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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2023
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
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Mastercard Incorporated
(Exact name of registrant as specified in its charter)
Delaware13-4172551
(State or other jurisdiction of incorporation or organization)(IRS Employer Identification Number)
2000 Purchase Street10577
Purchase,NY(Zip Code)
(Address of principal executive offices)
(914) 249-2000
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol
Name of each exchange of which registered
Class A Common Stock, par value $0.0001 per share
MA
New York Stock Exchange
2.1% Notes due 2027
MA27
New York Stock Exchange
1.0% Notes due 2029
MA29A
New York Stock Exchange
2.5% Notes due 2030
MA30
New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes
No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files)
Yes


No


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check One):
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13 (a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act)
YesNo
As of October 23, 2023, there were 930,438,307 shares outstanding of the registrant’s Class A common stock, par value $0.0001 per share; and 7,337,754 shares outstanding of the registrant’s Class B common stock, par value $0.0001 per share.



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MASTERCARD INCORPORATED FORM 10-Q
TABLE OF CONTENTS
PART I
PART II
Unregistered sales of equity securities, use of proceeds and issuer purchases of equity securities
-

2 MASTERCARD SEPTEMBER 30, 2023 FORM 10-Q


In this Report on Form 10-Q (“Report”), references to the “Company,” “Mastercard,” “we,” “us” or “our” refer to the business conducted by Mastercard Incorporated and its consolidated subsidiaries, including our operating subsidiary, Mastercard International Incorporated, and to the Mastercard brand.
Forward-Looking Statements
This Report contains forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts may be forward-looking statements. When used in this Report, the words “believe”, “expect”, “could”, “may”, “would”, “will”, “trend” and similar words are intended to identify forward-looking statements. Examples of forward-looking statements include, but are not limited to, statements that relate to the Company’s future prospects, developments and business strategies.
Many factors and uncertainties relating to our operations and business environment, all of which are difficult to predict and many of which are outside of our control, influence whether any forward-looking statements can or will be achieved. Any one of those factors could cause our actual results to differ materially from those expressed or implied in writing in any forward-looking statements made by Mastercard or on its behalf, including, but not limited to, the following factors:
regulation directly related to the payments industry (including regulatory, legislative and litigation activity with respect to interchange rates and surcharging)
the impact of preferential or protective government actions
regulation of privacy, data, security and the digital economy
regulation that directly or indirectly applies to us based on our participation in the global payments industry (including anti-money laundering, counter financing of terrorism, economic sanctions and anti-corruption, account-based payments systems, and issuer and acquirer practice regulation)
the impact of changes in tax laws, as well as regulations and interpretations of such laws or challenges to our tax positions
potential or incurred liability and limitations on business related to any litigation or litigation settlements
the impact of competition in the global payments industry (including disintermediation and pricing pressure)
the challenges relating to rapid technological developments and changes
the challenges relating to operating a real-time account-based payments system and to working with new customers and end users
the impact of information security incidents, account data breaches or service disruptions
issues related to our relationships with our stakeholders (including loss of substantial business from significant customers, competitor relationships with our customers, consolidation amongst our customers, merchants’ continued focus on acceptance costs and unique risks from our work with governments)
the impact of global economic, political, financial and societal events and conditions, including adverse currency fluctuations and foreign exchange controls as well as events and resulting actions related to the Russian invasion of Ukraine
the impact of the global COVID-19 pandemic and measures taken in response
reputational impact, including impact related to brand perception and lack of visibility of our brands in products and services
the impact of environmental, social and governance matters and related stakeholder reaction
the inability to attract and retain a highly qualified and diverse workforce, or maintain our corporate culture
issues related to acquisition integration, strategic investments and entry into new businesses
exposure to loss or illiquidity due to our role as guarantor and other contractual obligations
issues related to our Class A common stock and corporate governance structure
Please see a complete discussion of these risk factors in Part I, Item 1A - Risk Factors of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022. We caution you that the important factors referenced above may not contain all of the factors that are important to you. Our forward-looking statements speak only as of the date of this Report or as of the date they are made, and we undertake no obligation to update our forward-looking statements.

MASTERCARD SEPTEMBER 30, 2023 FORM 10-Q 3


PART I



PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Item 1. Consolidated financial statements (unaudited)
Mastercard Incorporated
Index to consolidated financial statements (unaudited)
Page
Consolidated Statement of Operations — Three and Nine Months Ended September 30, 2023 and 2022
Consolidated Statement of Comprehensive Income — Three and Nine Months Ended September 30, 2023 and 2022
Consolidated Balance Sheet — September 30, 2023 and December 31, 2022
Consolidated Statement of Changes in Equity Three and Nine Months Ended September 30, 2023 and 2022
Consolidated Statement of Cash Flows — Nine Months Ended September 30, 2023 and 2022

MASTERCARD SEPTEMBER 30, 2023 FORM 10-Q 5


PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Consolidated Statement of Operations (Unaudited)
 Three Months Ended September 30,Nine Months Ended September 30,
 2023202220232022
 (in millions, except per share data)
Net Revenue$6,533 $5,756 $18,550 $16,420 
Operating Expenses:
General and administrative2,285 2,069 6,528 5,860 
Advertising and marketing193 182 561 573 
Depreciation and amortization211 185 594 566 
Provision for litigation 208 231 341 
Total operating expenses2,689 2,644 7,914 7,340 
Operating income3,844 3,112 10,636 9,080 
Other Income (Expense):
Investment income71 16 185 28 
Gains (losses) on equity investments, net(6)60 (95)(133)
Interest expense(151)(120)(427)(344)
Other income (expense), net3 4 19 12 
Total other income (expense)(83)(40)(318)(437)
Income before income taxes3,761 3,072 10,318 8,643 
Income tax expense563 573 1,914 1,238 
Net Income$3,198 $2,499 $8,404 $7,405 
Basic Earnings per Share$3.40 $2.59 $8.88 $7.63 
Basic weighted-average shares outstanding941 965 947 971 
Diluted Earnings per Share$3.39 $2.58 $8.85 $7.60 
Diluted weighted-average shares outstanding943 968 949 974 

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

6 MASTERCARD SEPTEMBER 30, 2023 FORM 10-Q


PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Consolidated Statement of Comprehensive Income (Unaudited)
 Three Months Ended September 30,Nine Months Ended September 30,
 2023202220232022
 (in millions)
Net Income$3,198 $2,499 $8,404 $7,405 
Other comprehensive income (loss):
Foreign currency translation adjustments(239)(743)(92)(1,517)
Income tax effect1 62 (13)105 
Foreign currency translation adjustments, net of income tax effect(238)(681)(105)(1,412)
Translation adjustments on net investment hedges138 372 53 772 
Income tax effect(31)(82)(12)(171)
Translation adjustments on net investment hedges, net of income tax effect107 290 41 601 
Cash flow hedges17 14 (7)21 
Income tax effect(4)(3)2 (5)
Reclassification adjustments for cash flow hedges12 (4)29 (9)
Income tax effect(3)1 (7)2 
Cash flow hedges, net of income tax effect22 8 17 9 
Reclassification adjustments for defined benefit pension and other postretirement plans   (1)
Income tax effect    
Defined benefit pension and other postretirement plans, net of income tax effect   (1)
Investment securities available-for-sale
1 (2)3 (6)
Income tax effect   1 
Investment securities available-for-sale, net of income tax effect1 (2)3 (5)
Other comprehensive income (loss), net of income tax effect(108)(385)(44)(808)
Comprehensive Income$3,090 $2,114 $8,360 $6,597 

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


MASTERCARD SEPTEMBER 30, 2023 FORM 10-Q 7


PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Consolidated Balance Sheet (Unaudited)
September 30, 2023December 31, 2022
 (in millions, except per share data)
Assets
Current assets:
Cash and cash equivalents$6,890 $7,008 
Restricted cash for litigation settlement 589 
Investments602 400 
Accounts receivable3,925 3,425 
Settlement assets1,118 1,270 
Restricted security deposits held for customers1,824 1,568 
Prepaid expenses and other current assets2,624 2,346 
Total current assets16,983 16,606 
Property, equipment and right-of-use assets, net of accumulated depreciation and amortization of $2,140 and $1,904, respectively
1,972 2,006 
Deferred income taxes1,370 1,151 
Goodwill7,488 7,522 
Other intangible assets, net of accumulated amortization of $2,137 and $1,960, respectively
4,022 3,859 
Other assets7,839 7,580 
Total Assets$39,674 $38,724 
Liabilities, Redeemable Non-controlling Interests and Equity
Current liabilities:
Accounts payable$589 $926 
Settlement obligations992 1,111 
Restricted security deposits held for customers1,824 1,568 
Accrued litigation475 1,094 
Accrued expenses7,775 7,801 
Short-term debt1,337 274 
Other current liabilities1,527 1,397 
Total current liabilities14,519 14,171 
Long-term debt14,229 13,749 
Deferred income taxes385 393 
Other liabilities4,160 4,034 
Total Liabilities33,293 32,347 
Commitments and Contingencies
Redeemable Non-controlling Interests21 21 
Stockholders’ Equity
Class A common stock, $0.0001 par value; authorized 3,000 shares, 1,401 and 1,399 shares issued and 932 and 948 shares outstanding, respectively
  
Class B common stock, $0.0001 par value; authorized 1,200 shares, 7 and 8 shares issued and outstanding, respectively
  
Additional paid-in-capital5,791 5,298 
Class A treasury stock, at cost, 470 and 451 shares, respectively
(58,573)(51,354)
Retained earnings60,390 53,607 
Accumulated other comprehensive income (loss)(1,297)(1,253)
Mastercard Incorporated Stockholders' Equity6,311 6,298 
Non-controlling interests49 58 
Total Equity6,360 6,356 
Total Liabilities, Redeemable Non-controlling Interests and Equity$39,674 $38,724 

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

8 MASTERCARD SEPTEMBER 30, 2023 FORM 10-Q


PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Consolidated Statement of Changes in Equity (Unaudited)
Three Months Ended September 30, 2023
Stockholders’ Equity
Common StockAdditional
Paid-In
Capital
Class A
Treasury
Stock
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Mastercard Incorporated Stockholders’ EquityNon-
Controlling
Interests
Total Equity
Class AClass B
(in millions)
Balance at June 30, 2023$ $ $5,622 $(56,659)$57,730 $(1,189)$5,504 $53 $5,557 
Net income— — — — 3,198 — 3,198 — 3,198 
Activity related to non-controlling interests— — — — — — — (4)(4)
Redeemable non-controlling interest adjustments— — — — (2)— (2)— (2)
Other comprehensive income (loss)— — — — — (108)(108)— (108)
Dividends— — — — (536)— (536)— (536)
Purchases of treasury stock— — — (1,915)— — (1,915)— (1,915)
Share-based payments— — 169 1 — — 170 — 170 
Balance at September 30, 2023$ $ $5,791 $(58,573)$60,390 $(1,297)$6,311 $49 $6,360 
Nine Months Ended September 30, 2023
Stockholders’ Equity
  
Common Stock
Additional
Paid-In
Capital
Class A
Treasury
Stock
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Mastercard Incorporated Stockholders' EquityNon-
Controlling
Interests
Total
Equity
 Class AClass B
 (in millions)
Balance at December 31, 2022$ $ $5,298 $(51,354)$53,607 $(1,253)$6,298 $58 $6,356 
Net income— — — — 8,404 — 8,404 — 8,404 
Activity related to non-controlling interests— — — — — — — (9)(9)
Redeemable non-controlling interest adjustments — — — — (6)— (6)— (6)
Other comprehensive income (loss)— — — — — (44)(44)— (44)
Dividends— — — — (1,615)— (1,615)— (1,615)
Purchases of treasury stock— — — (7,232)— — (7,232)— (7,232)
Share-based payments— — 493 13 — — 506 — 506 
Balance at September 30, 2023$ $ $5,791 $(58,573)$60,390 $(1,297)$6,311 $49 $6,360 

MASTERCARD SEPTEMBER 30, 2023 FORM 10-Q 9


PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Consolidated Statement of Changes in Equity (Unaudited) - (Continued)
Three Months Ended September 30, 2022
Stockholders’ Equity
Common StockAdditional
Paid-In
Capital
Class A
Treasury
Stock
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Mastercard Incorporated Stockholders’ EquityNon-
Controlling
Interests
Total Equity
Class AClass B
(in millions)
Balance at June 30, 2022$ $ $5,163 $(47,359)$49,599 $(1,232)$6,171 $65 $6,236 
Net income— — — — 2,499 — 2,499 — 2,499 
Activity related to non-controlling interests— — — — — — — (3)(3)
Redeemable non-controlling interest adjustments— — — — (1)— (1)— (1)
Other comprehensive income (loss)— — — — — (385)(385)— (385)
Dividends— — — — (472)— (472)(472)
Purchases of treasury stock— — — (1,557)— — (1,557)— (1,557)
Share-based payments— — 106 — — — 106 — 106 
Balance at September 30, 2022$ $ $5,269 $(48,916)$51,625 $(1,617)$6,361 $62 $6,423 

Nine Months Ended September 30, 2022
Stockholders’ Equity
  
Common Stock
Additional
Paid-In
Capital
Class A
Treasury
Stock
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Mastercard Incorporated Stockholders' EquityNon-
Controlling
Interests
Total
Equity
 Class AClass B
 (in millions)
Balance at December 31, 2021$ $ $5,061 $(42,588)$45,648 $(809)$7,312 $71 $7,383 
Net income— — — — 7,405 — 7,405 — 7,405 
Activity related to non-controlling interests— — — — — — — (9)(9)
Redeemable non-controlling interest adjustments— — — — (5)— (5)— (5)
Other comprehensive income (loss)— — — — — (808)(808)— (808)
Dividends— — — — (1,423)— (1,423)— (1,423)
Purchases of treasury stock— — — (6,333)— — (6,333)— (6,333)
Share-based payments— — 208 5 — — 213 — 213 
Balance at September 30, 2022$ $ $5,269 $(48,916)$51,625 $(1,617)$6,361 $62 $6,423 

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

10 MASTERCARD SEPTEMBER 30, 2023 FORM 10-Q


PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
Consolidated Statement of Cash Flows (Unaudited)
 Nine Months Ended September 30,
 20232022
 (in millions)
Operating Activities
Net income$8,404 $7,405 
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of customer and merchant incentives1,196 1,197 
Depreciation and amortization594 566 
(Gains) losses on equity investments, net95 133 
Share-based compensation374 273 
Deferred income taxes(239)(589)
Other88 40 
Changes in operating assets and liabilities:
Accounts receivable(484)(326)
Settlement assets151 298 
Prepaid expenses(1,837)(1,472)
Accrued litigation and legal settlements(621)249 
Restricted security deposits held for customers240 (342)
Accounts payable(319)(91)
Settlement obligations(119)146 
Accrued expenses43 638 
Net change in other assets and liabilities284 (30)
Net cash provided by operating activities7,850 8,095 
Investing Activities
Purchases of investment securities available-for-sale(244)(192)
Purchases of investments held-to-maturity(327)(174)
Proceeds from sales of investment securities available-for-sale72 28 
Proceeds from maturities of investment securities available-for-sale155 156 
Proceeds from maturities of investments held-to-maturity116 194 
Purchases of property and equipment(294)(312)
Capitalized software(525)(446)
Purchases of equity investments(61)(62)
Proceeds from sales of equity investments44 7 
Acquisition of businesses, net of cash acquired (313)
Other investing activities(73)(6)
Net cash used in investing activities(1,137)(1,120)
Financing Activities
Purchases of treasury stock(7,200)(6,339)
Dividends paid(1,624)(1,430)
Proceeds from debt, net1,554 1,127 
Tax withholdings related to share-based payments(81)(137)
Cash proceeds from exercise of stock options213 77 
Other financing activities (12)
Net cash used in financing activities(7,138)(6,714)
Effect of exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents(29)(387)
Net decrease in cash, cash equivalents, restricted cash and restricted cash equivalents(454)(126)
Cash, cash equivalents, restricted cash and restricted cash equivalents - beginning of period9,196 9,902 
Cash, cash equivalents, restricted cash and restricted cash equivalents - end of period$8,742 $9,776 

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

MASTERCARD SEPTEMBER 30, 2023 FORM 10-Q 11


PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes to consolidated financial statements (unaudited)
Note 1. Summary of Significant Accounting Policies
Organization
Mastercard Incorporated and its consolidated subsidiaries, including Mastercard International Incorporated (“Mastercard International” and together with Mastercard Incorporated, “Mastercard” or the “Company”), is a global technology company in the payments industry. Mastercard connects consumers, financial institutions, merchants, governments, digital partners, businesses and other organizations worldwide by enabling electronic forms of payment instead of cash and checks and making those payment transactions safe, simple, smart and accessible.
Consolidation and Basis of Presentation
The consolidated financial statements include the accounts of Mastercard and its majority-owned and controlled entities, including any variable interest entities (“VIEs”) for which the Company is the primary beneficiary. Investments in VIEs for which the Company is not considered the primary beneficiary are not consolidated and are accounted for as marketable, equity method or measurement alternative method investments and recorded in other assets on the consolidated balance sheet. At September 30, 2023 and December 31, 2022, there were no significant VIEs which required consolidation and the investments were not considered material to the consolidated financial statements. The Company consolidates acquisitions as of the date the Company has obtained a controlling financial interest. Intercompany transactions and balances have been eliminated in consolidation. During the fourth quarter of 2022, the Company updated its disaggregated net revenue presentation by category and geography to reflect the nature of its payment services and to align such information with the way in which management views its categories of net revenue. Prior period amounts have been reclassified to conform to the 2022 presentation. The reclassification had no impact on previously reported total net revenue, operating income or net income. The Company follows accounting principles generally accepted in the United States of America (“GAAP”).
The balance sheet as of December 31, 2022 was derived from the audited consolidated financial statements as of December 31, 2022. The consolidated financial statements for the three and nine months ended September 30, 2023 and 2022 and as of September 30, 2023 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 and nine months ended September 30, 2023 are not necessarily indicative of the results to be expected for the full year.
The accompanying unaudited consolidated financial statements are presented in accordance with the U.S. Securities and Exchange Commission (“SEC”) requirements for Quarterly Reports on Form 10-Q. Reference should be made to Mastercard’s Annual Report on Form 10-K for the year ended December 31, 2022 for additional disclosures, including a summary of the Company’s significant accounting policies.
Note 2. Acquisitions
In April 2022, Mastercard acquired 100% equity interest in Dynamic Yield LTD. As of March 31, 2023, the Company finalized the purchase price accounting of $325 million for this acquisition. The final fair value of the purchase price allocation was not materially different than the preliminary estimated fair value. For the preliminary estimated fair value of the purchase price allocation as of the acquisition date, refer to Note 2 (Acquisitions) to the consolidated financial statements included in Part II, Item 8 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

12 MASTERCARD SEPTEMBER 30, 2023 FORM 10-Q


PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 3. Revenue
The Company’s disaggregated net revenue by category and geographic region were as follows:
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
(in millions)
Net revenue by category:
Payment network$4,210 $3,765 $11,933 $10,773 
Value-added services and solutions2,323 1,991 6,617 5,647 
Net revenue$6,533 $5,756 $18,550 $16,420 
Net revenue by geographic region:
North American Markets 1
$2,109 $2,031 $6,143 $5,769 
International Markets4,424 3,725 12,407 10,651 
Net revenue$6,533 $5,756 $18,550 $16,420 
1North American Markets includes the United States and Canada, excluding the U.S. Territories.
The Company’s customers are generally billed weekly, with certain billings occurring on a monthly and quarterly basis. The frequency of billing is dependent upon the nature of the performance obligation and the underlying contractual terms. The Company does not typically offer extended payment terms to customers. The following table sets forth the location of the amounts recognized on the consolidated balance sheet from contracts with customers:
September 30,
2023
December 31,
2022
(in millions)
Receivables from contracts with customers
Accounts receivable
$3,666 $3,213 
Contract assets
Prepaid expenses and other current assets105 118 
Other assets390 442 
Deferred revenue 1
Other current liabilities548 434 
Other liabilities300 248 
1    Revenue recognized from performance obligations satisfied during the three and nine months ended September 30, 2023 was $533 million and $1,362 million, respectively.

MASTERCARD SEPTEMBER 30, 2023 FORM 10-Q 13


PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 4. Earnings Per Share
The components of basic and diluted earnings per share (“EPS”) for common shares were as follows:
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
(in millions, except per share data)
Numerator
Net income$3,198 $2,499 $8,404 $7,405 
Denominator
Basic weighted-average shares outstanding941 965 947 971 
Dilutive stock options and stock units2 3 2 3 
Diluted weighted-average shares outstanding 1
943 968 949 974 
Earnings per Share
Basic$3.40 $2.59 $8.88 $7.63 
Diluted$3.39 $2.58 $8.85 $7.60 
Note: Table may not sum due to rounding.
1    For the periods presented, the calculation of diluted EPS excluded a minimal amount of anti-dilutive share-based payment awards.
Note 5. Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents
The following table provides the components of cash, cash equivalents, restricted cash and restricted cash equivalents reported on the consolidated balance sheet that total to the amounts shown on the consolidated statement of cash flows.
September 30,
2023
December 31,
2022
(in millions)
Cash and cash equivalents$6,890 $7,008 
Restricted cash and restricted cash equivalents
Restricted cash for litigation settlement 1
 589 
Restricted security deposits held for customers1,824 1,568 
Prepaid expenses and other current assets28 31 
Cash, cash equivalents, restricted cash and restricted cash equivalents$8,742 $9,196 
1During the three months ended September 30, 2023, the Company reduced its Restricted cash for litigation settlement balance by $600 million, including accrued interest, as a settlement became final in August 2023. See Note 15 (Legal and Regulatory Proceedings) for additional information regarding the Company’s restricted cash for litigation settlement.
Note 6. Investments
The Company’s investments on the consolidated balance sheet include both available-for-sale and held-to-maturity debt securities (see Investments section below). The Company classifies its investments in equity securities of publicly traded and privately held companies within other assets on the consolidated balance sheet (see Equity Investments section below).
Investments
Investments on the consolidated balance sheet consisted of the following:
September 30,
2023
December 31,
2022
(in millions)
Available-for-sale securities 1
$276 $272 
Held-to-maturity securities 2
326 128 
Total investments $602 $400 
1See Available-for-Sale Securities section below for further detail.
2Held-to-maturity securities represent investments in time deposits that mature within one year. The cost of these securities approximates fair value.

14 MASTERCARD SEPTEMBER 30, 2023 FORM 10-Q


PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Investment income on the consolidated statement of operations primarily consists of interest income generated from cash, cash equivalents, held-to maturity and available-for-sale investment securities, as well as realized gains and losses on the Company’s investment securities. The realized gains and losses from the sales of available-for-sale securities for the three and nine months ended September 30, 2023 and 2022 were not material.
Available-for-Sale Securities
The major classes of the Company’s available-for-sale investment securities and their respective amortized cost basis and fair values were as follows:
 September 30, 2023December 31, 2022
 Amortized
Cost
Gross
Unrealized
Gain
Gross
Unrealized
Loss
Fair
Value
Amortized
Cost
Gross
Unrealized
Gain
Gross
Unrealized
Loss
Fair
Value
(in millions)
Government and agency securities$93 $ $(1)$92 $91 $ $(2)$89 
Corporate securities186  (2)184 187  (4)183 
Total$279 $ $(3)$276 $278 $ $(6)$272 
The Company’s government and agency securities include U.S. government bonds, U.S. government sponsored agency bonds and foreign government bonds which are denominated in the national currency of the issuing country. Corporate available-for-sale investment securities held at September 30, 2023 and December 31, 2022 primarily carried a credit rating of A- or better. Corporate securities are comprised of commercial paper and corporate bonds. Unrealized gains and losses are recorded as a separate component of other comprehensive income (loss) on the consolidated statement of comprehensive income.
The maturity distribution based on the contractual terms of the Company’s available-for-sale investment securities at September 30, 2023 was as follows:
 
 Amortized CostFair Value
 (in millions)
Due within 1 year$161 $160 
Due after 1 year through 5 years118 116 
Total$279 $276 
Equity Investments
Included in other assets on the consolidated balance sheet are equity investments with readily determinable fair values (“Marketable securities”) and equity investments without readily determinable fair values (“Nonmarketable securities”). Marketable securities are equity interests in publicly traded companies and are measured using unadjusted quoted prices in their respective active markets. Nonmarketable securities that do not qualify for equity method accounting are measured at cost, less any impairment and adjusted for changes resulting from observable price changes in orderly transactions for the identical or similar investments of the same issuer (“Measurement alternative”).
The following table is a summary of the activity related to the Company’s equity investments:
 Balance at December 31, 2022PurchasesSales
Changes in Fair Value 1
Other 2
Balance at September 30, 2023
(in millions)
Marketable securities $399 $ $ $58 $ $457 
Nonmarketable securities1,331 61 (44)(153)(2)1,193 
Total equity investments $1,730 $61 $(44)$(95)$(2)$1,650 
1Recorded in gains (losses) on equity investments, net on the consolidated statement of operations.
2Includes translational impact of currency.

MASTERCARD SEPTEMBER 30, 2023 FORM 10-Q 15


PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table sets forth the components of the Company’s Nonmarketable securities:
September 30,
2023
December 31,
2022
(in millions)
Measurement alternative
$985 $1,087 
Equity method
208 244 
Total Nonmarketable securities$1,193 $1,331 
The following table summarizes the total carrying value of the Company’s Measurement alternative investments, including cumulative unrealized gains and losses through September 30, 2023:
(in millions)
Initial cost basis
$534 
Cumulative adjustments 1:
Upward adjustments629 
Downward adjustments (including impairment)(178)
Carrying amount, end of period$985 
1 Includes immaterial translational impact of currency.
The following table summarizes the unrealized gains and losses included in the carrying value of the Company’s Measurement alternative investments and Marketable securities:
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
(in millions)
Measurement alternative investments:
Upward adjustments$1 $4 $7 $107 
Downward adjustments (including impairment)(7) (142)(12)
Marketable securities:
Unrealized gains (losses), net3 79 58 (209)
Note 7. Fair Value Measurements
The Company’s financial instruments are carried at fair value, cost or amortized cost on the consolidated balance sheet. The Company classifies its fair value measurements of financial instruments into a three-level hierarchy (the “Valuation Hierarchy”).
Financial Instruments - Carried at Fair Value
Financial instruments carried at fair value are categorized for fair value measurement purposes as recurring or non-recurring in nature.

16 MASTERCARD SEPTEMBER 30, 2023 FORM 10-Q


PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Recurring Measurements
The distribution of the Company’s financial instruments measured at fair value on a recurring basis within the Valuation Hierarchy were as follows:
 September 30, 2023December 31, 2022
 Quoted Prices
in Active
Markets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
TotalQuoted Prices
in Active
Markets
(Level 1)
Significant
Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Total
(in millions)
Assets
Investment securities available-for-sale 1:
Government and agency securities$37 $55 $ $92 $35 $54 $ $89 
Corporate securities 184  184  183  183 
Derivative instruments 2:
Foreign exchange contracts 120  120  108  108 
Marketable securities 3:
Equity securities457   457 399   399 
Deferred compensation plan 4:
Deferred compensation assets84   84 74   74 
Liabilities
Derivative instruments 2:
Foreign exchange contracts$ $22 $ $22 $ $21 $ $21 
Interest rate contracts  109  109  105  105 
Deferred compensation plan 5:
Deferred compensation liabilities83   83 73   73 
1The Company’s U.S. government securities are classified within Level 1 of the Valuation Hierarchy as the fair values are based on unadjusted quoted prices for identical assets in active markets. The fair value of the Company’s available-for-sale non-U.S. government and agency securities and corporate securities are based on observable inputs such as quoted prices, benchmark yields and issuer spreads for similar assets in active markets and are therefore included in Level 2 of the Valuation Hierarchy.
2The Company’s foreign exchange and interest rate derivative asset and liability contracts have been classified within Level 2 of the Valuation Hierarchy as the fair value is based on observable inputs such as broker quotes for similar derivative instruments. See Note 17 (Derivative and Hedging Instruments) for further details.
3The Company’s Marketable securities are publicly held and classified within Level 1 of the Valuation Hierarchy as the fair values are based on unadjusted quoted prices in their respective active markets.
4The Company has a nonqualified deferred compensation plan where assets are invested primarily in mutual funds held in a rabbi trust, which is restricted for payments to participants of the plan. The Company has elected to use the fair value option for these mutual funds and are classified within Level 1 of the Valuation Hierarchy, which are measured using quoted prices of identical instruments in active markets and are included in prepaid expenses and other current assets on the consolidated balance sheet.
5The deferred compensation liabilities are classified within Level 1 of the Valuation Hierarchy as the fair value is measured based on the quoted prices of identical instruments to the investment vehicles selected by the participants. These are included in other liabilities on the consolidated balance sheet.
Nonrecurring Measurements
Nonmarketable Securities
The Company’s Nonmarketable securities are recorded at fair value on a nonrecurring basis in periods after initial recognition under the equity method or measurement alternative method. Nonmarketable securities are classified within Level 3 of the Valuation Hierarchy due to the absence of quoted market prices, the inherent lack of liquidity and unobservable inputs used to measure fair value that require management’s judgment. The Company uses discounted cash flows and market assumptions to estimate the fair value of its Nonmarketable securities when certain events or circumstances indicate that impairment may exist. See Note 6 (Investments) for further details.

MASTERCARD SEPTEMBER 30, 2023 FORM 10-Q 17


PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Financial Instruments - Not Carried at Fair Value
Debt
Debt instruments are carried on the consolidated balance sheet at amortized cost. The Company estimates the fair value of its debt based on either market quotes or observable market data. Debt is classified as Level 2 of the Valuation Hierarchy as it is generally not traded in active markets. At September 30, 2023, the carrying value and fair value of debt was $15.6 billion and $13.8 billion, respectively. At December 31, 2022, the carrying value and fair value of debt was $14.0 billion and $12.7 billion, respectively. See Note 10 (Debt) for further details.
Other Financial Instruments
Certain other financial instruments are carried on the consolidated balance sheet at cost or amortized cost basis, which approximates fair value due to their short-term, highly liquid nature. These instruments include cash and cash equivalents, restricted cash, time deposits, accounts receivable, settlement assets, restricted security deposits held for customers, accounts payable, settlement obligations and other accrued liabilities.
Note 8. Prepaid Expenses and Other Assets
Prepaid expenses and other current assets consisted of the following:
September 30,
2023
December 31,
2022
(in millions)
Customer and merchant incentives$1,533 $1,392 
Prepaid income taxes24 34 
Other1,067 920 
Total prepaid expenses and other current assets$2,624 $2,346 
Other assets consisted of the following:
September 30,
2023
December 31,
2022
(in millions)
Customer and merchant incentives$4,917 $4,578 
Equity investments1,650 1,730 
Income taxes receivable654 633 
Other618 639 
Total other assets$7,839 $7,580 
Customer and merchant incentives represent payments made to customers and merchants under business agreements. Payments made directly related to entering into such an agreement are generally capitalized and amortized over the life of the agreement.
Note 9. Accrued Expenses and Accrued Litigation
Accrued expenses consisted of the following:
September 30,
2023
December 31,
2022
 (in millions)
Customer and merchant incentives$5,667 $5,600 
Personnel costs996 1,322 
Income and other taxes555 279 
Other557 600 
Total accrued expenses$7,775 $7,801 
Customer and merchant incentives represent amounts to be paid to customers under business agreements. As of September 30, 2023 and December 31, 2022, long-term customer and merchant incentives included in other liabilities were $2,542 million and $2,293 million, respectively.

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ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
As of September 30, 2023 and December 31, 2022, the Company’s provision for litigation was $475 million and $1,094 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 during the nine months ended September 30, 2023 is primarily due to a $600 million decrease in the Company’s provision for litigation after a settlement became final in August 2023. See Note 15 (Legal and Regulatory Proceedings) for additional information regarding the Company’s accrued litigation.

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ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 10. Debt
Debt consisted of the following:
September 30,
2023
December 31,
2022
Effective
Interest Rate
(in millions)
Senior Notes
2023 USD Notes4.875 %Senior Notes due March 2028$750 $ 5.003 %
4.850 %Senior Notes due March 2033750  4.923 %
2022 EUR Notes 1
1.000 %Senior Notes due February 2029794 800 1.138 %
2021 USD Notes2.000 %Senior Notes due November 2031750 750 2.112 %
1.900 %Senior Notes due March 2031600 600 1.981 %
2.950 %Senior Notes due March 2051700 700 3.013 %
2020 USD Notes3.300 %Senior Notes due March 20271,000 1,000 3.420 %
3.350 %Senior Notes due March 20301,500 1,500 3.430 %
3.850 %Senior Notes due March 20501,500 1,500 3.896 %
2019 USD Notes2.950 %Senior Notes due June 20291,000 1,000 3.030 %
3.650 %Senior Notes due June 20491,000 1,000 3.689 %
2.000 %Senior Notes due March 2025750 750 2.147 %
2018 USD Notes3.500 %Senior Notes due February 2028500 500 3.598 %
3.950 %Senior Notes due February 2048500 500 3.990 %
2016 USD Notes2.950 %Senior Notes due November 2026750 750 3.044 %
3.800 %Senior Notes due November 2046600 600 3.893 %
2015 EUR Notes 2
2.100 %Senior Notes due December 2027846 854 2.189 %
2.500 %Senior Notes due December 2030159 160 2.562 %
2014 USD Notes3.375 %Senior Notes due April 20241,000 1,000 3.484 %
Other Debt
2023 INR Term Loan 3
9.430 %Term Loan due July 2024338  9.780 %
2022 INR Term Loan 4
8.640 %Term Loan due July 2023 275 9.090 %
15,787 14,239 
Less: Unamortized discount and debt issuance costs(112)(111)
Less: Cumulative hedge accounting fair value adjustments 5
(109)(105)
Total debt outstanding15,566 14,023 
Less: Short-term debt 6
(1,337)(274)
Long-term debt$14,229 $13,749 
1750 million euro-denominated debt issued in February 2022.
2950 million euro-denominated debt remaining of the €1.650 billion issued in December 2015.
3 INR28.1 billion Indian rupee-denominated loan issued in July 2023.
4 INR22.7 billion Indian rupee-denominated loan issued in July 2022.
5 The Company has an interest rate swap which is accounted for as a fair value hedge. See Note 17 (Derivative and Hedging Instruments) for additional information.
6 The 2014 USD Notes due April 2024 and the INR Term Loan due July 2024 are classified as short-term debt on the consolidated balance sheet as of September 30, 2023. The 2022 INR Term Loan due July 2023 was classified as short-term debt on the consolidated balance sheet as of December 31, 2022.

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ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Senior Notes
In March 2023, the Company issued $750 million principal amount of notes due March 2028 and $750 million principal amount of notes due March 2033 (collectively the “2023 USD Notes”). The net proceeds from the issuance of the 2023 USD Notes, after deducting the original issue discount, underwriting discount and offering expenses, were $1.489 billion.
The Senior Notes described above are not subject to any financial covenants and may be redeemed in whole, or in part, at the Company’s option at any time for a specified make-whole amount. These notes are senior unsecured obligations and would rank equally with any future unsecured and unsubordinated indebtedness.
Indian Rupee (“INR”) Term Loan
In July 2022, the Company entered into an unsecured INR22.7 billion term loan ($285 million as of the date of settlement) originally due July 2023 (the “2022 INR Term Loan”). The net proceeds of the 2022 INR Term Loan, after deducting issuance costs, were INR22.6 billion ($284 million as of the date of settlement).
In April 2023, the Company entered into an additional unsecured INR4.97 billion term loan, also originally due July 2023 (the “April 2023 INR Term Loan”). The stated interest rate and effective interest rate were 9.480% and 9.705%, respectively. The net proceeds of the April 2023 INR Term Loan, after deducting issuance costs, were INR4.96 billion ($61 million as of the date of settlement).
In July 2023, the Company modified and combined the 2022 INR Term Loan and April 2023 INR Term Loan (the “2023 INR Term Loan”), increasing the total unsecured loans to INR28.1 billion ($342 million as of the date of settlement). The 2023 INR Term Loan is due July 2024.
The Company obtained the INR Term Loans to serve as economic hedges to offset possible changes in the value of INR-denominated monetary assets due to foreign exchange fluctuations. The INR Term Loans are not subject to any financial covenants and they may be repaid in whole at the Company’s option at any time for a specified make-whole amount.
Note 11. Stockholders' Equity
Dividends
The Company declared quarterly cash dividends on its Class A and Class B common stock as summarized below: 
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
(in millions, except per share data)
Dividends declared per share $0.57 $0.49 $1.71 $1.47 
Total dividends declared$536 $472 $1,615 $1,423 

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ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Common Stock Activity
The following table presents the changes in the Company’s outstanding Class A and Class B common stock:
Three Months Ended September 30,
20232022
 Outstanding SharesOutstanding Shares
 Class AClass BClass AClass B
(in millions)
Balance at beginning of period935.9 7.4 960.0 7.7 
Purchases of treasury stock(4.8) (4.7) 
Share-based payments0.5  0.1  
Conversion of Class B to Class A common stock    
Balance at end of period931.6 7.4 955.4 7.7 
Nine Months Ended September 30,
20232022
 Outstanding SharesOutstanding Shares
 Class AClass BClass AClass B
(in millions)
Balance at beginning of period948.4 7.6 972.1 7.8 
Purchases of treasury stock(19.2) (18.3) 
Share-based payments2.2  1.5  
Conversion of Class B to Class A common stock0.2 (0.2)0.1 (0.1)
Balance at end of period931.6 7.4 955.4 7.7 
In December 2022 and November 2021, the Company’s Board of Directors approved share repurchase programs of its Class A common stock authorizing the Company to repurchase up to $9.0 billion and $8.0 billion, respectively. The following table summarizes the Company’s share repurchases of its Class A common stock:
Nine Months Ended September 30,
20232022
(in millions, except per share data)
Dollar-value of shares repurchased 1
$7,200 $6,339 
Shares repurchased19.2 18.3 
Average price paid per share$375.34 $345.54 
1The dollar-value of shares repurchased does not include a 1% excise tax that became effective January 1, 2023. The incremental tax is recorded in treasury stock on the consolidated balance sheet and is payable annually beginning in 2024.
As of September 30, 2023, the remaining authorization under the share repurchase programs approved by the Company’s Board of Directors was $5.0 billion.

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ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 12. Accumulated Other Comprehensive Income (Loss)
The changes in the balances of each component of accumulated other comprehensive income (loss), net of tax, for the nine months ended September 30, 2023 and 2022 were as follows:
December 31, 2022Increase / (Decrease)ReclassificationsSeptember 30, 2023
(in millions)
Foreign currency translation adjustments 1
$(1,414)$(105)$ $(1,519)
Translation adjustments on net investment hedges 2
309 41  350 
Cash flow hedges
Foreign exchange contracts 3
(8)(5)18 5 
Interest rate contracts(123) 4 (119)
Defined benefit pension and other postretirement plans(11)  (11)
Investment securities available-for-sale(6)3  (3)
Accumulated other comprehensive income (loss)$(1,253)$(66)$22 $(1,297)
December 31, 2021Increase / (Decrease)ReclassificationsSeptember 30, 2022
(in millions)
Foreign currency translation adjustments 1
$(739)$(1,412)$ $(2,151)
Translation adjustments on net investment hedges 2
34 601  635 
Cash flow hedges
Foreign exchange contracts 3
4 16 (11)9 
Interest rate contracts(128) 4 (124)
Defined benefit pension and other postretirement plans21  (1)20 
Investment securities available-for-sale(1)(5) (6)
Accumulated other comprehensive income (loss)$(809)$(800)$(8)$(1,617)
1During the nine months ended September 30, 2023, the increase in the accumulated other comprehensive loss related to foreign currency translation adjustments was driven primarily by the depreciation of the euro against the U.S. dollar. During the nine months ended September 30, 2022, the increase in the accumulated other comprehensive loss related to foreign currency translation adjustments was driven primarily by the depreciation of the euro and British pound against the U.S. dollar.
2During the nine months ended September 30, 2023, the increase in the accumulated other comprehensive gain related to the net investment hedges was driven by the depreciation of the euro against the U.S. dollar. During the nine months ended September 30, 2022, the increase in the accumulated other comprehensive gain related to the net investment hedges was driven by the depreciation of the euro against the U.S. dollar. See Note 17 (Derivative and Hedging Instruments) for additional information.
3Certain foreign exchange derivative contracts are designated as cash flow hedging instruments. Gains and losses resulting from changes in the fair value of these contracts are deferred in accumulated other comprehensive income (loss) and subsequently reclassified to the consolidated statement of operations when the underlying hedged transactions impact earnings. See Note 17 (Derivative and Hedging Instruments) for additional information.
Note 13. Share-Based Payments
During the nine months ended September 30, 2023, the Company granted the following awards under the Mastercard Incorporated 2006 Long Term Incentive Plan, amended and restated as of June 22, 2021 (the “LTIP”). The LTIP is a stockholder-approved plan that permits the grant of various types of equity awards to employees.
Grants in 2023Weighted-Average
Grant-Date
Fair Value
(in millions)(per option/unit)
Non-qualified stock options0.3$123 
Restricted stock units1.2$350 
Performance stock units0.2$365 
The Company uses the Black-Scholes option pricing model to determine the grant-date fair value of stock options and calculates the expected life and the expected volatility based on historical Mastercard information. The expected life of stock options granted in 2023 was estimated to be six years, while the expected volatility was determined to be 29.6%. These awards expire ten years from the date of grant and vest ratably over three years.

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The fair value of restricted stock units (“RSUs”) is determined and fixed on the grant date based on the Company’s Class A common stock price, adjusted for the exclusion of dividend equivalents. For RSUs granted in 2023, the awards generally vest ratably over three years.
The Company uses the Monte Carlo simulation valuation model to determine the grant-date fair value of performance stock units (“PSUs”) granted. PSUs vest after three years from the date of grant and are subject to a mandatory one-year deferral period, during which vested PSUs are eligible for dividend equivalents.
Compensation expense is recorded net of estimated forfeitures over the shorter of the vesting period or the date the individual becomes eligible to retire under the LTIP. The Company uses the straight-line method of attribution over the requisite service period for expensing equity awards.
Note 14. Income Taxes
The effective income tax rates were 15.0% and 18.6% for the three months ended September 30, 2023 and 2022, respectively. The lower effective income tax rate for the three months ended September 30, 2023, versus the comparable period in 2022, was primarily due to the Company’s ability to now claim more U.S. foreign tax credits generated in 2022 and 2023 resulting from Notice 2023-55 (the “Notice”), released by the U.S. Department of Treasury (“Treasury”) in the current period, partially offset by a $115 million discrete tax expense to establish a valuation allowance on the deferred tax asset related to U.S. foreign tax credits generated prior to 2022.
The effective income tax rates were 18.6% and 14.3% for the nine months ended September 30, 2023 and 2022, respectively. The higher effective income tax rate for the nine months ended September 30, 2023, versus the comparable period in 2022, was primarily due to changes in the valuation allowance associated with the deferred tax asset related to U.S. foreign tax credits. In 2022, the Company recognized a discrete tax benefit of $333 million to release the valuation allowance resulting from U.S. tax regulations published in the first quarter of 2022 (the “2022 Regulations”). In 2023, the treatment of foreign taxes paid under the 2022 Regulations changed due to the foreign tax legislation enacted in Brazil and the Notice released by Treasury. Therefore, the Company recognized a total $327 million discrete tax expense in 2023 to establish the valuation allowance. The discrete tax expense recognized in the nine months ended September 30, 2023 was partially offset by the Company’s ability to now claim more U.S. foreign tax credits generated in 2022 and 2023 due to the Notice.
As of September 30, 2023, the deferred tax asset related to U.S. foreign tax credits and corresponding valuation allowance is $575 million due to foreign tax legislation enacted in Brazil and the Notice. The valuation allowance relates to the Company’s ability to recognize future tax benefits associated with the carryforward of U.S. foreign tax credits generated in the current and prior periods. The recognition of the U.S. foreign tax credits is dependent upon the realization of future foreign source income in the appropriate foreign tax credit basket in accordance with U.S. federal income tax law.
The Company is subject to tax in the United States, Belgium, Singapore, the United Kingdom and various other foreign jurisdictions, as well as state and local jurisdictions. Uncertain tax positions are reviewed on an ongoing basis and are adjusted after considering facts and circumstances, including progress of tax audits, developments in case law and closing of statutes of limitation. Within the next twelve months, the Company believes that the resolution of certain federal, foreign and state and local examinations is reasonably possible and that a change in estimate, reducing unrecognized tax benefits, may occur. While such a change may be significant, it is not possible to provide a range of the potential change until the examinations progress further or the related statutes of limitation expire. The Company has effectively settled its U.S. federal income tax obligations through 2014. With limited exception, the Company is no longer subject to state and local or foreign examinations by tax authorities for years before 2011.
Note 15. Legal and Regulatory Proceedings
Mastercard is a party to legal and regulatory proceedings with respect to a variety of matters in the ordinary course of business.  Some of these proceedings are based on complex claims involving substantial uncertainties and unascertainable damages.  Accordingly, except as discussed below, it is not possible to determine the probability of loss or estimate damages, and therefore, Mastercard has not established reserves for any of these proceedings. When the Company determines that a loss is both probable and reasonably estimable, Mastercard records a liability and discloses the amount of the liability if it is material. When a material loss contingency is only reasonably possible, Mastercard does not record a liability, but instead discloses the nature and the amount of the claim, and an estimate of the loss or range of loss, if such an estimate can be made. Unless otherwise stated below with respect to these matters, Mastercard cannot provide an estimate of the possible loss or range of loss based on one or more of the following reasons: (1) actual or potential plaintiffs have not claimed an amount of monetary damages or the amounts are unsupportable or exaggerated, (2) the matters are in early stages, (3) there is uncertainty as to the outcome of pending appeals or motions, (4) there are significant factual issues to be resolved, (5) the proceedings involve multiple defendants or potential defendants whose share of any potential financial responsibility has yet to be determined and/or (6) there are novel legal issues presented. Furthermore, except as identified with respect to the matters below, Mastercard does not believe that the outcome of any individual existing legal or regulatory proceeding to which it is a party will have a material adverse effect on its results of operations, financial condition and overall business. However, an adverse judgment or other outcome or settlement with respect to any proceedings discussed below could result in fines or payments by Mastercard and/or could require Mastercard to change its business practices. In addition, an adverse outcome in a regulatory proceeding could lead to the filing of civil damage claims and possibly result in significant

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ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
damage awards. Any of these events could have a material adverse effect on Mastercard’s results of operations, financial condition and overall business.
Interchange Litigation and Regulatory Proceedings
Mastercard’s interchange fees and other practices are subject to regulatory, legal review and/or challenges in a number of jurisdictions, including the proceedings described below. When taken as a whole, the resulting decisions, regulations and legislation with respect to interchange fees and acceptance practices may have a material adverse effect on the Company’s prospects for future growth and its overall results of operations, financial position and cash flows.
United States. In June 2005, the first of a series of complaints were filed on behalf of merchants (the majority of the complaints were styled as class actions, although a few complaints were filed on behalf of individual merchant plaintiffs) against Mastercard International, Visa U.S.A., Inc., Visa International Service Association and a number of financial institutions. Taken together, the claims in the complaints were generally brought under both Sections 1 and 2 of the Sherman Act, which prohibit monopolization and attempts or conspiracies to monopolize a particular industry, and some of these complaints contain unfair competition law claims under state law. The complaints allege, among other things, that Mastercard, Visa, and certain financial institutions conspired to set the price of interchange fees, enacted point of sale acceptance rules (including the “no surcharge” rule) in violation of antitrust laws and engaged in unlawful tying and bundling of certain products and services, resulting in merchants paying excessive costs for the acceptance of Mastercard and Visa credit and debit cards. The cases were consolidated for pre-trial proceedings in the U.S. District Court for the Eastern District of New York in MDL No. 1720 (the “U.S. MDL Litigation Cases”). The plaintiffs filed a consolidated class action complaint seeking treble damages.
In July 2006, the group of purported merchant class plaintiffs filed a supplemental complaint alleging that Mastercard’s initial public offering of its Class A Common Stock in May 2006 (the “IPO”) and certain purported agreements entered into between Mastercard and financial institutions in connection with the IPO: (1) violate U.S. antitrust laws and (2) constituted a fraudulent conveyance because the financial institutions allegedly attempted to release, without adequate consideration, Mastercard’s right to assess them for Mastercard’s litigation liabilities. The class plaintiffs sought treble damages and injunctive relief including, but not limited to, an order reversing and unwinding the IPO.
In February 2011, Mastercard and Mastercard International entered into each of: (1) an omnibus judgment sharing and settlement sharing agreement with Visa Inc., Visa U.S.A. Inc. and Visa International Service Association and a number of financial institutions; and (2) a Mastercard settlement and judgment sharing agreement with a number of financial institutions.  The agreements provide for the apportionment of certain costs and liabilities which Mastercard, the Visa parties and the financial institutions may incur, jointly and/or severally, in the event of an adverse judgment or settlement of one or all of the U.S. MDL Litigation Cases. Among a number of scenarios addressed by the agreements, in the event of a global settlement involving the Visa parties, the financial institutions and Mastercard, Mastercard would pay 12% of the monetary portion of the settlement. In the event of a settlement involving only Mastercard and the financial institutions with respect to their issuance of Mastercard cards, Mastercard would pay 36% of the monetary portion of such settlement. 
In October 2012, the parties entered into a definitive settlement agreement with respect to the U.S. MDL Litigation Cases (including with respect to the claims related to the IPO) and the defendants separately entered into a settlement agreement with the individual merchant plaintiffs. The settlements included cash payments that were apportioned among the defendants pursuant to the omnibus judgment sharing and settlement sharing agreement described above. Mastercard also agreed to provide class members with a short-term reduction in default credit interchange rates and to modify certain of its business practices, including its no surcharge rule. The court granted final approval of the settlement in December 2013. Following an appeal by objectors and as a result of a reversal by the U.S. Court of Appeals for the Second Circuit, the district court divided the merchants’ claims into two separate classes - monetary damages claims (the “Damages Class”) and claims seeking changes to business practices (the “Rules Relief Class”). The court appointed separate counsel for each class.
In September 2018, the parties to the Damages Class litigation entered into a class settlement agreement to resolve the Damages Class claims, with merchants representing slightly more than 25% of the Damages Class interchange volume ultimately choosing to opt out of the settlement. The district court granted final approval of the Damages Class settlement in December 2019, which was upheld by the appellate court in March 2023 and became final in August 2023 pursuant to the terms of the agreement. Mastercard has commenced settlement negotiations with a number of the opt-out merchants and has reached settlements and/or agreements in principle to settle a number of these claims.
Separately, settlement negotiations with the Rules Relief Class are ongoing. Briefing on summary judgment motions in the Rules Relief Class and opt-out merchant cases was completed in December 2020. In September 2021, the district court granted the Rules Relief Class’s motion for class certification.
As of September 30, 2023 and December 31, 2022, Mastercard had accrued a liability of $464 million and $894 million, respectively, as a reserve for the U.S. MDL Litigation Cases. During the third quarter of 2023, Mastercard reduced both the accrued liability and restricted cash for litigation settlement by $600 million, including accrued interest, as the Damages Class settlement became final in August 2023. As of September 30, 2023 and December 31, 2022, Mastercard had no balance and $589 million, respectively, in a qualified cash settlement fund related to the Damages Class litigation and classified as restricted cash on its consolidated balance sheet. During the first quarter of

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2023, Mastercard recorded an additional accrual of $211 million as a result of a change in estimate with respect to the claims of merchants who opted out of the Damages Class litigation. The reserve as of September 30, 2023 for the opt-out merchants represents Mastercard’s best estimate of its probable liabilities in these matters and does not represent an estimate of a loss, if any, if the matters were litigated to a final outcome. Mastercard cannot estimate the potential liability if that were to occur.
Europe. Since May 2012, a number of United Kingdom (“U.K.”) merchants filed claims or threatened litigation against Mastercard seeking damages for excessive costs paid for acceptance of Mastercard credit and debit cards arising out of alleged anti-competitive conduct with respect to, among other things, Mastercard’s cross-border interchange fees and its U.K. and Ireland domestic interchange fees (the “U.K. Merchant claimants”). In addition, Mastercard has faced similar filed or threatened litigation by merchants with respect to interchange rates in other countries in Europe (the “Pan-European Merchant claimants”). Mastercard has resolved a substantial amount of these damages claims through settlement or judgment. Following these settlements, approximately £1.1 billion (approximately $1.4 billion as of September 30, 2023) of unresolved damages claims remain.
Mastercard continues to litigate with the remaining U.K. and Pan-European Merchant claimants and it has submitted statements of defense disputing liability and damages claims. A number of those matters are now progressing with motion practice and discovery. A hearing involving multiple merchant cases is scheduled for February 2024 concerning certain liability issues with respect to merchant claims for damages with respect to post-Interchange Fee Regulation consumer interchange fees as well as commercial and inter-regional interchange fees.
In a separate matter, Mastercard and Visa were served with a proposed collective action complaint in the U.K. on behalf of merchants seeking damages for commercial card transactions and inter-regional consumer card transactions in both the U.K. and the European Union. The plaintiffs have claimed damages against Mastercard of approximately £0.5 billion (approximately $0.6 billion as of September 30, 2023). In June 2023, the court denied the plaintiffs’ collective action application but provided the plaintiffs with an opportunity to file a revised application for certification. The plaintiffs have indicated that they plan to file a revised application in December 2023 and the court has scheduled a hearing on the application for April 2024.
In September 2016, a proposed collective action was filed in the United Kingdom on behalf of U.K. consumers seeking damages for intra-EEA and domestic U.K. interchange fees that were allegedly passed on to consumers by merchants between 1992 and 2008. The complaint, which seeks to leverage the European Commission’s 2007 decision on intra-EEA interchange fees, claims damages in an amount that exceeds £10 billion (approximately $12 billion as of September 30, 2023). Following various hearings since July 2017 regarding collective action and scope, in August 2021, the trial court issued a decision in which it granted class certification to the plaintiffs but narrowed the scope of the class. In January 2023, the trial court held a hearing on Mastercard’s request to narrow the number of years of damages sought by the plaintiffs on statute of limitations grounds. In July 2023, the trial court held an additional hearing regarding whether any causal connection existed between the levels of Mastercard’s intra-EEA interchange fees and U.K. domestic interchange fees.
Mastercard has been named as a defendant in a proposed consumer collective action filed in Portugal on behalf of Portuguese consumers. The complaint, which seeks to leverage the 2019 resolution of the European Commission’s investigation of Mastercard’s central acquiring rules and interregional interchange fees, claims damages of approximately €0.4 billion (approximately $0.4 billion as of September 30, 2023) for interchange fees that were allegedly passed on to consumers by Portuguese merchants for a period of approximately 20 years. Mastercard has submitted a statement of defense that disputes both liability and damages.
In April 2023, the Serbian Competition Commission issued a Statement of Objections (“SO”) against Mastercard. The SO covers historic domestic interchange fees from 2013 to 2018. The SO seeks monetary fines and costs but no business practices changes.
Australia. In May 2022, the Australian Competition & Consumer Commission (“ACCC”) filed a complaint targeting certain agreements entered into by Mastercard and certain Australian merchants related to Mastercard’s debit program. The ACCC alleges that by entering into such agreements, Mastercard engaged in conduct with the purpose of substantially lessening competition in the supply of debit card acceptance services. The ACCC seeks both declaratory relief and monetary fines and costs. A hearing on liability issues has been scheduled for March 2025.
ATM Non-Discrimination Rule Surcharge Complaints
United States. In October 2011, a trade association of independent Automated Teller Machine (“ATM”) operators and 13 independent ATM operators filed a complaint styled as a class action lawsuit in the U.S. District Court for the District of Columbia against both Mastercard and Visa (the “ATM Operators Complaint”).  Plaintiffs seek to represent a class of non-bank operators of ATM terminals that operate in the United States with the discretion to determine the price of the ATM access fee for the terminals they operate. Plaintiffs allege that Mastercard and Visa have violated Section 1 of the Sherman Act by imposing rules that require ATM operators to charge non-discriminatory ATM surcharges for transactions processed over Mastercard’s and Visa’s respective networks that are not greater than the surcharge for transactions over other networks accepted at the same ATM.  Plaintiffs seek both injunctive and monetary relief equal to treble the damages they claim to have sustained as a result of the alleged violations and their costs of suit, including attorneys’ fees. 
Subsequently, multiple related complaints were filed in the U.S. District Court for the District of Columbia alleging both federal antitrust and multiple state unfair competition, consumer protection and common law claims against Mastercard and Visa on behalf of putative classes of users of ATM services (the “ATM Consumer Complaints”). The claims in these actions largely mirror the allegations made in the ATM

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Operators Complaint, although these complaints seek damages on behalf of consumers of ATM services who pay allegedly inflated ATM fees at both bank and non-bank ATM operators as a result of the defendants’ ATM rules. Plaintiffs seek both injunctive and monetary relief equal to treble the damages they claim to have sustained as a result of the alleged violations and their costs of suit, including attorneys’ fees. 
In January 2012, the plaintiffs in the ATM Operators Complaint and the ATM Consumer Complaints filed amended class action complaints that largely mirror their prior complaints. In September 2019, the plaintiffs filed with the district court their motions for class certification in which the plaintiffs, in aggregate, allege over $1 billion in damages against all of the defendants. In August 2021, the trial court issued an order granting the plaintiffs’ request for class certification. In July 2023, the D.C. Circuit Court affirmed the district court order granting class certification, and subsequently denied Mastercard’s request for an appeal of that decision to all D.C. Circuit Court judges.
Europe. Mastercard was named as a defendant in an action brought by Euronet 360 Finance Limited, Euronet Polska Spolka z.o.o. and Euronet Services spol. s.r.o. (“Euronet”) alleging that certain rules affecting ATM access fees in Poland, the Czech Republic and Greece by Visa and Mastercard, and certain of their subsidiaries, breach various competition laws. Euronet sought damages, costs and injunctive relief to prevent the defendants from enforcing these rules. The matter was resolved via a settlement in October 2023.
U.S. Liability Shift Litigation
In March 2016, a proposed U.S. merchant class action complaint was filed in federal court in California alleging that Mastercard, Visa, American Express and Discover (the “Network Defendants”), EMVCo, and a number of issuing banks (the “Bank Defendants”) engaged in a conspiracy to shift fraud liability for card present transactions from issuing banks to merchants not yet in compliance with the standards for EMV chip cards in the United States (the “EMV Liability Shift”), in violation of the Sherman Act and California law. Plaintiffs allege damages equal to the value of all chargebacks for which class members became liable as a result of the EMV Liability Shift on October 1, 2015. The plaintiffs seek treble damages, attorney’s fees and costs and an injunction against future violations of governing law, and the defendants filed a motion to dismiss. In September 2016, the district court denied the Network Defendants’ motion to dismiss the complaint, but granted such a motion for EMVCo and the Bank Defendants. In May 2017, the district court transferred the case to New York so that discovery could be coordinated with the U.S. MDL Litigation Cases described above. In August 2020, the district court issued an order granting the plaintiffs’ request for class certification and in January 2021, the Network Defendants’ request for permission to appeal that decision was denied. The plaintiffs have submitted expert reports that allege aggregate damages in excess of $1 billion against the four Network Defendants. The Network Defendants have submitted expert reports rebutting both liability and damages. Briefing on summary judgment concluded.
Telephone Consumer Protection Class Action
Mastercard is a defendant in a Telephone Consumer Protection Act (“TCPA”) class action pending in Florida. The plaintiffs are individuals and businesses who allege that approximately 381,000 unsolicited faxes were sent to them advertising a Mastercard co-brand card issued by First Arkansas Bank (“FAB”). The TCPA provides for uncapped statutory damages of $500 per fax. Mastercard has asserted various defenses to the claims, and has notified FAB of an indemnity claim that it has (which FAB has disputed). In December 2019, the Federal Communications Commission (“FCC”) issued a declaratory ruling clarifying that the TCPA does not apply to faxes sent to online fax services that are received online via email. In December 2021, the trial court granted plaintiffs’ request for class certification, but narrowed the scope of the class to stand alone fax recipients only. Mastercard’s request to appeal that decision was denied. Briefing on plaintiffs’ motion to amend the class definition and Mastercard’s cross-motion to decertify the stand alone fax recipient class was completed in April 2023.
U.S. Federal Trade Commission Investigation
In June 2020, the U.S. Federal Trade Commission’s Bureau of Competition (“FTC”) informed Mastercard that it initiated a formal investigation into compliance with the Durbin Amendment to the Dodd-Frank Wall Street Reform and Consumer Protection Act. In particular, the investigation focused on Mastercard’s compliance with the debit routing provisions of the Durbin Amendment.  In December 2022, the FTC voted to issue an administrative complaint and accept a consent agreement with Mastercard. Pursuant to this agreement, Mastercard agreed to provide primary account numbers (PANs) so that merchants can route tokenized online debit transactions to alternative networks. The consent agreement does not include any monetary penalty. Following a public comment period, the FTC finalized the consent agreement in May 2023.
U.S. Department of Justice Investigation
In March 2023, Mastercard received a Civil Investigative Demand (“CID”) from the U.S. Department of Justice Antitrust Division (“DOJ”) seeking documents and information regarding a potential violation of Sections 1 or 2 of the Sherman Act. The CID focuses on Mastercard’s U.S. debit program and competition with other payment networks and technologies. Mastercard is cooperating with the DOJ in connection with the CID.

MASTERCARD SEPTEMBER 30, 2023 FORM 10-Q 27


PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 16. Settlement and Other Risk Management
Mastercard’s rules guarantee the settlement of many of the transactions between its customers (“settlement risk”). Settlement exposure is the settlement risk to customers under Mastercard’s rules due to the difference in timing between the payment transaction date and subsequent settlement. For those transactions the Company guarantees, the guarantee will cover the full amount of the settlement obligation to the extent the settlement obligation is not otherwise satisfied. The duration of the settlement exposure is short-term and generally limited to a few days.
Gross settlement exposure is estimated using the average daily payment volume during the three months prior to period end multiplied by the estimated number of days of exposure. The Company has global risk management policies and procedures, which include risk standards, to provide a framework for managing the Company’s settlement risk and exposure. In the event of failed settlement by a customer, Mastercard may pursue one or more remedies available under the Company’s rules to recover potential losses. Historically, the Company has experienced a low level of losses from customer settlement failures.
As part of its policies, Mastercard requires certain customers that do not meet the Company’s risk standards to enter into risk mitigation arrangements, including cash collateral and/or forms of credit enhancement such as letters of credit and guarantees. This requirement is based on a review of the individual risk circumstances for each customer. Mastercard monitors its credit risk portfolio and the adequacy of its risk mitigation arrangements on a regular basis. Additionally, from time to time, the Company reviews its risk management methodology and standards. As such, the amounts of estimated settlement exposure are revised as necessary.
The Company’s estimated settlement exposure was as follows:
September 30,
2023
December 31,
2022
(in millions)
Gross settlement exposure
$73,134 $64,885 
Risk mitigation arrangements applied to settlement exposure 1
(11,141)(9,224)
Net settlement exposure 1
$61,993 $55,661 
1The Company corrected its estimated net settlement exposure as of December 31, 2022. The correction was not material to the net settlement exposures previously reported and had no impact to any of the Company’s financial statement line items.
Mastercard also provides guarantees to customers and certain other counterparties indemnifying them from losses stemming from failures of third parties to perform duties. This includes guarantees of Mastercard-branded travelers cheques issued, but not yet cashed of $337 million and $342 million at September 30, 2023 and December 31, 2022, respectively, of which the Company has risk mitigation arrangements for $269 million and $273 million at September 30, 2023 and December 31, 2022, respectively. In addition, the Company enters into agreements in the ordinary course of business under which the Company agrees to indemnify third parties against damages, losses and expenses incurred in connection with legal and other proceedings arising from relationships or transactions with the Company. Certain indemnifications do not provide a stated maximum exposure. As the extent of the Company’s obligations under these agreements depends entirely upon the occurrence of future events, the Company’s potential future liability under these agreements is not determinable. Historically, payments made by the Company under these types of contractual arrangements have not been material.
Note 17. Derivative and Hedging Instruments
The Company monitors and manages its foreign currency and interest rate exposures as part of its overall risk management program which focuses on the unpredictability of financial markets and seeks to reduce the potentially adverse effects that the volatility of these markets may have on its operating results. A primary objective of the Company’s risk management strategies is to reduce the financial impact that may arise from volatility in foreign currency exchange rates principally through the use of both foreign exchange derivative contracts and foreign currency denominated debt. In addition, the Company may enter into interest rate derivative contracts to manage the effects of interest rate movements on the Company’s aggregate liability portfolio, including potential future debt issuances. The Company does not enter into derivatives for speculative purposes.
Cash Flow Hedges
The Company may enter into foreign exchange derivative contracts, including forwards and options, to manage the impact of foreign currency variability on anticipated revenues and expenses, which fluctuate based on currencies other than the functional currency of the entity. The objective of these hedging activities is to reduce the effect of movement in foreign exchange rates for a portion of revenues and expenses forecasted to occur. As these contracts are designated as cash flow hedging instruments, gains and losses resulting from changes in fair value of these contracts are deferred in accumulated other comprehensive income (loss) and subsequently reclassified to the consolidated statement of operations when the underlying hedged transactions impact earnings.
In addition, the Company may enter into interest rate derivative contracts to manage the effects of interest rate movements on the Company’s aggregate liability portfolio, including potential future debt issuances, and designate such derivatives as hedging instruments in a

28 MASTERCARD SEPTEMBER 30, 2023 FORM 10-Q


PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
cash flow hedging relationship. Gains and losses resulting from changes in fair value of these contracts are deferred in accumulated other comprehensive income (loss) and are subsequently reclassified as an adjustment to interest expense over the respective terms of the hedged debt issuances.
Fair Value Hedges
The Company may enter into interest rate derivative contracts, including interest rate swaps, to manage the effects of interest rate movements on the fair value of the Company's fixed-rate debt and designate such derivatives as hedging instruments in a fair value hedging relationship. Changes in fair value of these contracts and changes in fair value of fixed-rate debt attributable to changes in the hedged benchmark interest rate generally offset each other and are recorded in interest expense on the consolidated statement of operations. Gains or losses related to the net settlements of interest rate swaps are also recorded in interest expense on the consolidated statement of operations. The periodic cash settlements are included in operating activities on the consolidated statement of cash flows.
In 2021, the Company entered into an interest rate swap designated as a fair value hedge related to $1.0 billion of the 3.850% Senior Notes due March 2050. In effect, the interest rate swap synthetically converts the fixed interest rate on this debt to a variable interest rate based on the Secured Overnight Financing Rate (“SOFR”) Overnight Index Swap Rate. The net impact to interest expense for the three and nine months ended September 30, 2023 and 2022 was not material.
Net Investment Hedges
The Company may use foreign currency denominated debt and/or foreign exchange derivative contracts to hedge a portion of its net investment in foreign subsidiaries against adverse movements in exchange rates. The effective portion of the net investment hedge is recorded as a currency translation adjustment in accumulated other comprehensive income (loss). Forward points are excluded from the effectiveness assessment and are recognized in general and administrative expenses on the consolidated statement of operations over the hedge period. The amounts recognized in earnings related to forward points for the three and nine months ended September 30, 2023 and 2022 were not material.
As of September 30, 2023 and December 31, 2022, the Company had €1.7 billion euro-denominated debt outstanding designated as hedges of a portion of its net investment in its European operations. For the three and nine months ended September 30, 2023 and 2022, the Company recorded pre-tax net foreign currency gains (losses) of $54 million and $15 million and $189 million and $388 million, respectively, in other comprehensive income (loss).
As of September 30, 2023 and December 31, 2022, the Company had net foreign currency gains of $350 million and $309 million, respectively, after tax, in accumulated other comprehensive income (loss) associated with this hedging activity.
Non-designated Derivatives
The Company may also enter into foreign exchange derivative contracts to serve as economic hedges, such as to offset possible changes in the value of monetary assets and liabilities due to foreign exchange fluctuations, without designating these derivative contracts as hedging instruments. In addition, the Company is subject to foreign exchange risk as part of its daily settlement activities. This risk is typically limited to a few days between when a payment transaction takes place and the subsequent settlement with customers. To manage this risk, the Company may enter into short duration foreign exchange derivative contracts based upon anticipated receipts and disbursements for the respective currency position. The objective of these activities is to reduce the Company’s exposure to volatility arising from gains and losses resulting from fluctuations of foreign currencies against its functional currencies. Gains and losses resulting from changes in fair value of these contracts are recorded in general and administrative expenses on the consolidated statement of operations, net, along with the foreign currency gains and losses on monetary assets and liabilities.

MASTERCARD SEPTEMBER 30, 2023 FORM 10-Q 29


PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table summarizes the fair value of the Company’s derivative financial instruments and the related notional amounts:
September 30, 2023December 31, 2022
 NotionalDerivative assetsDerivative liabilitiesNotionalDerivative assetsDerivative liabilities
(in millions)
Derivatives designated as hedging instruments
Foreign exchange contracts in a cash flow hedge 1
$1,055 $15 $9 $642 $4 $15 
Interest rate contracts in a fair value hedge 2
1,000  109 1,000  105 
Foreign exchange contracts in a net investment hedge 1
2,858 93  1,814 103 4 
Derivatives not designated as hedging instruments
Foreign exchange contracts 1
2,099 12 13 521 1 2 
Total derivative assets/liabilities$7,012 $120 $131 $3,977 $108 $126 
1Foreign exchange derivative assets and liabilities are included within prepaid expenses and other current assets and other current liabilities, respectively, on the consolidated balance sheet.
2Interest rate derivative liabilities are included within other current liabilities and other liabilities on the consolidated balance sheet.
The pre-tax gain (loss) related to the Company's derivative financial instruments designated as hedging instruments are as follows:
Gain (Loss)
Recognized in OCI
Gain (Loss)
Reclassified from AOCI
Three Months Ended September 30,Location of Gain (Loss) Reclassified from AOCI into EarningsThree Months Ended September 30,
2023202220232022
(in millions)(in millions)
Derivative financial instruments in a cash flow hedge relationship:
Foreign exchange contracts$17 $14 Net revenue$(10)$6 
Interest rate contracts$ $ Interest expense$(2)$(2)
Derivative financial instruments in a net investment hedge relationship:
Foreign exchange contracts$84 $183 
Gain (Loss)
Recognized in OCI
Gain (Loss)
Reclassified from AOCI
Nine Months Ended September 30,Location of Gain (Loss) Reclassified from AOCI into EarningsNine Months Ended September 30,
2023202220232022
(in millions)(in millions)
Derivative financial instruments in a cash flow hedge relationship:
Foreign exchange contracts$(7)$21 Net revenue$(24)$14 
Interest rate contracts$ $ Interest expense$(5)$(5)
Derivative financial instruments in a net investment hedge relationship:
Foreign exchange contracts $38 $384 
The Company estimates that the pre-tax amount of the net deferred loss on cash flow hedges recorded in accumulated other comprehensive income (loss) at September 30, 2023 that will be reclassified into the consolidated statement of operations within the next 12 months is not material. The term of the foreign exchange derivative contracts designated in hedging relationships are generally less than 18 months.

30 MASTERCARD SEPTEMBER 30, 2023 FORM 10-Q


PART I
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The amount of gain (loss) recognized on the consolidated statement of operations for non-designated derivative contracts is summarized below: 
 Three Months Ended September 30,Nine Months Ended September 30,
Derivatives not designated as hedging instruments:2023202220232022
(in millions)
Foreign exchange contracts
General and administrative$(4)$13 $21 $25 
The Company’s derivative financial instruments are subject to both market and counterparty credit risk. Market risk is the potential for economic losses to be incurred on market risk sensitive instruments arising from adverse changes in market factors such as foreign currency exchange rates, interest rates and other related variables. Counterparty credit risk is the risk of loss due to failure of the counterparty to perform its obligations in accordance with contractual terms. The Company’s derivative contracts are subject to enforceable master netting arrangements, which contain various netting and setoff provisions. However, the Company has elected to present derivative assets and liabilities on a gross basis on the consolidated balance sheet. To mitigate counterparty credit risk, the Company enters into derivative contracts with a diversified group of selected financial institutions based upon their credit ratings and other factors. Generally, the Company does not obtain collateral related to derivatives because of the high credit ratings of the counterparties.

MASTERCARD SEPTEMBER 30, 2023 FORM 10-Q 31


PART I
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Item 2. Management’s discussion and analysis of financial condition and results of operations
The following supplements management's discussion and analysis of Mastercard Incorporated for the year ended December 31, 2022 as contained in the Company's Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission on February 14, 2023. It also should be read in conjunction with the consolidated financial statements and notes of Mastercard Incorporated and its consolidated subsidiaries, including Mastercard International Incorporated (together, “Mastercard” or the “Company”), included elsewhere in this Report. Percentage changes provided throughout “Management’s Discussion and Analysis of Financial Condition and Results of Operations” were calculated on amounts rounded to the nearest thousand. During the fourth quarter of 2022, the Company updated its disaggregated net revenue presentation by category and geography to reflect the nature of its payment services and to align such information with the way in which management views its categories of net revenue. Prior period amounts have been reclassified to conform to the updated presentation. The reclassification had no impact on previously reported total net revenue, operating income or net income.

Financial Results Overview
The following table provides a summary of our key GAAP operating results, as reported:
Three Months Ended September 30,Increase/(Decrease)Nine Months Ended September 30,Increase/(Decrease)
2023202220232022
($ in millions, except per share data)
Net revenue$6,533 $5,756 14%$18,550 $16,420 13%
Operating expenses$2,689 $2,644 2%$7,914 $7,340 8%
Operating income$3,844 $3,112 24%$10,636 $9,080 17%
Operating margin58.8 %54.1 %4.8 ppt57.3 %55.3 %2.0 ppt
Income tax expense$563 $573 (2)%$1,914 $1,238 54%
Effective income tax rate15.0 %18.6 %(3.7) ppt18.6 %14.3 %4.2 ppt
Net income$3,198 $2,499 28%$8,404 $7,405 13%
Diluted earnings per share$3.39 $2.58 31%$8.85 $7.60 16%
Diluted weighted-average shares outstanding943 968 (3)%949 974 (3)%
Note: Table may not sum due to rounding.
The following table provides a summary of our key non-GAAP operating results1, adjusted to exclude the impact of gains and losses on our equity investments, Special Items (which represent litigation judgments and settlements and certain one-time items) and the related tax impacts on our non-GAAP adjustments. In addition, we have presented growth rates, adjusted for the impact of currency:
Three Months Ended September 30,Increase/(Decrease)Nine Months Ended September 30,Increase/(Decrease)
20232022As adjustedCurrency-neutral20232022As adjustedCurrency-neutral
($ in millions, except per share data)
Adjusted net revenue 2
$6,533 $5,756 14%11%$18,550 $16,383 13%14%
Adjusted operating expenses$2,689 $2,437 10%9%$7,683 $6,932 11%11%
Adjusted operating margin58.8 %57.7 %1.2 ppt0.8 ppt58.6 %57.7 %0.9 ppt0.8 ppt
Adjusted effective income tax rate15.0 %19.4 %(4.4) ppt(4.6) ppt19.0 %14.8 %4.2 ppt4.1 ppt
Adjusted net income$3,202 $2,595 23%21%$8,622 $7,794 11%11%
Adjusted diluted earnings per share$3.39 $2.68 26%24%$9.08 $8.00 14%14%
Note: Table may not sum due to rounding.
1    See “Non-GAAP Financial Information” for further information on our non-GAAP adjustments and the reconciliation to GAAP reported amounts.
2    For the three months ended September 30, 2023 and 2022, the amounts presented are GAAP reported amounts, not adjusted.

32 MASTERCARD SEPTEMBER 30, 2023 FORM 10-Q


PART I
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Key highlights for the three and nine months ended September 30, 2023, versus the comparable periods in 2022:
Net revenueAdjusted net revenue
Three Months Ended September 30, 2023
GAAPNon-GAAP
(currency-neutral)
Adjusted net revenue increased 11% on a currency-neutral basis. The increase was attributable to growth in both our payment network and value-added services and solutions.
up 14%up 11%
Nine Months Ended September 30, 2023
GAAPNon-GAAP
(currency-neutral)
Adjusted net revenue increased 14% on a currency-neutral basis. The increase was attributable to growth in both our payment network and value-added services and solutions.
up 13%up 14%
Operating expensesAdjusted
operating expenses
Three Months Ended September 30, 2023
GAAP
Non-GAAP
(currency-neutral)
Adjusted operating expenses increased 9% on a currency-neutral basis, which includes 1 percentage point of growth due to acquisitions. The increase was primarily due to higher personnel costs.
up 2%up 9%
Nine Months Ended September 30, 2023
GAAP
Non-GAAP
(currency-neutral)
Adjusted operating expenses increased 11% on a currency-neutral basis, which includes 1 percentage point of growth due to acquisitions. The increase was primarily due to higher personnel costs.
up 8%up 11%
Effective income
tax rate
Adjusted effective
income tax rate
Three Months Ended September 30, 2023
The adjusted effective income tax rate of 15.0% was lower than the prior year rate of 19.4% primarily due to our ability to now claim more U.S. foreign tax credits generated in 2022 and 2023, partially offset by the establishment of a valuation allowance in 2023 of $115 million.
GAAPNon-GAAP
15.0%15.0%
Nine Months Ended September 30, 2023
The adjusted effective income tax rate of 19.0% was higher than the prior year rate of 14.8% primarily due to the release of a $333 million valuation allowance in 2022 and the establishment of a $327 million valuation allowance in 2023, partially offset by the ability to now claim more U.S. foreign tax credits generated in 2022 and 2023.
GAAPNon-GAAP
18.6%19.0%
Other financial highlights for the nine months ended September 30, 2023 were as follows:
We generated net cash flows from operations of $7.9 billion.
We repurchased 19.2 million shares of our common stock for $7.2 billion and paid dividends of $1.6 billion.
We completed a debt offering for an aggregate principal amount of $1.5 billion.

MASTERCARD SEPTEMBER 30, 2023 FORM 10-Q 33


PART I
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Non-GAAP Financial Information
Non-GAAP financial information is defined as a numerical measure of a company’s performance that excludes or includes amounts so as to be different than the most comparable measure calculated and presented in accordance with accounting principles generally accepted in the United States (“GAAP”). Our non-GAAP financial measures exclude the impact of gains and losses on our equity investments which includes mark-to-market fair value adjustments, impairments and gains and losses upon disposition and the related tax impacts. Our non-GAAP financial measures also exclude the impact of special items, where applicable, which represent litigation judgments and settlements and certain one-time items, as well as the related tax impacts (“Special Items”). We also present growth rates adjusted for the impact of currency which is a non-GAAP financial measure. We believe that the non-GAAP financial measures presented facilitate an understanding of our operating performance and provide a meaningful comparison of our results between periods. We use non-GAAP financial measures to, among other things, evaluate our ongoing operations in relation to historical results, for internal planning and forecasting purposes and in the calculation of performance-based compensation. We excluded these Special Items because management evaluates the underlying operations and performance of the Company separately from these recurring and nonrecurring items. Net revenue, operating expenses, operating margin, other income (expense), effective income tax rate, net income and diluted earnings per share adjusted for the impact of gains and losses on our equity investments, Special Items and/or the impact of currency, should not be relied upon as substitutes for measures calculated in accordance with GAAP. Our non-GAAP financial measures for the comparable periods exclude the impact of the following:
Gains and Losses on Equity Investments
In the three and nine months ended September 30, 2023, we recorded net losses of $6 million ($5 million after tax, or an immaterial impact per diluted share) and $95 million ($63 million after tax, or $0.07 per diluted share), respectively, primarily related to unrealized fair market value adjustments on marketable and nonmarketable equity securities.
In the three and nine months ended September 30, 2022, we recorded net gains of $60 million ($66 million after tax, or $0.07 per diluted share) and net losses of $133 million ($114 million after tax, or $0.12 per diluted share), respectively, primarily related to unrealized fair market value adjustments on marketable and non-marketable equity securities.
Special Items
Litigation provisions
In the nine months ended September 30, 2023, we recorded charges of $231 million ($156 million after tax, or $0.16 per diluted share) primarily as a result of a change in estimate related to the claims of merchants who opted out of the U.S. merchant class litigation.
In the third quarter of 2022, we recorded charges of $208 million ($162 million after tax, or $0.17 per diluted share) as a result of developments in settlement discussions with certain U.K. merchants, including a settlement reached with one of those merchants.
In the second quarter of 2022, we recorded charges of $133 million ($89 million after tax, or $0.09 per diluted share) as a result of a change in estimate related to the claims of merchants who opted out of the U.S. merchant class litigation.

34 MASTERCARD SEPTEMBER 30, 2023 FORM 10-Q


PART I
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Russia-related impacts
In the nine months ended September 30, 2022, we recorded a net charge of $30 million ($24 million after tax, or $0.02 per diluted share), directly related to imposed sanctions and the suspension of our business operations in Russia. The net charge was comprised of general and administrative expenses of $67 million, primarily related to incremental employee-related costs and reserves on uncollectible balances with certain sanctioned customers. This charge was offset by net benefits of $37 million, in net revenue, primarily related to a reduction in payment network rebates and incentives liabilities as a result of lower estimates of customer performance for certain customer business agreements due to the suspension of our business operations in Russia.
See Note 6 (Investments) and Note 15 (Legal and Regulatory Proceedings) to the consolidated financial statements included in Part I, Item 1 of this Report and “Management Discussion and Analysis of Financial Condition and Results of Operations - Russia and Ukraine” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2022, for further discussion related to certain of our non-GAAP financial measures.
Currency-neutral Growth Rates
Currency-neutral growth rates are calculated by remeasuring the prior period’s results using the current period’s exchange rates for both the translational and transactional impacts on operating results. The impact of currency translation represents the effect of translating operating results where the functional currency is different than our U.S. dollar reporting currency. The impact of the transactional currency represents the effect of converting revenue and expenses occurring in a currency other than the functional currency of the entity. The impact of the related realized gains and losses resulting from our foreign exchange derivative contracts designated as cash flow hedging instruments is recognized in the respective financial statement line item on the statement of operations when the underlying forecasted transactions impact earnings. We believe the presentation of currency-neutral growth rates provides relevant information to facilitate an understanding of our operating results.
The translational and transactional impact of currency and the related impact of our foreign exchange derivative contracts designated as cash flow hedging instruments (“Currency impact”) has been excluded from our currency-neutral growth rates and has been identified in our “Drivers of Change” tables. See “Foreign Currency - Currency Impact” for further information on our currency impacts and “Financial Results - Net Revenue” and “Financial Results - Operating Expenses” for our "Drivers of Change” tables.

MASTERCARD SEPTEMBER 30, 2023 FORM 10-Q 35


PART I
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following tables reconcile our reported financial measures calculated in accordance with GAAP to the respective adjusted non-GAAP financial measures:
Three Months Ended September 30, 2023
Net revenue Operating expensesOperating marginOther income (expense)Effective income tax rate Net income Diluted earnings per share
($ in millions, except per share data)
Reported - GAAP$6,533 $2,689 58.8 %$(83)15.0 %$3,198 $3.39 
(Gains) losses on equity investments ** ****— %— 
Adjusted - Non-GAAP$6,533 $2,689 58.8 %$(78)15.0 %$3,202 $3.39 
Nine Months Ended September 30, 2023
Net revenue Operating expensesOperating marginOther income (expense)Effective income tax rate Net income Diluted earnings per share
($ in millions, except per share data)
Reported - GAAP$18,550 $7,914 57.3 %$(318)18.6 %$8,404 $8.85 
(Gains) losses on equity investments******95 0.1 %63 0.07 
Litigation provisions**(231)1.2 %**0.3 %156 0.16 
Adjusted - Non-GAAP$18,550 $7,683 58.6 %$(223)19.0 %$8,622 $9.08 
Three Months Ended September 30, 2022
Net revenue Operating expensesOperating marginOther income (expense)Effective income tax rate Net income Diluted earnings per share
($ in millions, except per share data)
Reported - GAAP$5,756 $2,644 54.1 %$(40)18.6 %$2,499 $2.58 
(Gains) losses on equity investments******(60)0.6 %(66)(0.07)
Litigation provisions**(208)3.6 %**0.2 %162 0.17 
Adjusted - Non-GAAP$5,756 $2,437 57.7 %$(99)19.4 %$2,595 $2.68 
Nine Months Ended September 30, 2022
Net revenue Operating expensesOperating marginOther income (expense)Effective income tax rate Net income Diluted earnings per share
($ in millions, except per share data)
Reported - GAAP$16,420 $7,340 55.3 %$(437)14.3 %$7,405 $7.60 
(Gains) losses on equity investments******133 — %114 0.12 
Litigation provisions**(341)2.1 %**0.5 %251 0.26 
Russia-related impacts(37)(67)0.3 %**— %24 0.02 
Adjusted - Non-GAAP$16,383 $6,932 57.7 %$(303)14.8 %$7,794 $8.00 
Note: Tables may not sum due to rounding.
**    Not applicable.

36 MASTERCARD SEPTEMBER 30, 2023 FORM 10-Q


PART I
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following tables represent the reconciliation of our growth rates reported under GAAP to our non-GAAP growth rates:
Three Months Ended September 30, 2023 as compared to the Three Months Ended September 30, 2022
Increase/(Decrease)
Net revenue Operating expensesOperating marginEffective income tax rate Net income Diluted earnings per share
Reported - GAAP14%2%4.8 ppt(3.7) ppt28%31%
(Gains) losses on equity investments******(0.6) ppt4%4%
Litigation provisions**9%(3.6) ppt(0.2) ppt(8)%(8)%
Adjusted - Non-GAAP14%10%1.2 ppt(4.4) ppt23%26%
Currency impact
(2)%(1)%(0.4) ppt(0.2) ppt(3)%(3)%
Adjusted - Non-GAAP - currency-neutral11%9%0.8 ppt(4.6) ppt21%24%
Nine Months Ended September 30, 2023 as compared to the Nine Months Ended September 30, 2022
Increase/(Decrease)
Net revenue Operating expensesOperating marginEffective income tax rate Net income Diluted earnings per share
Reported - GAAP13%8%2.0 ppt4.2 ppt13%16%
(Gains) losses on equity investments******0.1 ppt(1)%(1)%
Litigation provisions**2%(0.8) ppt(0.1) ppt(2)%(2)%
Russia-related impacts—%1%(0.2) ppt— ppt—%—%
Adjusted - Non-GAAP13%11%0.9 ppt4.2 ppt11%14%
Currency impact
—%—%(0.1) ppt(0.1) ppt—%—%
Adjusted - Non-GAAP - currency-neutral14%11%0.8 ppt4.1 ppt11%14%
Note: Tables may not sum due to rounding.
**    Not applicable.
Key Metrics and Drivers
In addition to the financial measures described above in “Financial Results Overview”, we review the following metrics to evaluate and identify trends in our business, measure our performance, prepare financial projections and make strategic decisions. We believe that the key metrics presented facilitate an understanding of our operating and financial performance and provide a meaningful comparison of our results between periods. 
Operating Margin measures how much profit we make on each dollar of sales after our operating costs but before other income (expense) and income tax expense. Operating margin is calculated by dividing our operating income by net revenue.
Key Drivers
Gross Dollar Volume (“GDV”)1 measures dollar volume of activity, including both domestic and cross-border volume, on cards carrying our brands during the period, on a local currency basis and U.S. dollar-converted basis. GDV represents purchase volume plus cash volume; “purchase volume” means the aggregate dollar amount of purchases made with Mastercard-branded cards for the relevant period; and “cash volume” means the aggregate dollar amount of cash disbursements and includes the impact of balance transfers and convenience checks obtained with Mastercard-branded cards for the relevant period. Information denominated in U.S. dollars relating to GDV is calculated by applying an established U.S. dollar/local currency exchange rate for each local currency in which our volumes are reported. These exchange rates are calculated on a quarterly basis using the average exchange rate for each quarter.  We report period-over-period rates of change in purchase volume and cash volume on the basis of local currency information, in order to eliminate the impact of changes in the value of currencies against the U.S. dollar in calculating such rates of change.
1    Data used in the calculation of GDV is provided by Mastercard customers and is subject to verification by Mastercard and partial cross-checking against information provided by Mastercard’s transaction switching systems. All data is subject to revision and amendment by Mastercard or Mastercard’s customers. Starting in the first quarter of 2022, data related to sanctioned Russian banks was not reported to us and therefore such amounts are not included. Subsequent to the suspension of our business operations in Russia in March 2022, there is no Russian data to be reported.

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Cross-border Volume Growth2 measures the growth of cross-border dollar volume during the period, on a local currency basis and U.S. dollar-converted basis, for all Mastercard-branded programs.
Switched Transactions2 measures the number of transactions switched by Mastercard, which is defined as the number of transactions initiated and switched through our network during the period.
2    Growth rates are normalized to eliminate the effects of differing switching and carryover days between periods, as needed. Carryover days are those where transactions and volumes from days where the Company does not clear and settle are processed.
The following tables provide a summary of the growth trends in our key drivers:
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
Increase/(Decrease)Increase/(Decrease)
USDLocalUSDLocalUSDLocalUSDLocal
Mastercard-branded GDV growth 1
11%11%4%12%10%13%8%14%
United States5%5%10%10%6%6%11%11%
Worldwide less United States14%13%1%12%12%16%6%16%
Cross-border volume growth 1
26%21%29%44%26%26%39%51%
Mastercard-branded GDV growth adjusted for Russia 1,2
11%11%9%18%11%13%12%19%
Worldwide less United States GDV growth adjusted for Russia 1,2
14%13%8%23%13%16%13%24%
Cross-border volume growth adjusted for Russia 1,2
26%21%33%50%27%27%42%55%
Three Months Ended September 30,Nine Months Ended September 30,
2023202220232022
Increase/(Decrease)Increase/(Decrease)
Switched transactions growth15%9%15%14%
Switched transactions growth adjusted for Russia 2
15%19%17%22%
1    Excludes volume generated by Maestro and Cirrus cards.
2    Starting in the first quarter of 2022, as a result of imposed sanctions and the suspension of our business operations in Russia, we have provided adjusted growth rates for our key drivers excluding activity from Russian issued cards from the prior periods. See “Management Discussion and Analysis of Financial Condition and Results of Operations - Russia and Ukraine” in Part II, Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2022 for further information.
Key Metrics related to the Payment Network
Assessments represent agreed-upon standard pricing provided to our customers based on various forms of payment-related activity. Assessments are used internally by management to monitor operating performance as it allows for comparability and provides visibility into cardholder trends. Assessments do not represent our net revenue.
The following provides additional information on our key metrics related to the payment network:
Domestic assessments are charges based on activity related to cards that carry the Company’s brands where the merchant country and the country of issuance are the same. These assessments are primarily driven by the domestic dollar volume of activity (e.g., domestic purchase volume, domestic cash volume) or the number of cards issued.
Cross-border assessments are charges based on activity related to cards that carry the Company’s brands where the merchant country and the country of issuance are different. These assessments are primarily driven by the cross-border dollar volume of activity (e.g., cross-border purchase volume, cross-border cash volume).

38 MASTERCARD SEPTEMBER 30, 2023 FORM 10-Q


PART I
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Transaction processing assessments are charges primarily driven by the number of switched transactions on our payment network. Switching activities include:
Authorization, the process by which a transaction is routed to the issuer for approval
Clearing, the determination and exchange of financial transaction information between issuers and acquirers after a transaction has been successfully conducted at the point of interaction
Settlement, which facilitates the determination and exchange of funds between parties
These assessments can also include connectivity services and network access which are based on the volume of data transmitted and the number of authorization and settlement messages.
Other network assessments are charges for licensing, implementation and other franchise fees.
The following table provides a summary of our key metrics related to the payment network:
Three Months Ended September 30,Increase/(Decrease)Nine Months Ended September 30,Increase/(Decrease)
20232022As reportedCurrency-neutral20232022As reportedCurrency-neutral
($ in millions)($ in millions)
Domestic assessments$2,460 $2,220 11%10%$7,182 $6,579 9%10%
Cross-border assessments2,313 1,804 28%26%6,211 4,806 29%31%
Transaction processing assessments3,172 2,786 14%11%8,902 7,815 14%14%
Other network assessments229 195 17%17%712 576 24%24%
Foreign Currency
Currency Impact
Our primary revenue functional currencies are the U.S. dollar, euro, British pound and the Brazilian real. Our overall operating results are impacted by currency translation, which represents the effect of translating operating results where the functional currency is different than our U.S. dollar reporting currency.
Our operating results are also impacted by transactional currency. The impact of the transactional currency represents the effect of converting revenue and expense transactions occurring in a currency other than the functional currency. Changes in currency exchange rates directly impact the calculation of gross dollar volume (“GDV”), which are used in the calculation of our key metrics related to domestic assessments and cross-border assessments as well as certain volume-related rebates and incentives. GDV is calculated based on local currency spending volume converted to U.S. dollars and euros using average exchange rates for the period. As a result, our key metrics related to domestic assessments and cross-border assessments as well as certain volume-related rebates and incentives are impacted by the strengthening or weakening of the U.S. dollar and euro versus local currencies. For example, our billing in Australia is in the U.S. dollar, however, consumer spend in Australia is in the Australian dollar. The currency transactional impact of converting Australian dollars to our U.S. dollar billing currency will have an impact on the revenue generated. The strengthening or weakening of the U.S. dollar is evident when GDV growth on a U.S. dollar-converted basis is compared to GDV growth on a local currency basis. For the three and nine months ended September 30, 2023, GDV on a U.S. dollar-converted basis increased 11% and 10%, respectively, while GDV on a local currency basis increased 11% and 13%, respectively, versus the comparable periods in 2022. Further, the impact from transactional currency occurs in our key metric related to transaction processing assessments as well as value-added services and solutions revenue and operating expenses when the transacting currency of these items is different than the functional currency of the entity.
To manage the impact of foreign currency variability on anticipated revenues and expenses, we may enter into foreign exchange derivative contracts and designate such derivatives as hedging instruments in a cash flow hedging relationship as discussed further in Note 17 (Derivative and Hedging Instruments) to the consolidated financial statements included in Part I, Item 1.
Foreign Exchange Activity
We incur foreign currency gains and losses from remeasuring monetary assets and liabilities, including settlement assets and obligations, that are denominated in a currency other than the functional currency of the entity. To manage this foreign exchange risk, we may enter into foreign exchange derivative contracts to economically hedge the foreign currency exposure of our nonfunctional currency monetary assets and liabilities. The gains or losses resulting from the changes in fair value of these contracts are intended to reduce the potential effect of the underlying hedged exposure and are recorded net within general and administrative expenses on the consolidated statement of operations. The impact of this foreign exchange activity, including the related hedging activities, has not been eliminated in our currency-neutral results.

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PART I
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Our foreign exchange risk management activities are discussed further in Note 17 (Derivative and Hedging Instruments) to the consolidated financial statements included in Part I, Item 1.
Risk of Currency Devaluation
We are exposed to currency devaluation in certain countries. In addition, we are subject to exchange control regulations that restrict the conversion of financial assets into U.S. dollars. While these revenues and assets are not material to us on a consolidated basis, we can be negatively impacted should there be a continued and sustained devaluation of local currencies relative to the U.S. dollar and/or a continued and sustained deterioration of economic conditions in these countries.
Financial Results
Net Revenue
The components of net revenue were as follows:
 Three Months Ended September 30,Increase/(Decrease)Nine Months Ended September 30,Increase/(Decrease)
 2023202220212023202220232022202120232022
 ($ in millions)($ in millions)
Payment network$4,210 $3,765 $3,234 12%16%$11,933 $10,773 $8,757 11%23%
Value-added services and solutions2,323 1,991 1,751 17%14%6,617 5,647 4,911 17%15%
Total net revenue 6,533 5,756 4,985 14%15%18,550 16,420 13,668 13%20%
Special Items 1
— — — ****— (37)— ****
Adjusted net revenue
(excluding Special Items 1)
$6,533 $5,756 $4,985 14%15%$18,550 $16,383 $13,668 13%20%
Note: Table may not sum due to rounding.
**    Not meaningful.
1    See “Non-GAAP Financial Information” for further information on our non-GAAP adjustments and the reconciliation to GAAP reported amounts.
2023
For the three months ended September 30, 2023, net revenue increased 14% versus the comparable period in 2022. Adjusted net revenue increased 14%, or 11% on a currency-neutral basis. The increase in net revenue was attributable to both our payment network and value-added services and solutions.
Net revenue from our payment network increased 12%, or 10% on a currency-neutral basis, versus the comparable period in 2022. The increase was primarily driven by growth in domestic and cross-border dollar volumes and an increase in the number of switched transactions, reflecting trends of growth in our key drivers. Net revenue from our payment network included $3,963 million of rebates and incentives provided to customers, which increased 22% as reported, or 20% on a currency-neutral basis, versus the comparable period in 2022, primarily due to an increase in our key drivers as well as new and renewed deals.
Net revenue from our value-added services and solutions increased 17%, or 14% on a currency-neutral basis, versus the comparable period in 2022. The increase was driven primarily by the continued growth of (i) our cyber and intelligence solutions, driven by our underlying key drivers and demand for our fraud and security solutions, and (ii) demand for our consulting and marketing services, as well as our loyalty solutions, partially offset by (iii) other solutions.
For the nine months ended September 30, 2023, net revenue increased 13% versus the comparable period in 2022. Adjusted net revenue increased 13%, or 14% on a currency-neutral basis. The increase in net revenue was attributable to both our payment network and value-added services and solutions.
Net revenue from our payment network increased 11%, as reported and on a currency-neutral basis, versus the comparable period in 2022. The increase was primarily driven by growth in domestic and cross-border dollar volumes and an increase in the number of switched transactions, reflecting trends of growth in our key drivers. Net revenue from our payment network included $11,074 million of rebates and incentives provided to customers, which increased 23%, as reported and on a currency-neutral basis, versus the comparable period in 2022, primarily due to an increase in our key drivers as well as new and renewed deals.
Net revenue from our value-added services and solutions increased 17%, as reported and on a currency-neutral basis, versus the comparable period in 2022, which included a 1 percentage point increase from acquisitions. The remaining increase was driven primarily by the continued growth of (i) our cyber and intelligence solutions, driven by our underlying key drivers and demand for our fraud and security solutions, and (ii) demand for our consulting and marketing services, as well as our loyalty solutions, partially offset by (iii) other solutions.

40 MASTERCARD SEPTEMBER 30, 2023 FORM 10-Q


PART I
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
2022
For the three months ended September 30, 2022, net revenue increased 15% versus the comparable period in 2021. Adjusted net revenue increased 15%, or 23% on a currency-neutral basis, and included 1 percentage point of growth from acquisitions. The increase in net revenue was attributable to both our payment network and value-added services and solutions.
Net revenue from our payment network increased 16%, or 24% on a currency-neutral basis, versus the comparable period in 2021. The increase was primarily driven by growth in domestic and cross-border dollar volumes and an increase in the number of switched transactions, reflecting trends of growth in our key drivers. Net revenue from our payment network included $3,240 million of rebates and incentives provided to customers, which increased 19%, or 25% on a currency-neutral basis, versus the comparable period in 2021, primarily due to an increase in our key drivers as well as new and renewed deals.
Net revenue from our value-added services and solutions increased 14%, or 21% on a currency-neutral basis, versus the comparable period in 2021, which included a 2 percentage point increase from acquisitions. The remaining increase was driven primarily by the continued growth of (i) our cyber and intelligence solutions, driven by growth in our underlying key drivers and demand for our fraud and security solutions, as well as the scaling of our identity and authentication solutions and (ii) demand for our data analytics and marketing services.
For the nine months ended September 30, 2022, net revenue increased 20% versus the comparable period in 2021. Adjusted net revenue increased 20%, or 25% on a currency-neutral basis. The increase in net revenue was attributable to both our payment network and value-added services and solutions and included 1 percentage points of growth from acquisitions.
Net revenue from our payment network increased 23%, or 29% on a currency-neutral basis, versus the comparable period in 2021. The increase was primarily driven by growth in domestic and cross-border dollar volumes and an increase in the number of switched transactions, reflecting trends of growth in our key drivers. Net revenue from our payment network included $9,003 million of rebates and incentives provided to customers, which increased 21%, or 25% on a currency-neutral basis, versus the comparable period in 2021, primarily due to an increase in our key drivers as well as new and renewed deals.
Net revenue from our value-added services and solutions increased 15%, or 20% on a currency-neutral basis, versus the comparable period in 2021, which included a 4 percentage point increase from acquisitions. The remaining increase was driven primarily by the continued growth of (i) our cyber and intelligence solutions, driven by growth in our underlying key drivers and demand for our fraud and security solutions, as well as the scaling of our identity and authentication solutions and (ii) demand for our data analytics and consulting services.
See Note 3 (Revenue) 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, 2022 for a further discussion of how we recognize revenue.

MASTERCARD SEPTEMBER 30, 2023 FORM 10-Q 41


PART I
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Drivers of Change
The following tables summarize the drivers of change in net revenue:
Three Months Ended September 30,
Increase/(Decrease)
OperationalAcquisitions
Currency Impact 3
Special Items 4
Total
2023202220232022202320222023202220232022
Payment network10 %124 %1****%(8)%**— %12 %16 %
Value-added services and solutions13 %219 %2— %%%(7)%****17 %14 %
Net revenue11 %22 %— %%%(7)%— %— %14 %15 %
Nine Months Ended September 30,
Increase/(Decrease)
OperationalAcquisitions
Currency Impact 3
Special Items 4
Total
2023202220232022202320222023202220232022
Payment network12 %129 %1****— %(6)%**— %11 %23 %
Value-added services and solutions16 %216 %2%%%(5)%****17 %15 %
Net revenue13 %24 %— %%— %(6)%— %— %13 %20 %
Note: Tables may not sum due to rounding.
**    Not applicable.
1Includes impacts from our key drivers and metrics, offset by rebates and incentives.
2Includes impacts from cyber and intelligence, data and services, processing and gateway, ACH batch and real-time account-based domestic and cross-border payments and solutions, open banking and digital identity, offset by rebates and incentives.
3Includes the translational and transactional impact of currency and the related impact of our foreign exchange derivative contracts designated as cash flow hedging instruments.
4See “Non-GAAP Financial Information” for further information on our non-GAAP adjustments and the reconciliation to GAAP reported amounts.
Operating Expenses
For the three months ended September 30, 2023, operating expenses increased 2% versus the comparable period in 2022. Adjusted operating expenses increased 10%, or 9% on a currency-neutral basis, versus the comparable period in 2022, which included a 1 percentage point increase from acquisitions. The remaining increase was primarily due to higher personnel costs.
For the nine months ended September 30, 2023, operating expenses increased 8% versus the comparable period in 2022. Operating expenses increased 11%, on both an as-adjusted and currency-neutral basis, versus the comparable period in 2022, which included a 1 percentage point increase from acquisitions. The remaining increase was primarily due to higher personnel costs.
The components of operating expenses were as follows:
Three Months Ended September 30,Increase/ (Decrease)Nine Months Ended September 30,Increase/ (Decrease)
2023202220232022
($ in millions)
General and administrative$2,285 $2,069 10%$6,528 $5,860 11%
Advertising and marketing193 182 6%561 573 (2)%
Depreciation and amortization211 185 14%594 566 5%
Provision for litigation— 208 **231 341 **
Total operating expenses2,689 2,644 2%7,914 7,340 8%
Special Items 1
— (208)**(231)(408)**
Adjusted total operating expenses (excluding Special Items 1)
$2,689 $2,437 10%$7,683 $6,932 11%
Note: Table may not sum due to rounding.
**    Not meaningful.
1    See “Non-GAAP Financial Information” for further information on our non-GAAP adjustments and the reconciliation to GAAP reported amounts.

42 MASTERCARD SEPTEMBER 30, 2023 FORM 10-Q


PART I
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Drivers of Change
The following tables summarize the drivers of changes in operating expenses:
Three Months Ended September 30, 2023
Increase/(Decrease)
OperationalAcquisitions
Currency Impact 1
Special
Items 2, 3
Total
General and administrative9%1%1%**10%
Advertising and marketing4%—%2%**6%
Depreciation and amortization11%—%3%**14%
Provision for litigation**********
Total operating expenses9%1%1%(9)%2%
Nine Months Ended September 30, 2023
Increase/(Decrease)
OperationalAcquisitions
Currency Impact 1
Special
Items 2
Total
General and administrative12%1%(1)%(1)%11%
Advertising and marketing(2)%—%—%**(2)%
Depreciation and amortization4%1%—%**5%
Provision for litigation**********
Total operating expenses10%1%—%(3)%8%
Note: Tables may not sum due to rounding.
**    Not applicable/meaningful.
1Represents the translational and transactional impact of currency.
2See “Non-GAAP Financial Information” for further information on our non-GAAP adjustments and the reconciliation to GAAP reported amounts.
3The Special Items driver impact related to provision for litigation is reflected in total operating expenses.
General and Administrative
For the three months ended September 30, 2023, general and administrative expenses increased 10%, or 9% on a currency-neutral basis, versus the comparable period in 2022. Current period results included growth of 1 percentage points from acquisitions. The increase was primarily due to higher personnel costs to support our continued investment in our strategic initiatives across payments, services and new network capabilities.
For the nine months ended September 30, 2023, general and administrative expenses increased 11%, or 12% on a currency-neutral basis, versus the comparable period in 2022. Current period results included growth of 1 percentage points from acquisitions. The remaining increase was primarily due to higher personnel costs to support our continued investment in our strategic initiatives across payments, services and new network capabilities, partially offset by a decrease of 1 percentage point from the Special Item for Russia-related impacts in 2022.

MASTERCARD SEPTEMBER 30, 2023 FORM 10-Q 43


PART I
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The components of general and administrative expenses were as follows:
Three Months Ended September 30,Increase/ (Decrease)Nine Months Ended September 30,Increase/(Decrease)
 2023202220232022
 ($ in millions)
Personnel 1
$1,573 $1,382 14%$4,494 $3,882 16%
Professional fees118 118 —%332 313 6%
Data processing and telecommunications262 228 15%743 688 8%
Foreign exchange activity 2
25 38 **65 109 **
Other 1
307 303 2%894 868 3%
Total general and administrative expenses$2,285 $2,069 10%$6,528 $5,860 11%
Note: Table may not sum due to rounding.
**    Not meaningful.
1    For the nine months ended September 30, 2022, total general and administrative expenses includes a Special Item for Russia-related impacts of $67 million, of which $35 million is included within Personnel and $32 million is included within Other. See “Non-GAAP Financial Information” for further information on our non-GAAP adjustments and the reconciliation to GAAP reported amounts.
2    Foreign exchange activity includes the impact of remeasurement of assets and liabilities denominated in foreign currencies net of the impact of gains and losses on foreign exchange derivative contracts. See Note 17 (Derivative and Hedging Instruments) to the consolidated financial statements included in Part I, Item 1 for further discussion.
Advertising and Marketing
For the three months ended September 30, 2023, advertising and marketing expenses increased 6%, or 4% on a currency-neutral basis, versus the comparable period in 2022, primarily due to an increase in spending on sponsorships.
For the nine months ended September 30, 2023, advertising and marketing expenses decreased 2% on both an as reported and a currency-neutral basis, versus the comparable period in 2022, primarily due to a decrease in spending on marketing campaigns and advertising, partially offset by an increase in spending on sponsorships.
Depreciation and Amortization
For the three months ended September 30, 2023, depreciation and amortization expenses increased 14%, or 11% on a currency-neutral basis, versus the comparable period in 2022, primarily due to increased software capitalization.
For the nine months ended September 30, 2023, depreciation and amortization expenses increased 5% on both an as reported and currency-neutral basis, versus the comparable period in 2022, primarily due to increased software capitalization.
Provision for Litigation
For the nine months ended September 30, 2023, we recorded litigation provisions of $231 million as a result of a change in estimate related to the claims of merchants who opted out of the U.S. merchant class litigation as well as settlements with a number of U.K. and Pan-European merchants. See Note 15 (Legal and Regulatory Proceedings) to the consolidated financial statements included in Part I, Item 1 of this Report and “Non-GAAP Financial Information” in this section for further discussion.

44 MASTERCARD SEPTEMBER 30, 2023 FORM 10-Q


PART I
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Other Income (Expense)
For the three months ended September 30, 2023, other income (expense) was unfavorable $43 million, versus the comparable period in 2022, primarily due to net losses in the current year versus net gains in the prior year related to unrealized fair market value adjustments on marketable equity securities, partially offset by higher net investment income in the current year. Adjusted other income (expense) was favorable $21 million versus the prior year, primarily due to an increase in our investment income, partially offset by increased interest expense related to our 2023 debt issuances.
For the nine months ended September 30, 2023, other income (expense) was favorable $119 million, versus the comparable period in 2022, primarily due to an increase in our investment income and lower mark-to-market losses in 2023. Adjusted other income (expense) was favorable $80 million versus the prior year, primarily due to an increase in our investment income, partially offset by increased interest expense related to our 2022 and 2023 debt issuances.
The components of other income (expense) were as follows:
Three Months Ended September 30,Increase/ (Decrease)Nine Months Ended September 30,Increase/ (Decrease)
 2023202220232022
 ($ in millions)
Investment income$71 $16 **$185 $28 **
Gains (losses) on equity investments, net(6)60 **(95)(133)**
Interest expense(151)(120)25%(427)(344)24%
Other income (expense), net**19 12 **
Total other income (expense)(83)(40)**(318)(437)**
(Gains) losses on equity investments 1
(60)**95 133 **
Adjusted total other income (expense) 1
$(78)$(99)(21)%$(223)$(303)(26)%
Note: Table may not sum due to rounding.
**    Not meaningful.
1    See “Non-GAAP Financial Information” for further information on our non-GAAP adjustments and the reconciliation to GAAP reported amounts.
Income Taxes
The effective income tax rates were 15.0% and 18.6% for the three months ended September 30, 2023 and 2022, respectively. The adjusted effective income tax rates were 15.0% and 19.4% for the three months ended September 30, 2023 and 2022, respectively. Both the as reported and as adjusted effective income tax rates were lower versus the comparable period in 2022, primarily due to our ability to now claim more U.S. foreign tax credits generated in 2022 and 2023 resulting from Notice 2023-55 (the “Notice”), released by the U.S. Department of Treasury (“Treasury”) in the current period, partially offset by a $115 million discrete tax expense to establish a valuation allowance on the deferred tax asset related to U.S. foreign tax credits generated prior to 2022.
The effective income tax rates were 18.6% and 14.3% for the nine months ended September 30, 2023 and 2022, respectively. The adjusted effective income tax rates were 19.0% and 14.8% for the nine months ended September 30, 2023 and 2022, respectively. Both the as reported and as adjusted effective income tax rates were higher versus the comparable period in 2022, primarily due to changes in the valuation allowance associated with the deferred tax asset related to U.S. foreign tax credits. In 2022, we recognized a discrete tax benefit of $333 million to release the valuation allowance resulting from U.S. tax regulations published in the first quarter of 2022 (the “2022 Regulations”). In 2023, the treatment of foreign taxes paid under the 2022 Regulations changed due to the foreign tax legislation enacted in Brazil and the Notice released by Treasury. Therefore, we recognized a total $327 million discrete tax expense in 2023 to establish the valuation allowance. The discrete tax expense recognized in the nine months ended September 30, 2023 was partially offset by our ability to now claim more U.S. foreign tax credits generated in 2022 and 2023 due to the Notice.
As of September 30, 2023, the deferred tax asset related to U.S. foreign tax credits and corresponding valuation allowance is $575 million due to foreign tax legislation enacted in Brazil and the Notice. The valuation allowance relates to our ability to recognize future tax benefits associated with the carryforward of U.S. foreign tax credits generated in the current and prior periods. The recognition of the U.S. foreign tax credits is dependent upon the realization of future foreign source income in the appropriate foreign tax credit basket in accordance with U.S. federal income tax law.

MASTERCARD SEPTEMBER 30, 2023 FORM 10-Q 45


PART I
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
We rely on existing liquidity, cash generated from operations and access to capital to fund our global operations, capital expenditures, investments in our business and current and potential obligations. The following table summarizes the cash, cash equivalents, investments and credit available to us:
September 30,
2023
December 31,
2022
(in billions)
Cash, cash equivalents and investments 1
$7.5 $7.4 
Unused line of credit8.0 8.0 
1    Investments include available-for-sale securities and held-to-maturity securities. This amount excludes restricted cash and restricted cash equivalents of $1.9 billion and $2.2 billion at September 30, 2023 and December 31, 2022, respectively.
We believe that our existing cash, cash equivalents and investment securities balances, our cash flow generating capabilities, and our access to capital resources are sufficient to satisfy our future operating cash needs, capital asset purchases, outstanding commitments and other liquidity requirements associated with our existing operations and potential obligations which include litigation provisions and credit and settlement exposure.
Our liquidity and access to capital could be negatively impacted by global credit market conditions. We guarantee the settlement of many of the transactions between our customers. Historically, payments under these guarantees have not been significant; however, historical trends may not be an indication of potential future losses. The risk of loss on these guarantees is specific to individual customers, but may also be driven by regional or global economic conditions, including, but not limited to the health of the financial institutions in a country or region. See Note 16 (Settlement and Other Risk Management) to the consolidated financial statements in Part I, Item 1 for a description of these guarantees.
Our liquidity and access to capital could also be negatively impacted by the outcome of any of the legal or regulatory proceedings to which we are a party. For additional discussion of these and other risks facing our business, see Part I, Item 1A - Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2022 and Note 15 (Legal and Regulatory Proceedings) to the consolidated financial statements included in Part I, Item 1 of this Report.
Cash Flows
The table below shows a summary of the cash flows from operating, investing and financing activities:
Nine Months Ended September 30,
 20232022
 (in millions)
Net cash provided by operating activities$7,850 $8,095 
Net cash used in investing activities(1,137)(1,120)
Net cash used in financing activities(7,138)(6,714)
Net cash provided by operating activities decreased $245 million for the nine months ended September 30, 2023, versus the comparable period in 2022, primarily due to higher net income after adjusting for non-cash items and an increase in restricted security deposits held for customers, more than offset by restricted cash paid for litigation settlement, higher employee incentives paid, higher customer incentive payments and timing of settlement with customers.
Net cash used in investing activities increased $17 million for the nine months ended September 30, 2023, versus the comparable period in 2022, primarily due to an increase in capitalized software and purchases of investments in time deposits partially offset by less cash paid for business acquisitions in the current year.
Net cash used in financing activities increased $424 million for the nine months ended September 30, 2023, versus the comparable period in 2022, primarily due to higher repurchases of our Class A common stock in the current year partially offset by higher proceeds from debt issuances.

46 MASTERCARD SEPTEMBER 30, 2023 FORM 10-Q


PART I
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Debt and Credit Availability
In March 2023, we issued $750 million principal amount of notes due March 2028 and $750 million principal amount of notes due March 2033 (collectively the “2023 USD Notes”). The net proceeds from the issuance of the 2023 USD Notes, after deducting the original issue discount, underwriting discount and offering expenses, were $1.489 billion. In April 2023, we entered into an additional unsecured INR4.97 billion ($61 million as of the date of settlement) term loan, originally due July 2023 (the “April 2023 INR Term Loan”). In July 2023, we modified and combined the 2022 INR Term Loan and April 2023 INR Term Loan (the “2023 INR Term Loan”), increasing the total unsecured loans to INR28.1 billion ($342 million as of the date of settlement). The 2023 INR Term Loan is due July 2024.
Our total debt outstanding was $15.6 billion and $14.0 billion at September 30, 2023 and December 31, 2022, respectively, with the earliest maturity of $1 billion of principal occurring in April 2024.
As of September 30, 2023, we have a commercial paper program (the “Commercial Paper Program”), under which we are authorized to issue up to $8 billion in outstanding notes, with maturities up to 397 days from the date of issuance. In conjunction with the Commercial Paper Program, we have a committed unsecured $8 billion revolving credit facility (the “Credit Facility”) which expires in November 2027.
Borrowings under the Commercial Paper Program and the Credit Facility are to be used to provide liquidity for general corporate purposes, including providing liquidity in the event of one or more settlement failures by our customers. In addition, we may borrow and repay amounts under these facilities for business continuity purposes. We had no borrowings outstanding under the Commercial Paper Program or the Credit Facility at September 30, 2023 and December 31, 2022.
See Note 10 (Debt) to the consolidated financial statements included in Part I, Item 1 for further discussion on our debt and Note 15 (Debt) to the consolidated financial statements included in Part II, Item 8 of our Annual Report on Form 10-K for the year ended December 31, 2022 for further discussion on our debt, the Commercial Paper Program and the Credit Facility.
Dividends and Share Repurchases
We have historically paid quarterly dividends on our outstanding Class A common stock and Class B common stock. Subject to legally available funds, we intend to continue to pay a quarterly cash dividend. The declaration and payment of future dividends is at the sole discretion of our Board of Directors after taking into account various factors, including our financial condition, operating results, available cash and current and anticipated cash needs.
Aggregate payments for quarterly dividends totaled $1,624 million for the nine months ended September 30, 2023.
On December 6, 2022, our Board of Directors declared a quarterly cash dividend of $0.57 per share paid on February 9, 2023 to holders of record on January 9, 2023 of our Class A common stock and Class B common stock. The aggregate amount of this dividend was $545 million.
On February 14, 2023, our Board of Directors declared a quarterly cash dividend of $0.57 per share paid on May 9, 2023 to holders of record on April 7, 2023 of our Class A common stock and Class B common stock. The aggregate amount of this dividend was $541 million.
On June 26, 2023, our Board of Directors declared a quarterly cash dividend of $0.57 per share payable on August 9, 2023 to holders of record on July 7, 2023 of our Class A common stock and Class B common stock. The aggregate amount of this dividend was $538 million.
On September 19, 2023 our Board of Directors declared a quarterly cash dividend of $0.57 per share payable on November 9, 2023 to holders of record on October 9, 2023 of our Class A common stock and Class B common stock. The aggregate amount of this dividend is estimated to be $536 million.

MASTERCARD SEPTEMBER 30, 2023 FORM 10-Q 47


PART I
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Repurchased shares of our common stock are considered treasury stock. In December 2022 and November 2021, our Board of Directors approved share repurchase programs of our Class A common stock authorizing us to repurchase up to $9.0 billion and $8.0 billion, respectively. The program approved in 2022 became effective in April 2023 after the completion of the share repurchase program approved in 2021. The timing and actual number of additional shares repurchased will depend on a variety of factors, including cash requirements to meet the operating needs of the business, legal requirements, as well as the share price and economic and market conditions. The following table summarizes our share repurchase authorizations and repurchase activity of our Class A common stock through September 30, 2023:
(in millions, except average price data)
Remaining authorization at December 31, 2022$12,174 
Dollar-value of shares repurchased during the nine months ended September 30, 2023 1
$7,200 
Remaining authorization at September 30, 2023$4,974 
Shares repurchased during the nine months ended September 30, 202319.2 
Average price paid per share during the nine months ended September 30, 2023$375.34 
1    The dollar-value of shares repurchased does not include a 1% excise tax that became effective January 1, 2023. The incremental tax is recorded in treasury stock on the consolidated balance sheet and is payable annually beginning in 2024.
Recent Accounting Pronouncements
For a description of recent accounting pronouncements, if any, and the potential impact of these pronouncements refer to Note 1 (Summary of Significant Accounting Policies) to the consolidated financial statements included in Part I, Item 1.
Item 3. Quantitative and qualitative disclosures about market risk
Market risk is the potential for economic losses to be incurred on market risk sensitive instruments arising from adverse changes in factors such as interest rates and foreign currency exchange rates. Our exposure to market risk from changes in interest rates and foreign exchange rates is limited. Management monitors risk exposures on an ongoing basis and establishes and oversees the implementation of policies governing our funding, investments and use of derivative financial instruments to manage these risks.
Foreign currency and interest rate exposures are managed through our risk management activities, which are discussed further in Note 17 (Derivative and Hedging Instruments) to the consolidated financial statements included in Part I, Item 1.
Foreign Exchange Risk
We enter into foreign exchange derivative contracts to manage currency exposure associated with anticipated receipts and disbursements occurring in a currency other than the functional currency of the entity. We may also enter into foreign currency derivative contracts to offset possible changes in value of assets and liabilities due to foreign exchange fluctuations. The objective of these activities is to reduce our exposure to transaction gains and losses resulting from fluctuations of foreign currencies against our functional currencies, principally the U.S. dollar and euro. The effect of a hypothetical 10% adverse change in the value of the functional currencies could result in a fair value loss of approximately $92 million and loss of approximately $94 million on our foreign exchange derivative contracts outstanding at September 30, 2023 and December 31, 2022, respectively, before considering the offsetting effect of the underlying hedged activity.
We are also subject to foreign exchange risk as part of our daily settlement activities. To manage this risk, we enter into short duration foreign exchange contracts based upon anticipated receipts and disbursements for the respective currency position. This risk is typically limited to a few days between when a payment transaction takes place and the subsequent settlement with our customers. A hypothetical 10% adverse change in the value of the functional currencies would not have a material impact to the fair value of our short duration foreign exchange derivative contracts outstanding at September 30, 2023 and December 31, 2022, respectively.
We are further exposed to foreign exchange rate risk related to translation of our net investment in foreign subsidiaries where the functional currency is different than our U.S. dollar reporting currency. To manage this risk, we may enter into foreign exchange derivative contracts to hedge a portion of our net investment in foreign subsidiaries. The effect of a hypothetical 10% adverse change in the value of the U.S. dollar could result in a fair value loss of approximately $320 million and $203 million on our foreign exchange derivative contracts designated as a net investment hedge at September 30, 2023 and December 31, 2022, respectively, before considering the offsetting effect of the underlying hedged activity.

48 MASTERCARD SEPTEMBER 30, 2023 FORM 10-Q


PART I
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest Rate Risk
Our available-for-sale debt investments include fixed and variable rate securities that are sensitive to interest rate fluctuations. Our policy is to invest in high quality securities, while providing adequate liquidity and maintaining diversification to avoid significant exposure. A hypothetical 100 basis point adverse change in interest rates would not have a material impact to the fair value of our investments at September 30, 2023 and December 31, 2022.
We are also exposed to interest rate risk related to our fixed-rate debt. To manage this risk, we may enter into interest rate derivative contracts to hedge a portion of our fixed-rate debt that is exposed to changes in fair value attributable to changes in a benchmark interest rate. The effect of a hypothetical 100 basis point adverse change in interest rates would not have a material impact to the fair value of our interest rate derivative contracts designated as a fair value hedge of our fixed-rate debt at September 30, 2023 and December 31, 2022, respectively, before considering the offsetting effect of the underlying hedged activity.
Item 4. Controls and procedures
Evaluation of Disclosure Controls and Procedures
Our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) are designed to ensure that information that is required to be disclosed in the reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission and to ensure that information required to be disclosed is accumulated and communicated to management, including our President and Chief Executive Officer and our Chief Financial Officer, to allow timely decisions regarding disclosure. The President and Chief Executive Officer and the Chief Financial Officer, with assistance from other members of management, have reviewed the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Report and, based on their evaluation, have concluded that the disclosure controls and procedures were effective as of such date.
Changes in Internal Control over Financial Reporting
There was no change in Mastercard’s internal control over financial reporting that occurred during the three months ended September 30, 2023 that has materially affected, or is reasonably likely to materially affect, Mastercard's internal control over financial reporting.

MASTERCARD SEPTEMBER 30, 2023 FORM 10-Q 49


PART II



PART II
ITEM 1. LEGAL PROCEEDINGS
Item 1. Legal proceedings
Refer to Note 15 (Legal and Regulatory Proceedings) to the consolidated financial statements included in Part I, Item 1.
Item 1A. Risk factors
For a discussion of our risk factors, see Part I, Item 1A - Risk Factors of our Annual Report on Form 10-K for the year ended December 31, 2022.
Item 2. Unregistered sales of equity securities, use of proceeds and issuer purchases of equity securities
Issuer Purchases of Equity Securities
During the third quarter of 2023, we repurchased 4.8 million shares for $1.9 billion at an average price of $400.61 per share of Class A common stock. The following table presents our repurchase activity on a cash basis during the third quarter of 2023:
PeriodTotal 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, 2
July 1 - 311,664,589 $396.95 1,664,589 $6,218,906,492 
August 1 - 311,737,057 $396.20 1,737,057 $5,530,680,868 
September 1 - 301,356,433 $410.74 1,356,433 $4,973,542,871 
Total4,758,079 $400.61 4,758,079 
1    Dollar value of shares that may yet be purchased under the repurchase programs is as of the end of the period.
2 In December 2022 and November 2021, our Board of Directors approved share repurchase programs of our Class A common stock authorizing us to repurchase up to $9.0 billion and $8.0 billion, respectively.
Item 5. Other information
Rule 10b5-1 and Non-Rule 10b5-1 Trading Arrangements
During the three months ended September 30, 2023, certain of our officers and directors adopted or terminated trading arrangements for the sale of shares of our common stock as follows:
ActionDatePlansNumber of Securities to be SoldExpiration
Rule 10b5-1 1
Non-Rule 10b5-1 2
Ed McLaughlin,
President & Chief Technology Officer, Mastercard Technology
AdoptionAugust 18, 2023X-20,000 shares of Class A Common Stock underlying employee stock optionsThe earlier of (i) the date when all securities under plan are exercised and sold and (ii) December 31, 2024
1 Intended to satisfy the affirmative defense conditions of Rule 10b5-1(c)
2 Not intended to satisfy the affirmative defense conditions of Rule 10b5-1(c)
Other Information
Pursuant to Section 219 of the Iran Threat Reduction and Syria Human Rights Act of 2012, we hereby incorporate by reference herein the disclosure contained in Exhibit 99.1.

MASTERCARD SEPTEMBER 30, 2023 FORM 10-Q 51


Item 6. Exhibits
Refer to the Exhibit Index included herein.

52 MASTERCARD SEPTEMBER 30, 2023 FORM 10-Q


PART II
EXHIBIT INDEX
Exhibit index
Exhibit
Number
Exhibit Description
101.INSXBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH*XBRL Taxonomy Extension Schema Document
101.CAL*XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*XBRL Taxonomy Extension Label Linkbase Document
101.PRE*XBRL Taxonomy Extension Presentation Linkbase Document
+    Management contracts or compensatory plans or arrangements.
*    Filed or furnished herewith.
The agreements and other documents filed as exhibits to this Report are not intended to provide factual information or other disclosure other than with respect to the terms of the agreements or other documents themselves, and should not be relied upon for that purpose. In particular, any representations and warranties made by the Company in these agreements or other documents were made solely within the specific context of the relevant agreement or document and may not describe the actual state of affairs as of the date they were made or at any other time.

MASTERCARD SEPTEMBER 30, 2023 FORM 10-Q 53


SIGNATURES
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
MASTERCARD INCORPORATED
(Registrant)
Date:October 26, 2023By:
/S/ MICHAEL MIEBACH
Michael Miebach
President and Chief Executive Officer
(Principal Executive Officer)
Date:October 26, 2023By:/S/ SACHIN MEHRA
Sachin Mehra
Chief Financial Officer
(Principal Financial Officer)
Date:October 26, 2023By:
/S/ SANDRA ARKELL
Sandra Arkell
Corporate Controller
(Principal Accounting Officer)

54 MASTERCARD SEPTEMBER 30, 2023 FORM 10-Q