⚠ Litigation as a Standing CostModerate threat

Mastercard (MA) — threat to the moat

Mastercard has set money aside for litigation in every year for a decade, and some open cases seek more than a billion dollars.

Mastercard has been sued somewhere in almost every year of its public life, and the provisions show it. The provision for litigation was $1,128 million in 20181, $356 million in 20222, $539 million in 20233, $680 million in 2024 and $504 million in 20254. Cash paid for legal settlements was $647 million in 20255.

Provision for litigation ($M)1,12820183562022539202368020245042025Mastercard Forms 10-K FY2020-FY2025; FY2025 results release
A steady drip with an occasional flood.

The cases are various. The 2018 figure included a European Commission fine of €571 million6; later years include American merchant opt-outs, ATM surcharge cases and consumer claims. In the United Kingdom the Merricks consumer action was settled for £200 million, $263 million7.

At current earnings these amounts are affordable, about 3% to 5% of net income in recent years8. The risk is not the steady drip but a large adverse judgment, and several open American cases seek damages in excess of $1 billion9.

The smaller cases add up. Mastercard accrued $93 million for a bank-ATM consumer settlement approved in June 2025 and $79 million for a non-bank ATM consumer case, and $80 million to settle an EMV liability-shift class action10. A fax-advertising case involves approximately 381,000 faxes11. None of these threatens the business; together they explain why the provision line never reaches zero. A network that touches billions of transactions touches thousands of potential plaintiffs.

What would change this is a single provision above $1 billion again, as in 2018. It would say one of the open cases had gone badly.

References
  1. ReportedThe provision for litigation was $1,128 million in 2018, $356 million in 2022, $539 million in 2023, $680 million in 2024 and $504 million in 2025.
    Mastercard Form 10-K for fiscal 2020 - gross revenue and rebates for 2018-2020, the 2020 decline, the Finicity acquisition and the European Commission fine. — FY2020 · publ. February 2021 · source ↗
  2. ReportedThe provision for litigation was $1,128 million in 2018, $356 million in 2022, $539 million in 2023, $680 million in 2024 and $504 million in 2025.
    Mastercard Form 10-K for fiscal 2022 - key metrics and rebates for 2020-2022, the Ekata and Dynamic Yield acquisitions and the five largest customers. — FY2022 · publ. February 2023 · source ↗
  3. ReportedThe provision for litigation was $1,128 million in 2018, $356 million in 2022, $539 million in 2023, $680 million in 2024 and $504 million in 2025.
    Mastercard Form 10-K for fiscal 2023 - rebates of $15,182 million, the five largest customers, and North American and International Markets revenue for 2021-2023. — FY2023 · publ. February 2024 · source ↗
  4. ReportedThe provision for litigation was $1,128 million in 2018, $356 million in 2022, $539 million in 2023, $680 million in 2024 and $504 million in 2025.
    Mastercard fourth-quarter and full-year 2025 results release, Form 8-K exhibit 99.1 - statements, cash flow and operating metrics. — FY2025 · publ. 29 January 2026 · source ↗
  5. ReportedCash paid for legal settlements was $647 million in 2025.
    Mastercard Form 10-K for fiscal 2025 - Item 1A risk factors and Note 19 legal and regulatory proceedings. — FY2025 · publ. 11 February 2026 · source ↗
  6. ReportedThe 2018 figure included a European Commission fine of €571 million; later years include American merchant opt-outs, ATM surcharge cases and consumer claims.
    Mastercard Form 10-K for fiscal 2020 - gross revenue and rebates for 2018-2020, the 2020 decline, the Finicity acquisition and the European Commission fine. — FY2020 · publ. February 2021 · source ↗
  7. ReportedIn the United Kingdom the Merricks consumer action was settled for £200 million, $263 million.
    Mastercard Form 10-K for fiscal 2025 - Item 1A risk factors and Note 19 legal and regulatory proceedings. — FY2025 · publ. 11 February 2026 · source ↗
  8. Moat Explorer calcAt current earnings these amounts are affordable, about 3% to 5% of net income in recent years.
    Moat Explorer calculation from Mastercard's reported figures ($ millions unless stated). Gross payment network assessments 2025: 11,029 + 12,021 + 15,930 + 1,018 = 39,998; rebates 20,522 / 39,998 = 51.3%; 2024: 10,245 + 10,181 + 13,602 + 936 = 34,964, 17,629 / 34,964 = 50.4%; 2023: 15,182 / (15,824 + 15,182) = 49.0%; 2022: 8,794 + 6,597 + 10,646 + 766 = 26,803, 12,445 / 26,803 = 46.4%; 2021: 10,476 / (11,943 + 10,476) = 46.7%. Q2 2026: 5,997 / (5,451 + 5,997) = 52.4%; gross assessments growth (5,451 + 5,997) / (4,945 + 5,997 / 1.22) - 1 = about 16%. Old basis: 3,980 / 13,647 = 29.2% (2015); 8,315 / 23,616 = 35.2% (2020). Rebates 20,522 / 3,980 = 5.2 times; net revenue 32,791 / 9,667 = 3.4 times. Rebates against gross revenue 2025: 20,522 / (32,791 + 20,522 = 53,313) = 38.5%; Visa 15,751 / (40,000 + 15,751 = 55,751) = 28.3%; difference 20,522 - 15,751 = 4,771. US share: 2,958 / (2,958 + 7,028) = 29.6%; four networks 2,958 / 11,463 = 25.8%; Amex and Discover 11,463 - 9,986 = 1,477, 1,477 / 11,463 = 12.9%. Outside the US 100% - 29% = 71%. Cross-border assessments 12,021 / 3,498 = 3.4 times; cross-border volume fees 3,512 / 5,606 - 1 = -37.4%; 12,021 x 0.37 = 4,448. Services share of net revenue: 5,404 / 15,301 = 35.3% (2020); 6,941 / 18,884 = 36.8%; 7,879 / 22,237 = 35.4%; 9,274 / 25,098 = 37.0%; 10,832 / 28,167 = 38.5%; 13,315 / 32,791 = 40.6% (2025); 3,826 / 9,277 = 41.2% (Q2 2026); payment network 19,476 / 32,791 = 59.4%. Growth: payment network 11,943 / 9,897 - 1 = 21%, 14,358 / 11,943 - 1 = 20%, 15,824 / 14,358 - 1 = 10%, 17,335 / 15,824 - 1 = 10%, 19,476 / 17,335 - 1 = 12%; 19,476 / 9,897 = 2.0 times; services 7,879 / 6,941 - 1 = 14% (2022), 13,315 / 5,404 = 2.5 times; growth gap Q2 2026 20% - 10% = 10 points; acquisitions 3 / 23 = 13%. Operating margin: 5,078 / 9,667 = 52.5% (2015); 6,622 / 12,497 = 53.0% (2017); 7,282 / 14,950 = 48.7% (2018); 9,664 / 16,883 = 57.2% (2019); 8,081 / 15,301 = 52.8% (2020); 12,264 / 22,237 = 55.2% (2022). Headcount 39,800 / 13,400 = 3.0 times; net revenue 32,791 / 12,497 = 2.6 times (2017-2025). Capital spending 489 + 726 = 1,215; 1,215 / 32,791 = 3.7%; free cash flow 17,648 - 1,215 = 16,433; returned 11,727 + 2,756 = 14,483, 14,483 / 16,433 = 88%. Net debt 30 June 2026: 2,459 + 22,184 - 11,291 = 13,352. Diluted shares 906 / 1,137 - 1 = -20.3%; EPS 16.52 / 3.35 = 4.9 times, (16.52 / 3.35)^(1/10) - 1 = 17.3% a year; net income 14,968 / 3,808 = 3.9 times; net revenue (32,791 / 9,667)^(1/10) - 1 = 13.0% a year. Year-end P/E (market value over net income): 109.31 / 3.808 = 28.7 (2015); 160.24 / 3.915 = 40.9 (2017); 301.24 / 8.118 = 37.1 (2019); 353.05 / 8.687 = 40.6 (2021); 334.33 / 9.930 = 33.7 (2022); 483.30 / 12.874 = 37.5 (2024); 512.65 / 14.968 = 34.2 (2025); earnings yield 1 / 31.13 = 3.2%. Litigation provision against net income: 504 / 14,968 = 3.4%; 539 / 11,195 = 4.8%; 680 / 12,874 = 5.3%. Tax: pre-tax income 2025 14,968 + 3,610 = 18,578; (19.4% - 15.6%) x 18,578 = about 706. Amortised incentives 2,098 / 19,476 = 10.8%. Five-customer net revenue 6.9 bn. BVNK 1,500 / 11,727 = 13% of 2025 buybacks; acquisitions since 2020 809 + 861 + 325 + 2,700 + 1,500 = 6,195, 1,500 / 6,195 = 24%. Recorded Future 2,700 / 14,968 = 18%. Commercial gross dollar volume 1,405 / 10,632 = 13.2%. Property, equipment and right-of-use assets 1,168 + 1,135 = 2,303 - rebates, assessments and growth. — 2015-2026 · publ. September 2026 · source ↗
    Method: Arithmetic on figures reported in Mastercard's Forms 10-K, 10-Q, results releases, the Visa 10-K and the Nilson Report; operands shown in the source line.
  9. ReportedThe risk is not the steady drip but a large adverse judgment, and several open American cases seek damages in excess of $1 billion.
    Mastercard Form 10-K for fiscal 2025 - Item 7 MD&A: net revenue by category, key metrics, rebates, geography and the five largest customers. — FY2025 · publ. 11 February 2026 · source ↗
  10. ReportedMastercard accrued $93 million for a bank-ATM consumer settlement approved in June 2025 and $79 million for a non-bank ATM consumer case, and $80 million to settle an EMV liability-shift class action.
    Mastercard Form 10-K for fiscal 2025 - Item 1A risk factors and Note 19 legal and regulatory proceedings. — FY2025 · publ. 11 February 2026 · source ↗
  11. ReportedA fax-advertising case involves approximately 381,000 faxes.
    Mastercard Form 10-K for fiscal 2025 - Item 7 MD&A: net revenue by category, key metrics, rebates, geography and the five largest customers. — FY2025 · publ. 11 February 2026 · source ↗
Sources
Generated September 25, 2026