Earnings Per Share [Abstract]

Schedule of Basic and Diluted Earnings Per Share

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

	Three Months Ended March 31,
	2013		2012
	(in millions, except per share data)
Numerator:
Net income	$	766	$	682
Denominator:
Basic EPS weighted-average shares outstanding	123		127
Dilutive stock options and stock units	—		—
Diluted EPS weighted-average shares outstanding *	123		127
Earnings per Share
Basic	$	6.25	$	5.38
Diluted	$	6.23	$	5.36

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

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Legal and Regulatory Proceedings

3 Months Ended

Mar. 31, 2013

Legal and Regulatory Proceedings [Abstract]

Legal and Regulatory Proceedings

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.  Further, except as discussed below, MasterCard has not established reserves for any of these proceedings.  Except as identified below, MasterCard does not believe that the outcome of any existing legal or regulatory proceedings to which it is a party will have a material adverse effect on its results of operations, financial condition or overall business.  However, with respect to the matters discussed below, an adverse judgment or other outcome or settlement with respect to any such proceedings 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 damage awards in amounts that could be significant. Any of these events could have a material adverse effect on MasterCard's results of operations, financial condition and overall business.

Department of Justice Antitrust Litigation and Related Private Litigations

In October 1998, the U.S. Department of Justice (“DOJ”) filed suit against MasterCard International, Visa U.S.A., Inc. and Visa International Corp. in the U.S. District Court for the Southern District of New York alleging that both MasterCard's and Visa's governance structure and policies violated U.S. federal antitrust laws. The DOJ challenged (1) “dual governance”, where a financial institution has a representative on the Board of Directors of MasterCard or Visa while a portion of its card portfolio is issued under the brand of the other association, and (2) both MasterCard's Competitive Programs Policy (“CPP”) and a Visa bylaw provision that prohibited financial institutions participating in the respective associations from issuing competing proprietary payment cards (such as American Express or Discover). In October 2001, the judge issued an opinion upholding the legality and pro-competitive nature of dual governance. However, the judge also held that MasterCard's CPP and the Visa bylaw constituted unlawful restraints of trade under the federal antitrust laws. The judge subsequently issued a final judgment that ordered MasterCard to repeal the CPP and enjoined MasterCard from enacting or enforcing any bylaw, rule, policy or practice that prohibits its issuers from issuing general purpose credit or debit cards in the United States on any other general purpose card network.

In April 2005, a complaint was filed in California state court on behalf of a putative class of consumers under California unfair competition law (Section 17200) and the Cartwright Act (the “Attridge action”). The claims in this action seek to piggyback on the portion of the DOJ antitrust litigation discussed above with regard to the District Court's findings concerning MasterCard's CPP and Visa's related bylaw. The Court granted the defendants' motion to dismiss the plaintiffs' Cartwright Act claims but denied the defendants' motion to dismiss the plaintiffs' Section 17200 unfair competition claims. The parties have proceeded with discovery. In September 2009, MasterCard executed a settlement agreement that is subject to court approval in the separate California consumer litigations (see “U.S. Merchant and Consumer Litigations”). The agreement includes a release that the parties believe encompasses the claims asserted in the Attridge action. In August 2010, the Court in the California consumer actions granted final approval to the settlement. The plaintiff from the Attridge action and three other objectors filed appeals of the settlement approval. In January 2012, the Appellate Court reversed the trial court's settlement approval and remanded the matter to the trial court for further proceedings. In August 2012, the parties in the California consumer actions filed a motion seeking approval of a revised settlement agreement. The trial court granted final approval of the settlement in April 2013. This approval is subject to appeal.

U.S. Merchant and Consumer Litigations

Commencing in October 1996, several class action suits were brought by a number of U.S. merchants against MasterCard International and Visa U.S.A., Inc. challenging certain aspects of the payment card industry under U.S. federal antitrust law. The plaintiffs claimed that MasterCard's “Honor All Cards” rule (and a similar Visa rule), which required merchants who accept MasterCard cards to accept for payment every validly presented MasterCard card, constituted an illegal tying arrangement in violation of Section 1 of the Sherman Act. In June 2003, MasterCard International signed a settlement agreement to settle the claims brought by the plaintiffs in this matter, which the Court approved in December 2003. Pursuant to the settlement, MasterCard agreed, among other things, to create two separate “Honor All Cards” rules in the United States - one for debit cards and one for credit cards.

In addition, individual or multiple complaints have been brought in 19 states and the District of Columbia alleging state unfair competition, consumer protection and common law claims against MasterCard International (and Visa) on behalf of putative classes of consumers. The claims in these actions largely mirror the allegations made in the U.S. merchant lawsuit and assert that merchants, faced with excessive interchange fees, have passed these overhead charges to consumers in the form of higher prices on goods and services sold. MasterCard has successfully resolved the cases in all of the jurisdictions except California, where there continues to be outstanding cases. As discussed above under “Department of Justice Antitrust Litigation and Related Private Litigations,” in September 2009, the parties to the California state court actions executed a settlement agreement which required a payment by MasterCard of $6 million, subject to approval by the California state court. In August 2010, the court granted final approval of the settlement, subsequent to which MasterCard made the payment required by the settlement agreement. The plaintiff from the Attridge action described above under “Department of Justice Antitrust Litigation and Related Private Litigations” and three other objectors filed appeals of the settlement approval order. In January 2012, the Appellate Court reversed the trial court's settlement approval and remanded the matter to the trial court for further proceedings. As noted above, in August 2012, the parties in the California consumer actions filed a motion seeking approval of a revised settlement agreement. The trial court granted final approval of the settlement in April 2013. This approval is subject to appeal.

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 ATM terminals 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 charged 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.  Plaintiffs have not quantified their damages although they allege that they expect damages to be in the tens of millions of dollars. 

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 described above, 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.  Plaintiffs have not quantified their damages although they allege that they expect damages to be in the tens of millions of dollars. 

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. MasterCard has moved to dismiss the complaints for failure to state a claim. Oral argument on the motion was heard by the court in September 2012. In February 2013, the district court granted MasterCard's motion to dismiss the complaints and the plaintiffs have since filed a motion seeking approval to amend their complaints.

Interchange Litigation and Regulatory Proceedings

Interchange fees represent a sharing of payment system costs among the financial institutions participating in a four-party payment card system such as MasterCard's. Typically, interchange fees are paid by the acquirer to the issuer in connection with purchase transactions initiated with the payment system's cards. These fees reimburse the issuer for a portion of the costs incurred by it in providing services which are of benefit to all participants in the system, including acquirers and merchants. MasterCard or its customer financial institutions establish default interchange fees in certain circumstances that apply when there is no other interchange fee arrangement between the issuer and the acquirer. MasterCard establishes a variety of interchange rates depending on such considerations as the location and the type of transaction, and collects the interchange fee on behalf of the institutions entitled to receive it and remits the interchange fee to eligible institutions. MasterCard's interchange fees and other practices are subject to regulatory and/or legal review and/or challenges in a number of jurisdictions, including the proceedings described below. At this time, it is not possible to determine the ultimate resolution of, or estimate the liability related to, any of these interchange proceedings (except as otherwise indicated below), as the proceedings involve complex claims and/or substantial uncertainties and, in some cases, could include unascertainable damages or fines. Except as described below, no provision for losses has been provided in connection with them. Some of the proceedings described below could have a significant impact on our customers in the applicable country and on MasterCard's level of business in those countries. The proceedings reflect the significant and intense legal, regulatory and legislative scrutiny worldwide that interchange fees and acceptance practices have been receiving. 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 are styled as class actions, although a few complaints are filed on behalf of individual merchant plaintiffs) against MasterCard International Incorporated, Visa U.S.A., Inc., Visa International Service Association and a number of customer financial institutions. Taken together, the claims in the complaints are generally brought under both Sections 1 and 2 of the Sherman Act, which prohibit monopolization and attempts or conspiracies to monopolize a particular industry, and some of these complaints contain unfair competition law claims under state law. The complaints allege, among other things, that MasterCard, Visa, and certain of their customer 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. The cases have been consolidated for pre-trial proceedings in the U.S. District Court for the Eastern District of New York in MDL No. 1720. The plaintiffs have filed a consolidated class action complaint that seeks treble damages, as well as attorneys' fees and injunctive relief.

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 its customer financial institutions in connection with the IPO: (1) violate U.S. antitrust laws and (2) constitute a fraudulent conveyance because the customer financial institutions are allegedly attempting to release, without adequate consideration, MasterCard's right to assess them for MasterCard's litigation liabilities. In November 2008, the district court granted MasterCard's motion to dismiss the plaintiffs' supplemental complaint in its entirety with leave to file an amended complaint. The class plaintiffs repled their complaint. The causes of action and claims for relief in the complaint generally mirror those in the plaintiffs' original IPO-related complaint although the plaintiffs have attempted to expand their factual allegations based upon discovery that has been garnered in the case. The class plaintiffs seek treble damages and injunctive relief including, but not limited to, an order reversing and unwinding the IPO. In July 2009, the class plaintiffs and individual plaintiffs served confidential expert reports detailing the plaintiffs' theories of liability and alleging damages in the tens of billions of dollars. The defendants served their expert reports in December 2009 rebutting the plaintiffs' assertions both with respect to liability and damages.

In February 2011, MasterCard and MasterCard International Incorporated 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 customer financial institutions; and (2) a MasterCard settlement and judgment sharing agreement with a number of customer financial institutions.  The agreements provide for the apportionment of certain costs and liabilities which MasterCard, the Visa parties and the customer financial institutions may incur, jointly and/or severally, in the event of an adverse judgment or settlement of one or all of the cases in the interchange merchant litigations.  Among a number of scenarios addressed by the agreements, in the event of a global settlement involving the Visa parties, the customer 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 customer financial institutions with respect to their issuance of MasterCard cards, MasterCard would pay 36% of the monetary portion of such settlement. 

On July 13, 2012, MasterCard entered into a Memorandum of Understanding (“MOU”) to settle the merchant class litigation, and separately agreed in principle to settle all claims brought by the individual merchant plaintiffs. The MOU sets out a binding obligation to enter into a settlement agreement, and is subject to: (1) the successful completion of certain appendices, (2) the successful negotiation of a settlement agreement with the individual merchant plaintiffs, (3) final court approval of the class settlement, and (4) any necessary internal approvals for the parties. MasterCard's financial portion of the settlements is estimated to total $790 million on a pre-tax basis. Of that total, MasterCard recorded a pre-tax charge of $770 million in the fourth quarter of 2011 and an additional $20 million pre-tax charge in the second quarter of 2012. In addition to the financial portion of the settlement, U.S. merchant class members would also receive a 10 basis point reduction in default credit interchange fees for a period of eight months, funded by a corresponding reduction in the default credit interchange fees paid by acquirers to issuers. MasterCard would also be required to modify its No Surcharge Rule to permit U.S. merchants to surcharge MasterCard credit cards, subject to certain limitations set forth in the class settlement agreement. On October 19, 2012, the parties entered into a definitive settlement agreement with respect to the merchant class litigation (consistent with the terms of the MOU), and separately also entered into a settlement agreement with the individual merchant plaintiffs. The merchant class litigation settlement agreement is subject to court approval. The parties to the merchant class litigation filed a motion seeking preliminary approval of the settlement on October 19, 2012, and the court granted preliminary approval of the settlement on November 27, 2012 and scheduled a final approval hearing for September 2013. In April 2013, the parties filed briefs in support of their motion for final approval of the settlement. In 2012, the Company paid $790 million with respect to the settlements, of which $726 million was paid into a qualified settlement fund related to the merchant class litigations. Rule practice changes required by the settlement were implemented in late January 2013. In the event that the merchant class litigation settlement agreement is not approved by the court, or if the class settlement agreement is otherwise terminated by the defendants pursuant to the conditions in the settlement agreement and the litigations are not settled, a negative outcome in the litigation could have a material adverse effect on MasterCard's results of operations, financial position and cash flows.

Canada. In December 2010, the Canadian Competition Bureau (the “CCB”) filed an application with the Canadian Competition Tribunal to strike down certain MasterCard rules related to point-of-sale acceptance, including the “honor all cards” and “no surcharge” rules. The hearing on the matter was held before the Canadian Competition Tribunal and was completed in June 2012. The parties are awaiting a decision from the Canadian Competition Tribunal. In December 2010, a complaint styled as a class action lawsuit was commenced against MasterCard in Quebec on behalf of Canadian merchants. That suit essentially repeated the allegations and arguments of the CCB application to the Canadian Competition Tribunal and sought compensatory and punitive damages in unspecified amounts, as well as injunctive relief. In March 2011, a second purported class action lawsuit was commenced in British Columbia against MasterCard, Visa and a number of large Canadian financial institutions, and in May 2011 a third purported class action lawsuit was commenced in Ontario against the same defendants. These suits allege that MasterCard, Visa and the financial institutions have engaged in a conspiracy to increase or maintain the fees paid by merchants on credit card transactions and establish rules which force merchants to accept all MasterCard and Visa credit cards and prevent merchants from charging more for payments with MasterCard and Visa premium cards. The British Columbia suit seeks compensatory damages in unspecified amounts, and the Ontario suit seeks compensatory damages of $5 billion. The British Columbia and Ontario suits also seek punitive damages in unspecified amounts, as well as injunctive relief, interest and legal costs. In April 2012, the Quebec suit was amended to include the same defendants and similar claims as in the British Columbia and Ontario suits. With respect to status of the proceedings: (1) the Quebec suit was stayed in June 2012 until June 2013, (2) the Ontario suit is being temporarily suspended while the British Columbia suit proceeds, and (3) the British Columbia court held a class certification hearing in April 2013. Additional complaints styled as class actions have been filed in Saskatchewan and Alberta. The claims in these complaints largely mirror the claims in the British Columbia and Ontario suits. If the CCB's challenges and/or the class action law suits are ultimately successful, negative decisions could have a significant adverse impact on the revenue of MasterCard's Canadian customers and on MasterCard's overall business in Canada and, in the case of the private lawsuits, could result in substantial damage awards.

European Union. In September 2003, the European Commission issued a Statement of Objections challenging MasterCard Europe's cross-border default interchange fees and, in June 2006, it issued a supplemental Statement of Objections covering credit, debit and commercial card fees. In December 2007, the European Commission announced a decision that applies to MasterCard's default cross-border interchange fees for MasterCard and Maestro branded consumer payment card transactions in the European Economic Area (“EEA”) (the European Commission refers to these as “MasterCard's MIF”), but not to commercial card transactions (the European Commission stated publicly that it has not yet finished its investigation of commercial card interchange fees). The decision required MasterCard to stop applying the MasterCard MIF, to refrain from repeating the conduct, and not apply its then recently adopted (but never implemented) Maestro SEPA and Intra-Eurozone default interchange fees to debit card payment transactions within the Eurozone. The decision did not impose a fine on MasterCard, but provides for a daily penalty of up to 3.5% of MasterCard's daily consolidated global turnover in the preceding business year (which MasterCard estimates to be approximately $0.7 million per day) in the event that MasterCard fails to comply. To date, MasterCard has not been assessed any such penalty. In March 2008, MasterCard filed an application for annulment of the European Commission's decision with the General Court of the European Union.

Following discussions with the European Commission, MasterCard announced that, effective June 21, 2008, MasterCard would temporarily repeal its then current default intra-EEA cross-border consumer card interchange fees in conformity with the decision. In October 2008, MasterCard received an information request from the European Commission in connection with the decision concerning certain pricing changes that MasterCard implemented as of October 1, 2008. In March 2009, MasterCard gave certain undertakings to the European Commission and, in response, in April 2009, the Commissioner for competition policy and DG Competition informed MasterCard that, subject to MasterCard's fulfilling its undertakings, they do not intend to pursue proceedings for non-compliance with or circumvention of the December 2007 decision or for infringing the antitrust laws in relation to the October 2008 pricing changes, the introduction of new cross-border consumer default interchange fees or any of the other MasterCard undertakings. MasterCard's undertakings include: (1) repealing the October 2008 pricing changes; (2) adopting a specific methodology for the setting of cross-border consumer default interchange fees; (3) establishing new default cross-border consumer card interchange fees as of July 1, 2009 such that the weighted average interchange fee for credit card transactions does not exceed 30 basis points and for debit card transactions does not exceed 20 basis points; (4) introducing a new rule prohibiting its acquirers from requiring merchants to process all of their MasterCard and Maestro transactions with the acquirer; and (5) introducing a new rule requiring its acquirers to provide merchants with certain pricing information in connection with MasterCard and Maestro transactions. The undertakings were effective until the European Union General Court issued a judgment in May 2012.

In May 2012, the General Court of the European Union issued a judgment dismissing the Company's appeal and upholding the European Commission's decision. The Company appealed the judgment to the European Union Court of Justice in August 2012. Subject to ongoing discussion with the European Commission, MasterCard intends to continue to comply with the terms of the interim agreement with the European Commission, even though that agreement, by its terms, formally ended on the day of the judgment.

Although MasterCard believes that any other business practices it would implement in response to the decision would be in compliance with the December 2007 decision, the European Commission may deem any such practice not in compliance with the decision, or in violation of European competition law, in which case MasterCard may be assessed fines for the period that it is not in compliance. Furthermore, because a balancing mechanism like default cross-border interchange fees constitutes an essential element of MasterCard Europe's operations, the December 2007 decision could also significantly impact MasterCard International's European customers' and MasterCard Europe's business. The European Commission decision could also lead to additional competition authorities in European Union member states commencing investigations or proceedings regarding domestic interchange fees or initiating regulation. The possibility of such actions has increased due to the judgment of the General Court. The judgment also increases the possibility of an adverse outcome for the Company in related and pending matters (such as the interchange proceedings in Hungary, Italy and Poland, as further described below). In addition, the European Commission's decision could lead, and in the case of the United Kingdom and Belgium has led, to the filing of private actions against MasterCard Europe by merchants and/or consumers which, if MasterCard is unsuccessful in its appeal of the General Court decision, could result in MasterCard owing substantial damages.

In April 2013, the European Commission announced that it has opened proceedings to investigate: (1) MasterCard's interregional interchange fees that apply when a card outside the EEA is used at a merchant location in the EEA, (2) central acquiring rules, which apply when a merchant uses the services of an acquirer established in another country and (3) other business rules and practices (including the "honor all cards" rule).

Additional Litigations in Europe. In the United Kingdom, since May 2012, a number of retailers have filed claims against MasterCard for unspecified damages with respect to MasterCard's cross-border and U.K. and Ireland domestic interchange fees. In March 2013, the court heard arguments on MasterCard's motion to stay the proceedings pending the result of MasterCard's appeal of the European Union General Court's judgment discussed above. In Belgium, a retailer filed claims in December 2012 for unspecified damages with respect to MasterCard's cross-border and domestic interchange fees paid in Belgium, Greece and Luxembourg.

Additional Interchange Proceedings. Regulatory authorities in a number of other jurisdictions around the world have commenced competition-related proceedings or inquiries into interchange fees and acceptance practices. These matters include:

• France. In 2009, the French Competition Authority (the “FCA”) sent an information request to MasterCard as part of an investigation concerning its domestic interchange rates. The investigation was initially suspended until the judgment of the General Court of the European Union with respect to MasterCard's appeal of the December 2007 cross-border interchange fee decision of the European Commission. In January 2013, the investigation was re-opened and the FCA informed MasterCard that it intends to commence a formal proceeding and issue a statement of objections unless MasterCard offers commitments to reduce its interchange fees.

• Hungary. In December 2009, the Hungarian Competition Authority (the “HCA”) issued a formal decision that MasterCard's (and Visa's) historic domestic interchange fees violated Hungarian competition law and fined each of MasterCard Europe and Visa Europe approximately $3 million, which was paid during the fourth quarter of 2009. MasterCard appealed the decision to the Hungarian courts, which has stayed the proceeding until the completion of MasterCard's appeal to the European Union Court of Justice. If the HCA's decision is not reversed on appeal, it could have a significant adverse impact on the revenue of MasterCard's Hungarian customers and on MasterCard's overall business in Hungary. In June 2012, the HCA commenced a separate investigation of MasterCard's alleged abuse of dominant position in what it refers to as the domestic bankcard market during the period beginning in December 2010.

• Italy. In November 2010, the Italian Competition Authority (the “ICA”) adopted a decision in which it determined that MasterCard Europe's domestic interchange fees violate European Union competition law, fined MasterCard 2.7 million euro (approximately $4 million) and ordered MasterCard to refrain in the future from maintaining interchange fees that are not based on economic justifications linked to efficiency criteria and to eliminate any anticompetitive clauses from its licensing agreements. MasterCard appealed the ICA's infringement decision to the Administrative Court, and the decision was annulled by the Administrative Court in July 2011. The ICA has appealed the Administrative Court's judgment to the Council of State. If the ICA's infringement decision ultimately stands, it could have a significant adverse impact on the revenue of MasterCard's Italian customers and on MasterCard's overall business in Italy.

• Poland. In January 2007, the Polish Office for Protection of Competition and Consumers (the “PCA”) issued a decision that MasterCard's (and Visa Europe's) domestic credit and debit default interchange fees are unlawful under Polish competition law, and imposed fines on MasterCard's (and Visa Europe's) licensed financial institutions, the entities responsible for setting the fees. As part of this decision, the PCA decided that MasterCard (and Visa Europe) had not violated the law because they were not responsible for setting the fees. The decision is currently being appealed. If on appeal the PCA's decision is ultimately allowed to stand, it could have a significant adverse impact on the revenue of MasterCard's Polish customers and on MasterCard's overall business in Poland.

• United Kingdom. In February 2007, the Office for Fair Trading of the United Kingdom (the “OFT”) commenced an investigation of MasterCard's current U.K. default credit card interchange fees and so-called “immediate debit” cards to determine whether such fees contravene U.K. and European Union competition law. The OFT had informed MasterCard that it did not intend to issue a Statement of Objections or otherwise commence formal proceedings with respect to the investigation prior to the judgment of the General Court of the European Union with respect to MasterCard's appeal of the December 2007 cross-border interchange fee decision of the European Commission, and this period was extended until the completion of MasterCard's appeal to the Court of Justice. If the OFT ultimately determines that any of MasterCard's U.K. interchange fees contravene U.K. and European Union competition law, it may issue a new decision and possibly levy fines accruing from the date of its first decision. Such a decision could lead to the filing of private actions against MasterCard by merchants and/or consumers which could result in an award or awards of substantial damages and could have a significant adverse impact on the revenue of MasterCard International's U.K. customers and MasterCard's overall business in the U.K.

Regulatory authorities and/or central banks in certain other jurisdictions, including Brazil, Chile, Germany, Latvia, Portugal, Russia, Singapore and South Africa, are reviewing MasterCard's and/or its customers' interchange fees and/or other practices and may seek to commence proceedings related to, or otherwise regulate, the establishment of such fees and/or such practices.

Other Regulatory Proceedings

In addition to challenges to interchange fees, MasterCard's other standards and operations are also subject to regulatory and/or legal review and/or challenges in a number of jurisdictions from time to time.  These proceedings tend to reflect the increasing global regulatory focus to which the payments industry is subject and, when taken as a whole with other regulatory and legislative action, such actions could result in the imposition of costly new compliance burdens on MasterCard and its customers and may lead to increased costs and decreased transaction volumes and revenue.

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Stockholders' Equity

3 Months Ended

Mar. 31, 2013

Equity [Abstract]

Stockholders' Equity

Stockholders’ Equity

In June 2012, the Company’s Board of Directors approved a share repurchase program authorizing the Company to repurchase up to $1.5 billion of its Class A common stock (the "June 2012 Share Repurchase Program"). This program became effective in June 2012 at the completion of the Company’s previously announced $2 billion Class A share repurchase program (this $2 billion repurchase program consisted of $1 billion authorized in September 2010 and $1 billion authorized in April 2011).

On February 5, 2013, the Company's Board of Directors approved a new share repurchase program authorizing the Company to repurchase up to $2 billion of its Class A common stock (the "February 2013 Share Repurchase Program").  The new share repurchase program became effective at the completion of the June 2012 Share Repurchase Program, which occurred in March 2013. 

The following table summarizes the Company's share repurchase authorizations of its Class A common stock through March 31, 2013, as well as historical purchases:

	Authorization Dates
	February 2013		June 2012		April 20111		Total
	(in millions, except average price data)
Board authorization	$	2,000	$	1,500	$	2,000	$	5,500
Dollar value of shares repurchased during the three months ended March 31, 2012	**		**		$	248	$	248
Remaining authorization at December 31, 2012	**		$	604	$	—	$	604
Dollar value of shares repurchased during the three months ended March 31, 2013	$	162	$	604	$	—	$	766
Remaining authorization at March 31, 2013	$	1,838	$	—	$	—	$	1,838
Shares repurchased during the three months ended March 31, 2012	**		**		0.65		0.65
Average price paid per share during the three months ended March 31, 2012	**		**		$	379.68	$	379.68
Shares repurchased during the three months ended March 31, 2013	0.31		1.17		—		1.48
Average price paid per share during the three months ended March 31, 2013	$	522.87	$	517.16	$	—	$	518.36
Cumulative shares repurchased through March 31, 2013	0.31		3.11		6.54		9.96
Cumulative average price paid per share	$	522.87	$	481.58	$	305.60	$	367.34

^** Not applicable

¹The initial authorization in September 2010 for $1 billion was amended in April 2011 to increase the authorization to $2 billion.

As of April 25, 2013, the cumulative repurchases by the Company under the February 2013 Share Repurchase Program totaled approximately 0.7 million shares of its Class A common stock for an aggregate cost of approximately $344 million at an average price of $527.57 per share of Class A common stock.

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Property, Plant and Equipment

3 Months Ended

Mar. 31, 2013

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment

Property, Plant and Equipment

Property, plant and equipment consisted of the following:

	March 31, 2013			December 31, 2012
	(in millions)
Property, plant and equipment	$	873		$	858
Less accumulated depreciation and amortization	(405		)	(386		)
Property, plant and equipment, net	$	468		$	472

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Accrued Expenses

27 Months Ended

Mar. 31, 2013

Accrued Liabilities [Abstract]

Accrued Expenses

Accrued Expenses

Accrued expenses consisted of the following:

	March 31, 2013		December 31, 2012
	(in millions)
Customer and merchant incentives	$	1,096	$	1,058
Personnel costs	177		354
Advertising	77		122
Income and other taxes	250		94
Other	103		120
Total accrued expenses	$	1,703	$	1,748

As of March 31, 2013 and December 31, 2012, the Company's provision related to the U.S. merchant class litigation was $724 million and $726 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. The decrease in restricted cash for litigation settlement and accrued litigation for the U.S. merchant class litigation is due to net expenses paid by the fund related to administrative settlement activities. See Note 11 (Legal and Regulatory Proceedings) for further discussion of the U.S. merchant class litigation.

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Accumulated Other Comprehensive Income

3 Months Ended

Mar. 31, 2013

Accumulated Other Comprehensive Income (Loss), Net of Tax [Abstract]

Comprehensive Income (Loss) Note [Text Block]

Accumulated Other Comprehensive Income

The changes in the balances of each component of accumulated other comprehensive income, net of tax, for the three months ended March 31, 2013 were as follows:

	Foreign Currency Translation Adjustments			Defined Benefit Pension and Other Postretirement Plans			Investment Securities Available-for-Sale		Accumulated Other Comprehensive Income (Loss)
	(in millions)
Balance at December 31, 2012	$	93		$	(37	)	$	5	$	61
Current period other comprehensive income (loss)*	(112		)	1			—		(111		)
Balance at March 31, 2013	$	(19	)	$	(36	)	$	5	$	(50	)

^*During the three months ended March 31, 2013, $1 million of deferred costs related to the Company's Defined Benefit Pension Plan were reclassified from accumulated other comprehensive income to general and administrative expenses. In addition, $1 million of net gains on available-for-sale investment securities were recognized in investment income during the three months ended March 31, 2013. Tax amounts related to these items are insignificant.

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Earnings Per Share Schedule of Basic and Diluted Earnings Per Share (Details) (USD $) In Millions, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2013		Mar. 31, 2012
Numerator: [Abstract]
Net income	$ 766		$ 682
Denominator: [Abstract]
Basic EPS weighted-average shares outstanding	123		127
Dilutive stock options and stock units	0		0
Dilutive EPS weighted-average shares outstanding	123	[1]	127	[1]
Earnings per Share [Abstract]
Basic	$ 6.25		$ 5.38
Diluted	$ 6.23		$ 5.36

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

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Settlement and Other Risk Management Travelers cheques issued (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Note 12. Settlement and Other Risk Management [Abstract]
Travelers Cheques Covered by Collateral Arrangements	$ 424	$ 434
Guarantor Obligations, Maximum Exposure, Undiscounted	$ 527	$ 539

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Foreign Exchange Risk Management

3 Months Ended

Mar. 31, 2013

Foreign Currency Derivatives [Abstract]

Foreign Exchange Risk Management

Foreign Exchange Risk Management

The Company enters into foreign currency forward contracts to manage risk associated with anticipated receipts and disbursements which are either transacted in a non-functional currency or valued based on a currency other than its functional currencies. The Company also enters into foreign currency forward contracts to offset possible changes in value due to foreign exchange fluctuations of assets and liabilities denominated in currencies other than the functional currency of the entity holding the assets and liabilities. 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. The notional value of commitments to sell foreign currency was $1.9 billion and $1.6 billion at March 31, 2013 and December 31, 2012, respectively.

The Company does not designate foreign currency derivatives as hedging instruments pursuant to the accounting guidance for derivative instruments and hedging activities. The Company records the change in the estimated fair value of the outstanding derivatives at the end of the reporting period to its consolidated balance sheet and consolidated statement of operations.

As of March 31, 2013, all forward contracts to purchase and sell foreign currency had been entered into with customers of MasterCard. MasterCard’s derivative contracts are summarized below:

	March 31, 2013					December 31, 2012
	Notional		Estimated Fair Value			Notional		Estimated Fair Value
	(in millions)
Commitments to purchase foreign currency	$	100	$	(2	)	$	76	$	(1	)
Commitments to sell foreign currency	1,870		(14		)	1,571		(2		)
Balance Sheet Location:
Accounts Receivable*			$	15				$	12
Other Current Liabilities*			(31		)			(15		)

* The fair value of derivative contracts are presented on a gross basis on the balance sheet and are subject to enforceable master netting arrangements, which contain various netting and setoff provisions.

The amount of gain (loss) recognized in income for the contracts to purchase and sell foreign currency are summarized below: 

	Three Months Ended March 31,
	2013			2012
	(in millions)
Foreign currency derivative contracts
General and administrative	$	(23	)	$	(6	)
Net revenue	—			(4		)
Total	$	(23	)	$	(10	)

The fair value of the foreign currency forward contracts generally reflects the estimated amounts that the Company would receive (or pay), on a pre-tax basis, to terminate the contracts at the reporting date based on broker quotes for the same or similar instruments. The terms of the foreign currency forward contracts are generally less than 18 months. The Company had no deferred gains or losses related to foreign exchange in accumulated other comprehensive income as of March 31, 2013 and December 31, 2012 as there were no derivative contracts accounted for under hedge accounting.

The Company’s derivative financial instruments are subject to both market and counterparty credit risk. Market risk is the risk of loss due to the potential change in an instrument’s value caused by fluctuations in interest rates and other variables related to currency exchange rates. The effect of a hypothetical 10% adverse change in foreign currency rates could result in a fair value loss of approximately $199 million on the Company's foreign currency derivative contracts outstanding at March 31, 2013 related to the hedging program. Counterparty credit risk is the risk of loss due to failure of the counterparty to perform its obligations in accordance with contractual terms. To mitigate counterparty credit risk, the Company enters into derivative contracts with 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.

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Property, Plant and Equipment (Tables)

3 Months Ended

Mar. 31, 2013

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment

Property, plant and equipment consisted of the following:

	March 31, 2013			December 31, 2012
	(in millions)
Property, plant and equipment	$	873		$	858
Less accumulated depreciation and amortization	(405		)	(386		)
Property, plant and equipment, net	$	468		$	472

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Settlement and Other Risk Management Narrative (Details) (Italy Greece Portugal Spain [Member])	Mar. 31, 2013
Italy Greece Portugal Spain [Member]
Risks Inherent in Servicing Assets and Servicing Liabilities [Line Items]
Percentage Of MasterCard's Total Aggregate Gross Settlement Exposure	5.00%

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Property, Plant and Equipment (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2013	Dec. 31, 2012
Property, Plant and Equipment [Abstract]
Property, plant and equipment	$ 873	$ 858
Less accumulated depreciation and amortization	405	386
Property, plant and equipment, net	$ 468	$ 472

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Consolidated Statement of Comprehensive Income (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2013		Mar. 31, 2012
Statement of Other Comprehensive Income [Abstract]
Net Income	$ 766		$ 682
Other comprehensive income (loss):
Foreign currency translation adjustments	(112)	[1]	77
Defined benefit pension and other postretirement plans	1		1
Income tax effect	0		0
Defined benefit pension and other postretirement plans, net of income tax effect	1	[1]	1
Investment securities available-for-sale	0		3
Income tax effect	0		(1)
Investment securities available-for-sale, net of income tax effect	0	[1]	2
Other comprehensive income (loss), net of tax	(111)	[1]	80
Comprehensive Income	$ 655		$ 762

[1] During the three months ended March 31, 2013, $1 million of deferred costs related to the Company's Defined Benefit Pension Plan were reclassified from accumulated other comprehensive income to general and administrative expenses. In addition, $1 million of net gains on available-for-sale investment securities were recognized in investment income during the three months ended March 31, 2013. Tax amounts related to these items are insignificant.

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Earnings Per Share

3 Months Ended

Mar. 31, 2013

Earnings Per Share [Abstract]

Earnings Per Share

Earnings Per Share

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

	Three Months Ended March 31,
	2013		2012
	(in millions, except per share data)
Numerator:
Net income	$	766	$	682
Denominator:
Basic EPS weighted-average shares outstanding	123		127
Dilutive stock options and stock units	—		—
Diluted EPS weighted-average shares outstanding *	123		127
Earnings per Share
Basic	$	6.25	$	5.38
Diluted	$	6.23	$	5.36

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

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Accrued Expenses (Tables)

3 Months Ended

Mar. 31, 2013

Accrued Liabilities [Abstract]

Accrued Expenses

Accrued expenses consisted of the following:

	March 31, 2013		December 31, 2012
	(in millions)
Customer and merchant incentives	$	1,096	$	1,058
Personnel costs	177		354
Advertising	77		122
Income and other taxes	250		94
Other	103		120
Total accrued expenses	$	1,703	$	1,748

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Fair Value and Investment Securities Maturity Distribution Based on Contractual Terms of Investment Securities (Details) (USD $) In Millions, unless otherwise specified	Mar. 31, 2013
Available-For-Sale Amortized Cost
Due within 1 year	$ 1,548
Due after 1 year through 5 years	1,220
Due after 5 years through 10 years	48
Due after 10 years	35
No contractual maturity	209
Total	3,060
Available-For-Sale Fair Value
Due within 1 year	1,549
Due after 1 year through 5 years	1,228
Due after 5 years through 10 years	49
Due after 10 years	32
No contractual maturity	210
Total	$ 3,068

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Settlement and Other Risk Management

3 Months Ended

Mar. 31, 2013

Settlement and Other Risk Management [Abstract]

Settlement and Other Risk Management

Settlement and Other Risk Management

MasterCard's rules guarantee the settlement of many of the MasterCard, Cirrus and Maestro branded transactions between its issuers and acquirers ("settlement risk"). Settlement exposure is the outstanding 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. Settlement exposure is primarily estimated using the average daily card volume during the quarter multiplied by the estimated number of days to settle. The Company has global risk management policies and procedures, which include risk standards, to provide a framework for managing the Company's settlement risk. Customer-reported transaction data and the transaction clearing data underlying the settlement exposure calculation may be revised in subsequent reporting periods.

In the event that MasterCard effects a payment on behalf of a failed customer, MasterCard may seek an assignment of the underlying receivables of the failed customer. Subject to approval by the Board of Directors, customers may be charged for the amount of any settlement loss incurred during these ordinary course activities of the Company.

The Company's global risk management policies and procedures are aimed at managing the settlement exposure. These risk management procedures include interaction with the bank regulators of countries in which it operates, requiring customers to make adjustments to settlement processes, and requiring collateral from customers. MasterCard requires certain customers that are not in compliance with the Company's risk standards in effect at the time of review to post collateral, typically in the form of cash, letters of credit, or guarantees. This requirement is based on management's review of the individual risk circumstances for each customer that is out of compliance. In addition to these amounts, MasterCard holds collateral to cover variability and future growth in customer programs. The Company may also hold collateral to pay merchants in the event of merchant bank/acquirer failure. Although the Company is not contractually obligated under its rules to effect such payments to merchants, the Company may elect to do so to protect brand integrity. 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 from MasterCard, Cirrus and Maestro branded transactions was as follows:

	March 31, 2013			December 31, 2012
	(in millions)
Gross settlement exposure	$	38,077		$	37,768
Collateral held for settlement exposure	(4,565		)	(3,775		)
Net uncollateralized settlement exposure	$	33,512		$	33,993

MasterCard-branded travelers cheques are no longer being issued. For previously issued travelers cheques, MasterCard guarantees the payment of MasterCard-branded travelers cheques in the event of issuer default. The term of the guarantee is unlimited, while the exposure is limited to the cheques issued but not yet cashed. The notional amount of cheques issued, but not yet cashed was $527 million and $539 million at March 31, 2013 and December 31, 2012, respectively, of which $424 million and $434 million at March 31, 2013 and December 31, 2012, respectively, is mitigated by collateral arrangements.

Beginning in 2008, many of the Company's financial institution customers have been directly and adversely impacted by the events that have occurred in the financial markets around the world. The ongoing economic turmoil presents increased risk that the Company may have to perform under its settlement and travelers cheque guarantees. General economic conditions and political conditions in countries in which MasterCard operates also affect the Company's settlement risk. For example, the European sovereign debt crisis has introduced a heightened level of risk to the Company. This risk could increase if economic and financial market conditions deteriorate further. The Company's aggregate gross settlement exposures to Greece, Italy, Portugal and Spain, four of the countries significantly impacted by the eurozone crisis, are less than 5% of MasterCard's total gross settlement exposure as of March 31, 2013 and are being managed through various planning and mitigation practices. The Company's global risk management policies and procedures are revised and enhanced from time to time. Historically, the Company has experienced a low level of losses from customer financial institution failures.

MasterCard also provides guarantees to customers and certain other companies indemnifying them from losses stemming from failures of third parties to perform duties. In addition, the Company enters into business 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.