Mastercard Inc 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS merchant plaintiffs. The settlements included cash payments that were apportioned among the defendants pursuant to the omnibus judgment sharing and settlement sharing agreement described above. Mastercard also agreed to provide class members with a short-term reduction in default credit interchange rates and to modify certain of its business practices, including its no surcharge rule. The court granted final approval of the settlement in 2013. Following an appeal by objectors and as a result of a reversal of the settlement approval by the U.S. Court of Appeals for the Second Circuit, the case was sent back to the district court for further proceedings. The court divided the merchants’ claims into two separate classes - monetary damages claims (the “Damages Class”) and claims seeking changes to business practices (the “Rules Relief Class”). The court appointed separate counsel for each class. In 2018, the parties to the Damages Class litigation entered into a class settlement agreement to resolve the Damages Class claims, with merchants representing slightly more than 25 % of the Damages Class interchange volume choosing to opt out of the settlement. The Damages Class settlement agreement became final in August 2023. Since 2018, Mastercard has reached settlements or agreements in principle to settle with over 250 opt-out merchants. These opt-out merchant settlements, along with the Damages Class settlement, represent over 90 % of Mastercard’s U.S. interchange volume. Approximately 65 individual opt-out merchants continue to litigate, seeking treble damages and attorneys’ fees and costs. During the first quarter of 2024, the district court denied the defendants’ motions for summary judgment with respect to these ongoing individual opt-out merchant cases, sending the cases back to their original jurisdictions for trials. In October 2024, the remaining opt-out merchants submitted expert reports on liability and damages issues. The aggregate single damages claimed by these merchants total approximately $ 12 billion with respect to their Mastercard purchase volume. Mastercard would be responsible for 36 % of any Mastercard-related judgment pursuant to the December 2011 judgment and settlement sharing agreement discussed above. The first trial in the opt-out merchant cases, which will involve six of the larger opt-out merchants, has been scheduled for October 2025. In 2021, the district court granted the Rules Relief Class’s motion for class certification. In March 2024, the parties to the Rules Relief Class litigation entered into a settlement agreement to resolve the Rules Relief Class claims. The court held a preliminary settlement approval hearing in June 2024, and subsequently issued a decision denying approval of the settlement. The parties are in ongoing settlement discussions. The court has not yet scheduled a trial date. As of December 31, 2024 and 2023, Mastercard had accrued a liability of $ 559 million and $ 596 million, respectively, for the U.S. MDL Litigation Cases. The liability as of December 31, 2024 represents Mastercard’s best estimate of its probable liabilities in these matters and does not represent an estimate of a loss, if any, if the matters were litigated to a final outcome. Mastercard cannot estimate the potential liability if that were to occur. Europe. Since 2012, a number of United Kingdom (“U.K.”) merchants filed claims or threatened litigation against Mastercard seeking damages for excessive costs paid for acceptance of Mastercard credit and debit cards arising out of alleged anti-competitive conduct with respect to, among other things, Mastercard’s cross-border interchange fees and its U.K. and Ireland domestic interchange fees (the “U.K. Merchant claimants”). In addition, Mastercard has faced similar filed or threatened litigation by merchants with respect to interchange rates in other countries in Europe (the “Pan-European Merchant claimants”). Mastercard has resolved a substantial amount of these damages claims through settlement or judgment. Following these settlements, approximately £ 0.3 billion (approximately $ 0.4 billion as of December 31, 2024) 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 was completed in March 2024 concerning certain liability issues with respect to merchant claims for damages related 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 in both the U.K. and the European Union. In December 2023, the plaintiffs filed a revised collective action application claiming damages against Mastercard in excess of £ 1 billion (approximately $ 1.3 billion as of December 31, 2024). In June 2024, the court granted the plaintiffs’ collective action application. Mastercard’s request for permission to appeal this ruling was denied. In 2016, a proposed collective action was filed in the United Kingdom on behalf of U.K. consumers seeking damages for intra-European Economic Area (“EEA”) and domestic U.K. interchange fees that were allegedly passed on to consumers by merchants between 1992 and 2008. The complaint, which seeks to leverage the European Commission’s 2007 decision on intra-EEA interchange fees, claims damages in an amount that exceeds £ 10 billion (approximately $ 13 billion as of December 31, 2024). In 2021, the trial court issued a decision in which it granted class certification to the plaintiffs but narrowed the scope of the class. Since January 2023, the trial court has held hearings on various issues, including whether any causal connection existed between the levels of Mastercard’s intra-EEA interchange fees and U.K. domestic interchange fees and regarding Mastercard’s request to narrow the number of years of damages sought by the plaintiffs on statute of limitations grounds. In February 2024, the trial court ruled in 101 MASTERCARD 2024 FORM 10-K PART II ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Mastercard’s favor, finding no causal connection between the levels of Mastercard’s intra-EEA interchange fees and U.K. domestic interchange fees. In June 2024, the trial court ruled in Mastercard’s favor with respect to its request to dismiss five years of the plaintiffs’ damages claims on statute of limitations grounds. The plaintiffs’ request for permission to appeal this ruling was granted. In December 2024, the parties entered into a settlement agreement to resolve this matter. The parties have submitted supporting papers to the court seeking approval of the settlement, and the court has scheduled a hearing on settlement approval for late February 2025. Mastercard recorded an accrual of £ 200 million ($ 251 million as of December 31, 2024) in connection with this settlement agreement. 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 December 31, 2024) 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. Australia. In 2022, the Australian Competition & Consumer Commission (“ACCC”) filed a complaint targeting certain agreements entered into by Mastercard and certain Australian merchants related to Mastercard’s debit program. The ACCC alleges that by entering into such agreements, Mastercard engaged in conduct with the purpose of substantially lessening competition in the supply of debit card acceptance services. The ACCC seeks both declaratory relief and monetary fines and costs. A hearing on liability issues has been scheduled for March 2025. ATM Non-Discrimination Rule Surcharge Complaints In 2011, a trade association of independent ATM operators and 13 independent ATM operators filed a complaint styled as a class action lawsuit in the U.S. District Court for the District of Columbia against both Mastercard and Visa (the “ATM Operators Class Complaint”). Plaintiffs seek to represent a class of non-bank operators of ATM terminals that operate in the United States with the discretion to determine the price of the ATM access fee for the terminals they operate. Plaintiffs allege that Mastercard and Visa have violated Section 1 of the Sherman Act by imposing rules that require ATM operators to charge non-discriminatory ATM surcharges for transactions processed over Mastercard’s and Visa’s respective networks that are not greater than the surcharge for transactions over other networks accepted at the same ATM. Plaintiffs seek both injunctive and monetary relief equal to treble the damages they claim to have sustained as a result of the alleged violations and their costs of suit, including attorneys’ fees. Subsequently, multiple related complaints were filed in the U.S. District Court for the District of Columbia alleging both federal antitrust and multiple state unfair competition, consumer protection and common law claims against Mastercard and Visa on behalf of different putative classes of users of ATM services. The claims in these actions largely mirror the allegations made in the ATM Operators Class Complaint, although these complaints seek damages on behalf of consumers of ATM services who pay allegedly inflated ATM fees at both bank (“Bank ATM Consumer Class Complaint”) and non-bank (“Non-bank ATM Consumer Class Complaint”) ATM operators as a result of the defendants’ ATM rules. Plaintiffs 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 2019, the plaintiffs in all three class complaints filed with the district court their motions for class certification. In 2023, the D.C. Circuit Court affirmed the district court’s previous order granting class certification. The U.S. Supreme Court declined to hear the defendants’ appeal of the certification decision. In May 2024, Mastercard executed a settlement agreement with the class lawyers representing the Bank ATM Consumer Class, subject to court approval. At a hearing held in January 2025, the court indicated that it intends to provide final approval of the settlement. During the first quarter of 2024, Mastercard recorded an accrual of $ 93 million in connection with this matter. The litigation with the ATM Operators Class and Non-bank ATM Consumer Class is ongoing. The plaintiffs in these two remaining class complaints, in aggregate, allege over $ 1 billion in single damages against all of the defendants. MASTERCARD 2024 FORM 10-K 102 PART II ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS U.S. Liability Shift Litigation In 2016, a proposed U.S. merchant class action complaint was filed in federal court in California alleging that Mastercard, Visa, American Express and Discover (the “Network Defendants”), EMVCo, and a number of issuing banks (the “Bank Defendants”) engaged in a conspiracy to shift fraud liability for card present transactions from issuing banks to merchants not yet in compliance with the standards for EMV chip cards in the United States (the “EMV Liability Shift”), in violation of the Sherman Act and California law. Plaintiffs 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. The district court denied the Network Defendants’ motion to dismiss the complaint, but granted such a motion for EMVCo and the Bank Defendants. In 2017, the district court transferred the case to New York so that discovery could be coordinated with the U.S. MDL Litigation Cases described above. In 2020, the district court issued an order granting the plaintiffs’ request for class certification. The plaintiffs have submitted expert reports that allege aggregate single damages in excess of $ 1 billion against the four Network Defendants. The Network Defendants submitted expert reports rebutting both liability and damages and all briefs on summary judgment have been submitted. In September 2024, the district court denied the Network Defendants’ motion for summary judgment. Telephone Consumer Protection Class Action Mastercard is a defendant in a Telephone Consumer Protection Act (“TCPA”) class action pending in Florida. The plaintiffs are individuals and businesses who allege that approximately 381,000 unsolicited faxes were sent to them advertising a Mastercard co-brand card issued by First Arkansas Bank (“FAB”). The TCPA provides for uncapped statutory damages of $ 500 per fax. Mastercard has asserted various defenses to the claims, and has notified FAB of an indemnity claim that it has (which FAB has disputed). In 2019, the Federal Communications Commission (“FCC”) issued a declaratory ruling clarifying that the TCPA does not apply to faxes sent to online fax services that are received online via email. In 2021, the trial court granted plaintiffs’ request for class certification, but narrowed the scope of the class to stand alone fax recipients only. Mastercard’s request to appeal that decision was denied. Briefing on plaintiffs’ motion to amend the class definition and Mastercard’s cross-motion to decertify the stand alone fax recipient class was completed in April 2023 and the parties await the court’s decision. U.S. Department of Justice Investigation In 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. European Commission Investigation In August 2024, Mastercard received a formal request for information from the European Commission seeking documents and information in connection with an investigation into alleged anti-competitive behavior of certain card scheme services in the European Union/EEA. The request focuses on Mastercard’s practices regarding network fees related to acquirers. Mastercard is cooperating with the European Commission in connection with the request. Note 22. Settlement and Other Risk Management Mastercard’s rules guarantee the settlement of many of the payment network transactions between its customers (“settlement risk”). Settlement exposure is the settlement risk to customers under Mastercard’s rules due to the difference in timing between the payment transaction date and subsequent settlement. For those transactions the Company guarantees, the guarantee will cover the full amount of the settlement obligation to the extent the settlement obligation is not otherwise satisfied. The duration of the settlement exposure is short-term and generally limited to a few days. 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, the Company periodically reviews its risk management methodology and standards. As such, the amounts of estimated settlement exposure are revised as necessary. 103 MASTERCARD 2024 FORM 10-K PART II ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The Company’s estimated settlement exposure was as follows at December 31: 2024 2023 (in millions) Gross settlement exposure $ 78,385 $ 75,023 Risk mitigation arrangements applied to settlement exposure ( 13,466 ) ( 12,167 ) Net settlement exposure $ 64,919 $ 62,856 Mastercard also provides guarantees to customers and certain other counterparties indemnifying them from losses stemming from failures of third parties to perform duties. This includes guarantees of Mastercard-branded travelers cheques issued, but not yet cashed. In addition, the Company enters into agreements in the ordinary course of business under which the Company agrees to indemnify third parties against damages, losses and expenses incurred in connection with legal and other proceedings arising from relationships or transactions with the Company. Certain indemnifications do not provide a stated maximum exposure. As the extent of the Company’s obligations under these agreements depends entirely upon the occurrence of future events, the Company’s potential future liability under these agreements is not determinable. Historically, payments made by the Company under these types of contractual arrangements have not been material. Note 23. Derivative and Hedging Instruments The Company monitors and manages its foreign currency and interest rate exposures as part of its overall risk management program which focuses on the unpredictability of financial markets and seeks to reduce the potentially adverse effects that the volatility of these markets may have on its operating results. A primary objective of the Company’s risk management strategies is to reduce the financial impact that may arise from volatility in foreign currency exchange rates. The Company uses both foreign exchange derivative contracts (when the hedge costs are economically justified) and foreign currency denominated debt to manage its currency exposure. In addition, the Company may enter into interest rate derivative contracts to manage the effects of interest rate movements on the Company’s aggregate liability portfolio, including potential future debt issuances. The Company does not enter into derivatives for speculative purposes. Cash Flow Hedges The Company may enter into foreign exchange derivative contracts, including forwards and options, to manage the impact of foreign currency variability on anticipated revenues and expenses, which fluctuate based on currencies other than the functional currency of the entity. The objective of these hedging activities is to reduce the effect of movement in foreign exchange rates for a portion of revenues and expenses forecasted to occur. As these contracts are designated as cash flow hedging instruments, gains and losses resulting from changes in fair value of these contracts are deferred in accumulated other comprehensive income (loss) and are subsequently reclassified to the consolidated statements of operations when the underlying hedged transactions impact earnings. The terms of these contracts are for generally less than 18 months. In April 2024, the Company entered into foreign exchange derivative contracts to hedge its exposure to variability in cash flows related to foreign denominated assets. Gains and losses resulting from changes in fair value of these contracts are deferred in accumulated other comprehensive income (loss) and are subsequently reclassified to the consolidated statements of operations when the hedged transactions impact earnings. Forward points are excluded from the effectiveness assessment and are amortized to general and administrative expenses on the consolidated statements of operations over the hedge period. The maximum term of these contracts was for approximately 7 years. In addition, the Company may enter into interest rate derivative contracts to manage the effects of interest rate movements on the Company’s aggregate liability portfolio, including potential future debt issuances, and designate such derivatives as hedging instruments in a cash flow hedging relationship. Gains and losses resulting from changes in fair value of these contracts are deferred in accumulated other comprehensive income (loss) and are subsequently reclassified as an adjustment to interest expense over the respective terms of the hedged debt issuances. Fair Value Hedges The Company may enter into interest rate derivative contracts, including interest rate swaps, to manage the effects of interest rate movements on the fair value of the Company's fixed-rate debt and designate such derivatives as hedging instruments in a fair value hedging relationship. Changes in fair value of these contracts and changes in fair value of fixed-rate debt attributable to changes in the hedged benchmark interest rate generally offset each other and are recorded in interest expense on the consolidated statements of operations. Gains and losses related to the net settlements of interest rate swaps are also recorded in interest MASTERCARD 2024 FORM 10-K 104 PART II ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS expense on the consolidated statements of operations. The periodic cash settlements are included in operating activities on the consolidated statements 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 years ended December 31, 2024, 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 amortized to general and administrative expenses on the consolidated statements of operations over the hedge period. The amounts recognized in earnings related to forward points for the years ended December 31, 2024, 2023 and 2022 were not material. As of December 31, 2024 and 2023, the Company had € 1.3 billion and € 1.6 billion euro-denominated debt outstanding designated as hedges of a portion of its net investment in its European operations. In December 2024 and 2023, the Company de-designated € 400 million and € 109 million of the euro-denominated debt as net investment hedges to effectively manage changes in its net investment exposures in foreign subsidiaries. The € 109 million of euro-denominated debt de-designated in December 2023 was subsequently re-designated as a net investment hedge effective April 2024. For the years ended December 31, 2024, 2023 and 2022 the Company recorded pre-tax net foreign currency gains (losses) of $ 104 million, $( 67 ) million and $ 176 million, respectively, in other comprehensive income (loss). As of December 31, 2024 and 2023, the Company had net foreign currency gains of $ 295 million and $ 181 million, after tax, respectively, in accumulated other comprehensive income (loss) associated with this hedging activity. Non-designated Derivatives The Company may also enter into foreign exchange derivative contracts to serve as economic hedges, such as to offset possible changes in the value of monetary assets and liabilities due to foreign exchange fluctuations, without designating these derivative contracts as hedging instruments. In addition, the Company is subject to foreign exchange risk as part of its daily settlement activities. This risk is typically limited to a few days between when a payment transaction takes place and the subsequent settlement with customers. To manage this risk, the Company may enter into short duration foreign exchange derivative contracts based upon anticipated receipts and disbursements for the respective currency position. The objective of these activities is to reduce the Company’s exposure to volatility arising from gains and losses resulting from fluctuations of foreign currencies against its functional currencies. Gains and losses resulting from changes in fair value of these contracts are recorded in general and administrative expenses on the consolidated statements of operations, net, along with the foreign currency gains and losses on monetary assets and liabilities. The following table summarizes the fair value of the Company’s derivative financial instruments and the related notional amounts: December 31, 2024 December 31, 2023 Notional Derivative Assets Derivative Liabilities Notional Derivative Assets Derivative Liabilities (in millions) Derivatives designated as hedging instruments Foreign exchange contracts in a cash flow hedge 1 $ 3,951 $ 135 $ 6 $ 1,006 $ 2 $ 25 Interest rate contracts in a fair value hedge 2 1,000 — 63 1,000 — 79 Foreign exchange contracts in a net investment hedge 1 2,511 54 — — — — Derivatives not designated as hedging instruments Foreign exchange contracts 1 2,741 17 30 5,424 34 79 Total $ 10,203 $ 206 $ 99 $ 7,430 $ 36 $ 183 1 Foreign exchange derivative assets and liabilities are included within prepaid expenses and other current assets, other assets and other current liabilities on the consolidated balance sheets. 2 Interest rate derivative liabilities are included within other current liabilities and other liabilities on the consolidated balance sheets. 105 MASTERCARD 2024 FORM 10-K PART II ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The pre-tax gain (loss) related to the Company's derivative financial instruments designated as hedging instruments are as follows: Gain (Loss) Recognized in Other Comprehensive Income (Loss) Gain (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) Years ended December 31, Location of Gain (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) into Earnings Years ended December 31, 2024 2023 2022 2024 2023 2022 (in millions) (in millions) Derivative financial instruments in a cash flow hedge relationship: Foreign exchange contracts 1 $ 161 $ ( 41 ) $ 1 Net revenue $ 8 $ ( 29 ) $ 16 General and administrative 2 $ 177 $ — $ — Interest rate contracts $ — $ — $ — Interest expense $ ( 7 ) $ ( 6 ) $ ( 6 ) Derivative financial instruments in a net investment hedge relationship: Foreign exchange contracts $ 43 $ ( 98 ) $ 177 1 Includes immaterial amounts excluded from the effectiveness assessment recognized in other comprehensive income (loss). 2 Includes immaterial amounts excluded from the effectiveness assessment recognized in earnings. The Company estimates that the pre-tax amount of the net deferred loss on cash flow hedges recorded in accumulated other comprehensive income (loss) at December 31, 2024 that will be reclassified into the consolidated statements of operations within the next 12 months is not material. The amount of gain (loss) recognized on the consolidated statements of operations for non-designated derivative contracts is summarized below: Years ended December 31, Derivatives not designated as hedging instruments: 2024 2023 2022 (in millions) Foreign exchange contracts General and administrative $ 32 $ 42 $ 21 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 sheets. 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. Note 24. Segment Reporting Mastercard has concluded it has one reportable operating segment, “Payment Solutions.” The Payment Solutions segment derives its revenues from a wide range of payment solutions provided to customers. Revenue is generated from offering customers access to Mastercard’s continuous payment network, as well as by providing value-added services and solutions, whether integrated and sold with the payment network or on a stand-alone basis. Revenue is recognized when services are performed in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those services (i.e., fees charged to customers). All of the segment’s activities are interrelated, and each activity is dependent upon and supportive of the other. Accordingly, all significant operating decisions are based upon analysis of Mastercard at the consolidated level. The accounting policies of the Payment Solutions segment are the same as those described in Note 1 (Summary of Significant Accounting Policies). Mastercard’s Chief Executive Officer has been identified as the chief operating decision-maker (“CODM”). The CODM assesses performance for the Payment Solutions segment and decides how to allocate resources, including whether to reinvest profits into the Payment Solutions segment or into other business activities such as for acquisitions, to pay dividends or for share repurchases, based on net income as reported on the consolidated statements of operations (“Consolidated Net Income”). The CODM uses MASTERCARD 2024 FORM 10-K 106 PART II ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Consolidated Net Income and other measures for internal planning and forecasting purposes and in the calculation of performance-based compensation. The following represents the selected financial information regularly reviewed by the CODM to assess performance of the Payment Solutions segment for the years ended December 31: 2024 2023 2022 (in millions) Net revenue $ 28,167 $ 25,098 $ 22,237 Less: Personnel 6,673 6,022 5,263 Professional Fees 549 495 480 Data processing and telecommunications 1,119 1,008 926 Foreign exchange activity 65 83 102 Advertising and marketing 815 825 789 Depreciation and amortization 897 799 750 Provision for litigation 680 539 356 Investment Income ( 327 ) ( 274 ) ( 61 ) (Gains) losses on equity investments, net 29 61 145 Interest expense 646 575 471 Other (income) expense, net ( 20 ) 7 ( 23 ) Income tax expense 2,380 2,444 1,802 Other segment items 1 1,787 1,319 1,307 Consolidated Net Income $ 12,874 $ 11,195 $ 9,930 1 Includes fulfillment costs, occupancy costs, travel and meeting expenses, and other overhead expenses. Revenue by geographic market is based on the location of the Company’s customer that issued the card, the location of the merchant acquirer where the card is being used or the location of the customer receiving services. Revenue generated in the U.S. was approximately 30 % of net revenue in 2024, 30 % in 2023 and 33 % in 2022. No individual country, other than the U.S., generated more than 10% of net revenue in those periods. Mastercard did not have any individual customer that generated greater than 10% of net revenue in 2024, 2023 or 2022. The following table reflects the geographical location of the Company’s property, equipment and right-of-use assets, net, as of December 31: 2024 2023 2022 (in millions) United States $ 1,095 $ 1,027 $ 1,123 Other countries 1,043 1,034 883 Total $ 2,138 $ 2,061 $ 2,006 107 MASTERCARD 2024 FORM 10-K PART II ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Item 9. Changes in and disagreements with accountants on accounting and financial disclosure Not applicable.