Mastercard(MA) - 2025 Q4 - Annual Report

Financial Performance - Net revenue for 2025 reached $32.8 billion, up 16% from the previous year, with net income also increasing by 16% to $15.0 billion, resulting in a diluted EPS of $16.52, up 19%[18] - Adjusted net revenue was $32.8 billion, reflecting a 15% increase, while adjusted net income rose to $15.4 billion, up 13%, leading to an adjusted diluted EPS of $17.01, up 15%[18] Transaction Volume - Gross dollar volume (GDV) for Mastercard-branded programs reached $10.6 trillion, with a 15% increase, and cross-border volume grew by 9%[18] - Consumer credit GDV was $3.878 billion, up 8%, while consumer debit and prepaid GDV reached $5.349 billion, up 9%[19] Strategic Priorities - The company is focusing on three strategic priorities: growing core consumer payments, diversifying into new customers and geographies, and building new areas for the future[20][21] - Mastercard aims to capture opportunities in commercial payments and disbursements through its Mastercard Move capabilities, enhancing money movement solutions[23] Technology and Security - The company is investing in technology and data to create smarter, more secure commerce solutions, emphasizing the importance of AI and data governance[30] - Mastercard employs a multi-layered security approach to protect its payment ecosystem, addressing cyber threats and ensuring transaction security[47][48] - Approximately 40% of all Mastercard transactions are now tokenized, enhancing security and user experience[67] - Mastercard launched Mastercard Threat Intelligence in 2025 to proactively detect cyberattacks and prevent payment fraud[73] Payment Network and Capabilities - Mastercard's payment network supports transactions in over 150 currencies across more than 220 countries, facilitating a secure and efficient payment process[36] - Mastercard's payment network switches over 70% of all transactions for Mastercard and Maestro-branded cards, including nearly all cross-border transactions[49] - The Mastercard Move platform enables money transfers to over 17 billion endpoints globally across more than 60 originating countries and 155 receiving countries[63] - In 2025, Mastercard embedded its virtual card technology in more than 10 global B2B and travel and expense platforms, doubling the number from 2024[63] Financial Inclusion and Social Impact - Mastercard's prepaid programs aim to drive financial inclusion for previously unbanked individuals through social security payments and unemployment benefits[54] - The company supports stablecoin transactions through approximately 130 crypto co-brand card programs, enhancing digital asset integration[67] Employee and Workforce - As of December 31, 2025, Mastercard employed approximately 39,800 persons globally, with 70% outside the U.S., and the total workforce cost was $7.3 billion[80] - Mastercard's voluntary workforce turnover was approximately 6% as of December 31, 2025, indicating a stable employee retention rate[80] Regulatory Environment - The company is subject to government regulations that impact its operations, including oversight from central banks and compliance with laws in multiple countries[107] - In July 2025, the EU introduced revised systemic importance regulations, enhancing cyber resilience and risk management requirements for systemically important payment systems[110] - Brazil's Central Bank established new regulations for Payment Scheme Operators, enhancing governance and accountability standards across the payments ecosystem[110] - Interchange fees are regulated in some jurisdictions, with caps on debit interchange and ongoing litigation affecting these fees[109] Competitive Landscape - Mastercard faces intense competition from global payment networks such as Visa, American Express, and China UnionPay, with varying market shares in different jurisdictions[100] - The company’s competitive advantages include a highly adaptable global payments network, a strong brand, and advanced technology capabilities[105] - Regulatory initiatives may lead to increased competition from alternative payment service providers and fintechs, impacting Mastercard's market share[104] Risk Management - The company monitors market risk exposures continuously and implements policies to manage funding, investments, and derivative financial instruments[332] - A hypothetical 10% adverse change in foreign currency values could result in a fair value loss of approximately $405 million and $475 million on foreign exchange derivative contracts outstanding at December 31, 2025 and 2024 respectively[334] - A hypothetical 10% adverse change in the U.S. dollar could result in a fair value loss of approximately $279 million on such contracts at December 31, 2024[336] - A hypothetical 100 basis point adverse change in interest rates would not have a material impact on the fair value of the company's available-for-sale debt investments at December 31, 2025 and 2024[337] Data Governance and Privacy - The company has established a governance framework to ensure data protection and fairness in AI applications, adhering to its Data and Tech Responsibility Principles[91] - The company has established a comprehensive privacy, data protection, and information security program to protect personal data of EEA residents under GDPR[115] - The interpretation and application of privacy and data laws are constantly evolving, requiring ongoing monitoring and governance by the company[116] Brand and Marketing Strategy - Mastercard announced a partnership with the McLaren Formula 1 Team, becoming the official naming partner starting in the 2026 season[89] - The company emphasizes a competitive compensation approach, including a global minimum standard of 10% of base pay toward retirement[87] - Mastercard's brand strategy includes managing its various brands to reinforce connectivity and value across its customer base, supported by a consistent marketing message[88] Digital Infrastructure and Innovation - The company is expanding its digital public infrastructure initiatives, which are increasingly supported by government efforts to enhance local payment systems[104] - Mastercard's open finance platform allows secure access and management of consumer data, improving customer experience and driving financial inclusion[79] - The company aims to enhance its processing capabilities in the payments value chain with an expanded suite of offerings, including ACH batch and real-time account-based payments[77] - Mastercard's data and AI initiatives focus on enhancing security, personalization, and efficiency, utilizing various data sources and advanced analytics[90]