Item 7A. Quantitative and Qualitative Disclosures About Market Risk
Item 7A. 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 foreign currency exchange rates and interest rates. Our exposure to market risk from changes in foreign currency exchange rates and interest 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 21 (Derivative and Hedging Instruments) to the consolidated financial statements included in Part II, Item 8.
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 exchange 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 gains and losses resulting from fluctuations of foreign currencies against our functional currencies, principally the U.S. dollar and euro. A hypothetical 10% adverse change in the value of the functional currencies could result in a fair value loss of approximately $405 million and $475 million on our foreign exchange derivative contracts outstanding at December 31, 2025 and 2024, 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 derivative 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 December 31, 2025 and 2024, 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. As of December 31, 2025, we did not have any foreign exchange derivative contracts designated as a net investment hedge. A hypothetical 10% adverse change in the value of the U.S. dollar could result in a fair value loss of approximately $279 million on our foreign exchange derivative contracts designated as a net investment hedge at December 31, 2024, before considering the offsetting effect of the underlying hedged activity.
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 December 31, 2025 and 2024.
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. 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 December 31, 2025 and 2024, respectively, before considering the offsetting effect of the underlying hedged activity.
63 MASTERCARD 2025 FORM 10-K
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Item 8. Financial statements and supplementary data
Mastercard Incorporated
Index to consolidated financial statements
Page
As of December 31, 2025 and 2024 and for the years ended December 31, 2025, 2024 and 2023
Management’s report on internal control over financial reporting
65
Report of independent registered public accounting firm (PCAOB ID 238 )
66
Consolidated Statements of Operations
68
Consolidated Statements of Comprehensive Income
69
Consolidated Balance Sheet s
70
Consolidated Statements of Changes in Equity
71
Consolidated Statements of Cash Flows
73
Notes to consolidated financial statements
74
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Management’s report on internal control over financial reporting
The management of Mastercard Incorporated (“Mastercard”) is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with accounting principles generally accepted in the United States of America. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. As required by Section 404 of the Sarbanes-Oxley Act of 2002, management has assessed the effectiveness of Mastercard’s internal control over financial reporting as of December 31, 2025. In making its assessment, management has utilized the criteria set forth in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Management has concluded that, based on its assessment, Mastercard’s internal control over financial reporting was effective as of December 31, 2025. The effectiveness of Mastercard’s internal control over financial reporting as of December 31, 2025 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which appears on the next page.
65 MASTERCARD 2025 FORM 10-K
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of Mastercard Incorporated
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Mastercard Incorporated and its subsidiaries (the “Company”) as of December 31, 2025 and 2024, and the related consolidated statements of operations, comprehensive income, changes in equity and cash flows for each of the three years in the period ended December 31, 2025, including the related notes (collectively referred to as the “consolidated financial statements”). We also have audited the Company’s internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.
Basis for Opinions
The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s report on internal control over financial reporting. Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
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PART II
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Revenue Recognition - Rebates and Incentives
As described in Notes 1 and 3 to the consolidated financial statements, the Company provides certain customers with rebates and incentives which are a portion of total net revenue of $32.8 billion for the year ended December 31, 2025. The Company has business agreements with certain customers that provide for rebates and incentives within net revenue that could be either fixed or variable. Variable rebates and incentives are recorded primarily when volume- and transaction-based revenues are recognized over the contractual term. Variable rebates and incentives are calculated based upon estimated customer performance, such as volume thresholds, and the terms of the related business agreements. As disclosed by management, various factors are considered in estimating customer performance, including forecasted transactions, card issuance and card conversion volumes, expected payments and historical experience with that customer.
The principal considerations for our determination that performing procedures relating to rebates and incentives is a critical audit matter are (i) the significant judgment by management when developing estimates related to rebates and incentives based on customer performance; and (ii) a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating management’s estimates related to customer performance, including the reasonableness of the various applicable factors considered by management in the estimate.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to rebates and incentives, including controls over evaluating estimated customer performance. These procedures also included, among others, evaluating the reasonableness of estimated customer performance for a sample of customer agreements, including (i) evaluating the agreements to identify whether all rebates and incentives are identified and recorded accurately; (ii) testing management’s process for developing estimated customer performance, including evaluating the reasonableness of the various applicable factors considered by management; and (iii) evaluating estimated customer performance as compared to actual results in the period the customer reports actual performance.
/s/ PricewaterhouseCoopers LLP
New York, New York
February 11, 2026
We have served as the Company’s auditor since 1989.
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Consolidated Statements of Operations
For the Years Ended December 31,
2025 2024 2023
(in millions, except per share data)
Net Revenue $ 32,791 $ 28,167 $ 25,098
Operating Expenses:
General and administrative 11,318 10,193 8,927
Advertising and marketing 929 815 825
Depreciation and amortization 1,143 897 799
Provision for litigation 504 680 539
Total operating expenses 13,894 12,585 11,090
Operating income 18,897 15,582 14,008
Other Income (Expense):
Investment income 325 327 274
Gains (losses) on equity investments, net ( 88 ) ( 29 ) ( 61 )
Interest expense ( 722 ) ( 646 ) ( 575 )
Other income (expense), net 166 20 ( 7 )
Total other income (expense) ( 319 ) ( 328 ) ( 369 )
Income before income taxes 18,578 15,254 13,639
Income tax expense 3,610 2,380 2,444
Net Income $ 14,968 $ 12,874 $ 11,195
Basic Earnings per Share $ 16.54 $ 13.91 $ 11.86
Basic weighted-average shares outstanding 905 925 944
Diluted Earnings per Share $ 16.52 $ 13.89 $ 11.83
Diluted weighted-average shares outstanding 906 927 946
The accompanying notes are an integral part of these consolidated financial statements.
MASTERCARD 2025 FORM 10-K 68
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Consolidated Statements of Comprehensive Income
For the Years Ended December 31,
2025 2024 2023
(in millions)
Net Income $ 14,968 $ 12,874 $ 11,195
Other comprehensive income (loss):
Foreign currency translation adjustments 596 ( 456 ) 328
Income tax effect ( 72 ) 17 ( 33 )
Foreign currency translation adjustments, net of income tax effect 524 ( 439 ) 295
Translation adjustments on net investment hedges ( 215 ) 147 ( 165 )
Income tax effect 46 ( 33 ) 37
Translation adjustments on net investment hedges, net of income tax effect ( 169 ) 114 ( 128 )
Cash flow hedges ( 301 ) 161 ( 41 )
Income tax effect 20 ( 12 ) 10
Reclassification adjustments for cash flow hedges
395 ( 178 ) 35
Income tax effect ( 11 ) — ( 8 )
Cash flow hedges, net of income tax effect 103 ( 29 ) ( 4 )
Defined benefit pension and other postretirement plans ( 8 ) 23 ( 18 )
Income tax effect 2 ( 4 ) 5
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 ( 6 ) 19 ( 14 )
Investment securities available-for-sale
— 1 6
Income tax effect — — ( 1 )
Investment securities available-for-sale, net of income tax effect — 1 5
Other comprehensive income (loss), net of income tax effect 452 ( 334 ) 154
Comprehensive Income $ 15,420 $ 12,540 $ 11,349
The accompanying notes are an integral part of these consolidated financial statements.
69 MASTERCARD 2025 FORM 10-K
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Consolidated Balance Sheets
December 31,
2025 2024
(in millions, except per share data)
Assets
Current assets:
Cash and cash equivalents $ 10,566 $ 8,442
Restricted cash and restricted cash equivalents 561 492
Restricted security deposits held for customers 2,121 1,874
Investments 332 330
Accounts receivable 4,609 3,773
Settlement assets 1,626 1,821
Prepaid expenses and other current assets 3,743 2,992
Total current assets 23,558 19,724
Property, equipment and right-of-use assets, net 2,303 2,138
Deferred income taxes 1,567 1,614
Goodwill 9,560 9,193
Other intangible assets, net 5,554 5,453
Other assets 11,615 9,959
Total Assets $ 54,157 $ 48,081
Liabilities and Equity
Current liabilities:
Accounts payable $ 999 $ 929
Settlement obligations 2,409 2,316
Restricted security deposits held for customers 2,121 1,874
Accrued litigation 800 930
Accrued expenses 13,272 10,393
Short-term debt 749 750
Other current liabilities 2,412 2,028
Total current liabilities 22,762 19,220
Long-term debt 18,251 17,476
Deferred income taxes 307 317
Other liabilities 5,091 4,553
Total Liabilities 46,411 41,566
Commitments and Contingencies
Stockholders’ Equity
Class A common stock, $ 0.0001 par value; authorized 3,000 shares, 1,406 and 1,404 shares issued and 887 and 907 shares outstanding, respectively
— —
Class B common stock, $ 0.0001 par value; authorized 1,200 shares, 7 shares issued and outstanding
— —
Additional paid-in-capital 6,907 6,442
Class A treasury stock, at cost, 518 and 497 shares, respectively
( 83,224 ) ( 71,431 )
Retained earnings 85,035 72,907
Accumulated other comprehensive income (loss) ( 981 ) ( 1,433 )
Mastercard Incorporated Stockholders' Equity
7,737 6,485
Non-controlling interests 9 30
Total Equity 7,746 6,515
Total Liabilities and Equity $ 54,157 $ 48,081
The accompanying notes are an integral part of these consolidated financial statements.
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Consolidated Statements of Changes in Equity
Stockholders’ Equity
Common Stock
Additional
Paid-In
Capital Class A
Treasury
Stock Retained
Earnings Accumulated
Other
Comprehensive
Income (Loss) Mastercard Incorporated Stockholders' Equity Non-
Controlling
Interests Total
Equity
Class A Class B
(in millions)
Balance at December 31, 2022 $ — $ — $ 5,298 $ ( 51,354 ) $ 53,607 $ ( 1,253 ) $ 6,298 $ 58 $ 6,356
Net income — — — — 11,195 — 11,195 — 11,195
Activity related to non-controlling interests — — — — — — — ( 12 ) ( 12 )
Redeemable non-controlling interest adjustments — — — — ( 7 ) — ( 7 ) — ( 7 )
Other comprehensive income (loss) — — — — — 154 154 — 154
Dividends — — — — ( 2,231 ) — ( 2,231 ) — ( 2,231 )
Purchases of treasury stock — — — ( 9,088 ) — — ( 9,088 ) — ( 9,088 )
Share-based payments — — 595 13 — — 608 — 608
Balance at December 31, 2023 — — 5,893 ( 60,429 ) 62,564 ( 1,099 ) 6,929 46 6,975
Net income — — — — 12,874 — 12,874 — 12,874
Activity related to non-controlling interests — — — — — — — ( 16 ) ( 16 )
Redeemable non-controlling interest adjustments — — — — ( 5 ) — ( 5 ) — ( 5 )
Other comprehensive income (loss) — — — — — ( 334 ) ( 334 ) — ( 334 )
Dividends — — — — ( 2,526 ) — ( 2,526 ) — ( 2,526 )
Purchases of treasury stock — — — ( 11,025 ) — — ( 11,025 ) — ( 11,025 )
Share-based payments — — 549 23 — — 572 — 572
Balance at December 31, 2024 — — 6,442 ( 71,431 ) 72,907 ( 1,433 ) 6,485 30 6,515
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Consolidated Statements of Changes in Equity (Continued)
Stockholders’ Equity
Common Stock Additional
Paid-In
Capital
Class A
Treasury
Stock
Retained
Earnings Accumulated
Other
Comprehensive
Income (Loss) Mastercard Incorporated Stockholders' Equity Non-
Controlling
Interests Total
Equity
Class A Class B
(in millions)
Balance at December 31, 2024 — — 6,442 ( 71,431 ) 72,907 ( 1,433 ) 6,485 30 6,515
Net income — — — — 14,968 — 14,968 14,968
Activity related to non-controlling interests — — — — — — — ( 21 ) ( 21 )
Other comprehensive income (loss) — — — — — 452 452 — 452
Dividends — — — — ( 2,840 ) — ( 2,840 ) — ( 2,840 )
Purchases of treasury stock — — — ( 11,837 ) — — ( 11,837 ) — ( 11,837 )
Share-based payments — — 465 44 — — 509 — 509
Balance at December 31, 2025 $ — $ — $ 6,907 $ ( 83,224 ) $ 85,035 $ ( 981 ) $ 7,737 $ 9 $ 7,746
The accompanying notes are an integral part of these consolidated financial statements.
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Consolidated Statements of Cash Flows
For the Years Ended December 31,
2025 2024 2023
(in millions)
Operating Activities
Net income $ 14,968 $ 12,874 $ 11,195
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of customer incentives 2,098 1,830 1,622
Depreciation and amortization 1,143 897 799
(Gains) losses on equity investments, net 88 29 61
Share-based compensation 597 526 460
Deferred income taxes 57 ( 527 ) ( 236 )
Other 139 191 22
Changes in operating assets and liabilities:
Accounts receivable ( 642 ) 186 ( 546 )
Income taxes receivable ( 91 ) ( 165 ) ( 171 )
Settlement assets 202 ( 593 ) 40
Prepaid expenses ( 3,388 ) ( 3,225 ) ( 2,438 )
Accrued litigation and legal settlements ( 142 ) 205 ( 375 )
Restricted security deposits held for customers 247 29 277
Accounts payable 45 75 ( 99 )
Settlement obligations 89 922 282
Accrued expenses 1,836 1,587 571
Long-term taxes payable ( 185 ) ( 163 ) ( 129 )
Net change in other assets and liabilities 587 102 645
Net cash provided by operating activities 17,648 14,780 11,980
Investing Activities
Purchases of investment securities available-for-sale ( 501 ) ( 508 ) ( 300 )
Purchases of investments held-to-maturity ( 28 ) ( 108 ) ( 347 )
Proceeds from sales of investment securities available-for-sale 254 199 87
Proceeds from maturities of investment securities available-for-sale 232 262 191
Proceeds from maturities of investments held-to-maturity 52 378 157
Purchases of property and equipment ( 489 ) ( 474 ) ( 371 )
Capitalized software ( 726 ) ( 720 ) ( 717 )
Purchases of equity investments ( 339 ) ( 42 ) ( 89 )
Proceeds from sales of equity investments 181 125 44
Acquisition of businesses, net of cash acquired — ( 2,511 ) —
Other investing activities 2 ( 3 ) ( 6 )
Net cash used in investing activities ( 1,362 ) ( 3,402 ) ( 1,351 )
Financing Activities
Purchases of treasury stock ( 11,727 ) ( 10,954 ) ( 9,032 )
Dividends paid ( 2,756 ) ( 2,448 ) ( 2,158 )
Proceeds from debt, net 1,242 3,960 1,554
Payment of debt ( 750 ) ( 1,336 ) —
Tax withholdings related to share-based payments ( 291 ) ( 178 ) ( 89 )
Cash proceeds from employee stock plans 203 224 237
Other financing activities ( 100 ) ( 104 ) —
Net cash used in financing activities ( 14,179 ) ( 10,836 ) ( 9,488 )
Effect of exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents 333 ( 199 ) 128
Net increase in cash, cash equivalents, restricted cash and restricted cash equivalents 2,440 343 1,269
Cash, cash equivalents, restricted cash and restricted cash equivalents - beginning of period 10,808 10,465 9,196
Cash, cash equivalents, restricted cash and restricted cash equivalents - end of period $ 13,248 $ 10,808 $ 10,465
The accompanying notes are an integral part of these consolidated financial statements.
73 MASTERCARD 2025 FORM 10-K
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Notes to consolidated financial statements
Note 1. Summary of Significant Accounting Policies
Organization
Mastercard Incorporated and its consolidated subsidiaries, including Mastercard International Incorporated (“Mastercard International” and together with Mastercard Incorporated, “Mastercard” or the “Company”), is a technology company in the global payments industry. Mastercard connects consumers, financial institutions, merchants, governments, digital partners, businesses and other organizations worldwide by enabling electronic payments and making those payment transactions secure, simple, smart and accessible. The Company makes payments easier and more efficient by providing a wide range of payment solutions and services using its family of well-known and trusted brands, including its primary brand Mastercard®, as well as its Maestro® and Cirrus® brands. The Company operates a payments network that provides choice and flexibility for consumers, merchants and Mastercard customers. Through its unique and proprietary global payments network, the Company switches (authorizes, clears and settles) payment transactions. The Company has additional payments capabilities that include automated clearing house (“ACH”) transactions (both batch and real-time account-based payments). Using these capabilities, the Company offers consumer and commercial payment products, captures new payment flows and provides services and solutions. The Company’s services and solutions include, among others, security solutions, consumer acquisition and engagement services, business and market insights, digital and authentication, processing and gateway and other solutions, all of which draw on Mastercard’s principled and responsible use of secure data. The Company’s capabilities strengthen, reinforce and complement each other and are fundamentally interdependent. For the global payments network, Mastercard’s franchise model sets the standards and ground-rules that balance value and risk across (and allows for interoperability among) all stakeholders. The Company employs a multi-layered approach to help protect the global payments ecosystem in which it operates.
Mastercard is not a financial institution. The Company does not issue cards, extend credit, determine or receive revenue from interest rates or other fees charged to account holders by issuers, nor does the Company establish the rates charged by acquirers in connection with merchants’ acceptance of the Company’s products. In most cases, account holder relationships belong to, and are managed by, the Company’s financial institution customers.
Significant Accounting Policies
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 sheets. At December 31, 2025 and 2024, there were no significant VIEs that 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. Certain prior period amounts within the consolidated statements of cash flows have been reclassified to conform to the 2025 presentation. The reclassification had no impact on previously reported net cash flows from operating, investing or financing activities. The Company follows accounting principles generally accepted in the United States of America (“GAAP”).
Non-controlling interests represent the equity interest not owned by the Company and are recorded for consolidated entities in which the Company owns less than 100 % of the interests. Changes in a parent’s ownership interest while the parent retains its controlling interest are accounted for as equity transactions, and upon loss of control, retained ownership interests are remeasured at fair value, with any gain or loss recognized in earnings. For 2025, 2024 and 2023, net income/(losses) attributable to non-controlling interests were not material and, as a result, amounts are included on the consolidated statements of operations within other income (expense).
Use of estimates - The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Future events and their effects cannot be predicted with certainty; accordingly, accounting estimates require the exercise of judgment. These financial statements were prepared using information reasonably available as of December 31, 2025 and through the date of this Report. The accounting estimates used in the preparation of the Company’s consolidated financial statements may change as new events occur, as more experience is acquired, as additional information is obtained and as the Company’s operating environment changes. Actual results may differ from these estimates.
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA - NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Revenue recognition - Revenue is recognized to depict the transfer of promised services to customers in an amount that reflects the consideration to which the Company expects to be entitled to in exchange for those services.
Revenue from the Company’s payment network is primarily generated by charging fees to customers (issuers, acquirers and other market participants) for providing switching and other network-related services, as well as by charging fees to customers based primarily on the gross dollar volume of activity (GDV, which includes both domestic and cross-border volume) on the cards that carry the Company’s brands. Revenue is recognized in the period in which the related transactions and volume occur. Certain volume-based revenue is determined from information reported by customers.
Revenue from the Company’s value-added services and solutions is generated through either fixed or transaction-based fees. These services and solutions can be integrated and sold with the Company’s payment network services or can be sold on a stand-alone basis. For those contracts that include multiple performance obligations, the Company allocates revenue to each performance obligation based on its relative standalone selling price (“SSP”). The SSP is the price at which the Company would sell a promised product or service separately in similar circumstances to similar customers. Revenue from the Company’s value-added services and solutions is recognized in the period in which the related services and solutions are performed or transactions occur. For services provided to customers where delivery involves the use of a third-party, the Company recognizes revenue on a gross basis if it acts as the principal, controlling the service to the customer, or on a net basis if it acts as the agent, arranging for the service to be provided.
Mastercard has business agreements with certain customers that provide for rebates and incentives within net revenue that could be either fixed or variable. Fixed incentives typically represent payments to a customer directly related to entering into an agreement, which are generally capitalized and amortized over the life of the agreement on a straight-line basis. Variable rebates and incentives are recorded primarily when volume- and transaction-based revenues are recognized over the contractual term and are calculated based upon estimated customer performance, such as volume thresholds, and the terms of the related business agreements. Capitalized customer incentives are included in prepaid expenses and other current assets and other assets on the consolidated balance sheets. Customer incentives to be paid to customers under business agreements are included in accrued expenses and other liabilities on the consolidated balance sheets.
Certain of the Company’s contracts may include options to receive additional value-added services and solutions. The Company accounts for the option as a distinct performance obligation if the option provides a material right to the customer. Material rights are incremental to the standard offerings, which a customer would not have received without entering into the contract. If a material right exists in a contract, revenue allocated to the option is deferred and recognized as revenue when those future products or services are transferred or when the option expires. The value of the option is based on observable prices in the contract or on a relative SSP basis.
Contract assets include unbilled consideration typically resulting from executed value-added services and solutions performed for customers in connection with Mastercard’s payments network service arrangements. Collection for these services typically occurs over the contractual term. Contract assets are included in prepaid expenses and other current assets and other assets on the consolidated balance sheets.
The Company defers the recognition of revenue when consideration has been received prior to the satisfaction of performance obligations. As these performance obligations are satisfied, revenue is subsequently recognized. Deferred revenue primarily relates to certain value-added services and solutions. Deferred revenue is included in other current liabilities and other liabilities on the consolidated balance sheets.
Business combinations - The Company accounts for business combinations under the acquisition method of accounting. The Company measures the tangible and intangible identifiable assets acquired, liabilities assumed, any non-controlling interest in the acquiree and contingent consideration at fair value as of the acquisition date. Acquisition-related costs are expensed as incurred and are included in general and administrative expenses on the consolidated statements of operations. Any excess purchase price over the fair value of net assets acquired, including identifiable intangible assets, is recorded as goodwill. Measurement period adjustments, if any, to the preliminary estimated fair value of the intangibles assets as of the acquisition date are recorded in goodwill.
Goodwill and other intangible assets - Indefinite-lived intangible assets consist of goodwill and customer relationships. Goodwill represents the synergies expected to arise after the acquisition date and the assembled workforce. Finite-lived intangible assets consist of capitalized software costs, intangible assets acquired in business combinations (including customer relationships and acquired technology) and other intangible assets. Intangible assets with finite useful lives are amortized over their estimated useful lives, on a straight-line basis, which range from one to twenty years . Capitalized software includes internal and external costs incurred directly related to the design, development and testing phases of each capitalized software project.
The valuation methods for goodwill and other intangible assets acquired in business combinations involve assumptions concerning comparable company multiples, discount rates, growth projections and other assumptions of future business conditions. The
75 MASTERCARD 2025 FORM 10-K
PART II