Dear Fellow Shareholders:

In 2008 — in the face of a global economic crisis not seen in more than a generation — we responded the way smart companies do: by aligning resources to meet the changing needs of our customers. Despite the challenges, we achieved excellent operating results while maintaining a healthy balance sheet.

Our customer-focused strategy has never been more important as we help our customers weather the headwinds of the financial crisis. This approach has served us well in the best of times and continues to do so now as we work with our customers to optimize portfolios, maximize efficiencies, mitigate risks and reduce charge-offs. By addressing these areas head on, we’ve become an important ally in the toughest of times while positioning ourselves as a preferred partner for the future.

Immediate challenges aside, we continue to keep our eye on the big picture: the global migration to faster, more efficient and more secure forms of payment. Despite today’s priorities, our long-term objective remains the same: to steadily displace cash and checks and advance commerce globally.

Strong Results Despite a Challenging Economy
Overall, MasterCard revenues increased by 22.7 percent in 2008, to $5.0 billion. Excluding special items, we generated net income of $1.2 billion for the year, or $9.45 per share on a diluted basis, compared with $1.0 billion, or $7.58 a share, in 2007.1 Our operating margin, excluding the impact of special items, was 39 percent for full-year 2008, an 11.7 percentage point improvement over 2007.

MasterCard generated worldwide gross dollar volume (GDV) of more than $2.5 trillion, a 10.7 percent increase in local currency terms over 2007. GDV was tempered in the fourth quarter by lower levels of consumer spending, particularly in the United States. Worldwide purchase volume for 2008 rose 11.3 percent in local currency terms, to $1.9 trillion.

At year-end, our customers had issued 981 million MasterCard-branded cards, a 7.6 percent increase over 2007. Though not refl ected in our GDV, we also have 652 million Maestro®-branded cards. Transactions processed across the MasterCard Worldwide Network increased 11.8 percent, to 21 billion.

Growth was led by expanding use and acceptance of our cards in markets outside the United States. While we expect this trend to continue, net revenue growth is anticipated to be lower in 2009 due to recessionary conditions in many economies.

Competitive Strengths Set MasterCard Apart
We are fortunate to meet the global economic challenges from a position of strength thanks to sound management
practices, the diversification of our business and a host of advantages that set our organization apart. In particular, our business model as a franchisor, processor and advisor represents a competitive advantage, as customers around the world tap into the power of our brand, payment processing network and industry expertise.

Our brand positioning — ”the best way to pay for everything that matters” — resonates as deeply as ever as consumers and businesses carefully consider each and every purchase. Our compelling product offerings can be used at more than 28.5 million acceptance locations, including 1.5 million ATMs, as well as other locations where cash may be obtained. Meanwhile, our global Priceless® campaign continues to transcend borders and cultures, appearing in 110 countries and 51 languages — and, in 2008, received numerous awards as one of the world’s most admired and enduring campaigns. In addition, we continue to leverage top-tier sponsorships that help drive business for our customers and unique experiences for our cardholders.

At the same time, the MasterCard Worldwide Network processes billions of transactions each year, fueling connections among our customers, merchants and cardholders that propel commerce around the world. With an agile and integrated structure unparalleled in the industry, our network delivers operational excellence, shaping innovative solutions for customers, efficient payment alternatives for merchants and greater choice and convenience for cardholders. The new MasterCard Integrated Processing Solutions™ platform, for example, enables customers to offer leading-edge products and expand debit and prepaid portfolios across banking channels.

Our ability to analyze transactional data and produce actionable intelligence and market insights continues to prove its value as well. MasterCard Advisors — our global professional services organization — provides customers with strategic approaches that drive new business opportunities. In the United States and the United Kingdom, SpendingPulse®, a macroeconomic indicator from MasterCard Advisors, reports on retail spending in a variety of categories. Additional MasterCard reports shed light on everything from the rise of Internet shopping among Asian women to ways European fi nancial institutions can better understand their cardholder base.

Of course, of all our advantages, our employees are our greatest strength. They have taken up the call to reduce costs during these challenging times and continue to focus firmly on the needs of our customers. From St. Louis to Singapore, they embrace the values that permeate our culture — teamwork, transparency and diversity — while upholding our high ethical standards.

Positioning MasterCard for the Future
Centering our efforts on what matters most to our customers, we made key decisions and investments over the past year that lay the groundwork for the future.

On the legal front, we resolved disputes with American Express and Discover Financial Services. On the regulatory side, we applauded the decision of Canada’s Commissioner of Competition to support dual issuance of competing payment brands by financial institutions. This move provides new prospects in a market where MasterCard has become the fastest-growing payments brand.

In 2008, we forged a number of important relationships. We began integrating our operations with Europay France, enabling French banks to provide competitive services while benefiting from a single point of contact for their electronic payment needs. In addition, with innovation critical to delivering value, we acquired Ireland-based software company Orbiscom, building on our existing partnership, through which we developed MasterCard inControl™. Earlier this year, we also increased our equity in Strategic Payment Services, becoming the majority stakeholder in the Australian joint venture which provides outsourced processing solutions in the region. Our ability to make these investments reflects our strong capital position and forward focus.

Innovative Payment Solutions Offer Long-Range Value
We continue to roll out innovative products that make life easier for consumers, such as MasterCard PayPass®, the leading Tap & Go® payment solution. One noteworthy example in 2008 included partnering with Telecom Italia to develop PayPass-enabled payments on mobile phones. We now have more than 50 million PayPass-enabled cards and devices, with acceptance locations in 28 countries.

At the same time, we offer a number of card programs that target the affl uent segment. In Latin America, we now have MasterCard Black™ card programs in 19 countries, as well as World Elite® MasterCard in Mexico. We also rolled out World MasterCard® in numerous markets, including China, Malaysia, Qatar, Saudi Arabia and Singapore, among others. In addition, we recently launched World Debit™ MasterCard, the fi rst premium debit card in the United States.

Meanwhile, our debit and prepaid programs continue to gain momentum around the world. To further differentiate our offerings in the United States, we launched MasterCard Savings™, exclusively providing MasterCard debit and prepaid cardholders with discounts and special offers from thousands of merchants. In addition, we rolled out the Chicago Bears Debit MasterCard card with Chase. In India, we partnered with Citibank to launch the fi rst MasterCard premium debit program in South Asia.

In Europe, we made inroads that support the Single Euro Payments Area initiative. We began processing domestic debit transactions in several countries and launched Debit MasterCard in Finland and Maestro-only branded cards in Germany and Ireland. We also launched the region’s fi rst combo cards — Cartlib and Cartwin — with Crédit Agricole in France. The cards combine debit and credit functionality, placing choice in the hands of consumers.

In addition, we’re making it easier for merchants to accept, and consumers to use, Maestro cards online. Several merchants have registered to use the Maestro Advance Registration Program. This is a noteworthy step in advancing our e-commerce presence, as we continue to enhance consumers’ online experience.

Our programs gained traction in the public sector as well. In 2008, the U.S. Department of the Treasury’s Financial Management Service selected Comerica Bank as its fi nancial agent to issue Direct Express® MasterCard-branded prepaid cards for social security and other prepaid programs. Similarly, in Italy, the first national government benefi ts disbursement program was launched with Poste Italiane using prepaid MasterCard cards. Government prepaid programs such as these simplify the process for distributing payments.

At the same time, we continue to make advancements in mobile and person-to-person (P2P) payments. In the United States, we are working with Obopay to create an integrated, mobile P2P platform. Meanwhile, our P2P MasterCard MoneySend® program in India and Singapore is enabling real-time money transfers.

We also focused on the business-to-business sector, offering new programs around the world. These included MasterCard Easy Savings™ for Small Business and the MasterCard Payment Gateway®, which routes commercial payments between financial institutions and buyers and/or suppliers.

In the United Kingdom, we partnered with Barclays Bank to launch the Barclaycard Business card program for small businesses and forged an agreement with Royal Bank of Scotland, the first institution to leverage MasterCard inControl. This innovative platform provides advanced authorization, transaction routing and alert controls to help cardholders and businesses better manage payments and purchasing expenditures.

In 2008, we continued to build our relationship with merchants and established valuable new partnerships. For example, we launched the Everyday Money MasterCard Credit Card with HSBC and Woolworths, Australia’s largest retailer. Importantly, we continue to solicit merchants’ input by conducting Merchant Advisory and Point of Interaction Group Meetings around the world. Topics include chargebacks, e-commerce, and new payment solutions, as well as other issues. These meetings provide a valuable forum for sharing insights that help inform new MasterCard processes and payment capabilities.

Shaping a World-Class Organization
Throughout the year, we instilled a greater emphasis on employee training, career development and diversity and inclusion initiatives. As a company that conducts business in 210 countries and territories, we recognize that having a diverse workforce is critical to delivering value globally.

I am very pleased with our efforts to build a world-class organization and delighted with the accolades MasterCard has received. These include recognition from Working Mother magazine, which put us on its 2008 “100 Best Companies” list and the Human Rights Campaign Foundation, which recognized MasterCard as one of its 2009 “best places to work.”

In addition, DiversityInc ranked MasterCard among the top companies for diversity, and Training magazine included us on its “Training Top 125” list, which recognizes the best global companies for employer-sponsored training and development. Moreover, BusinessWeek magazine ranked our organization number 10 on its “BusinessWeek 50” list, and Fortune magazine cited MasterCard as one of the “World’s Most Admired Companies.”

We are also proud of the ways we give back to the communities we serve. Whether through the financial planning and educational resources we offer in numerous countries, the card programs we develop to help disburse government funds and disaster relief, or the generous volunteer efforts of our employees, we continue to demonstrate good corporate citizenship around the world.

Of course, any enterprise is only as good as its people — and we’ve been extremely privileged in that regard. In 2008, we welcomed Jackson Tai, the former vice chairman and CEO of DBS Group and DBS Bank Ltd., to our Board of Directors.

Mr. Tai brings to his role deep knowledge of our industry and a wealth of experience in Asian markets. We also extend our gratitude to Tan Teong Hean who left the board in 2008. We appreciate the numerous contributions he made to our organization.

During the year, we also welcomed two new Executive Committee members: Rob Reeg and Stephanie Voquer, who oversee Global Technology and Operations and Global Human Resources, respectively. At the same time, we saw the retirements of Alan Heuer as vice chairman and Michael Michl as chief administrative offi cer. We benefited immensely from their expertise over the years and are grateful for their leadership.

It is clear that we are fortunate in many ways, not the least of which is how our employees have demonstrated that they are ready and able to meet the challenges before us — and to advance commerce when it matters most.

Robert W. Selander
President and Chief Executive Officer

Download MasterCard Annual Report 2008

PDF format, 760KB, 160Pages.

At a time when consumers, businesses and governments are striving to exercise greater financial management, MasterCard offers an array of payment solutions that make commerce easier, safer and more effi cient.

Finding new and innovative ways to deliver value has always been of paramount importance to us — and that commitment is evident in our 2008 results.

Under difficult economic conditions, our employees rose to the challenge, leveraging our strengths, adjusting plans and realigning resources to meet the changing needs of our customers.

It’s unmistakably clear that the value of electronic payments has never been greater. We are proud of our achievements — and of the role we play in advancing commerce around the world, particularly when it matters most.

MasterCard Worldwide. The Heart of Commerce.™

To learn more about MasterCard, visit our website:
www.mastercardworldwide.com

MasterCard is a leading global payment solutions company that provides a variety of services in support of the credit, debit and related payment programs of over 24,000 financial institutions and other entities that are our customers.

Through our three-tiered business model as franchisor, processor and advisor, we develop and market payment solutions, process payment transactions, and provide support services to our customers and, depending upon the service, to merchants and other clients. We manage a family of well-known, widely accepted payment card brands, including MasterCard®, MasterCard Electronic™, Maestro® and Cirrus®, which we license to our customers. As part of managing these brands, we also establish and enforce rules and standards surrounding the use of our payment card network.

We generate revenues from the fees that we charge our customers for providing transaction processing and other payment-related services (operations fees) and by assessing our customers based primarily on the dollar volume of activity on the cards that carry our brands (assessments).

A typical transaction processed over our network involves four parties in addition to us: the cardholder, the merchant, the issuer (the cardholder’s bank) and the acquirer (the merchant’s bank). Consequently, the payment network we operate is often referred to as a “four-party” payment system. Our customers are the financial institutions and other entities that act as issuers and acquirers. Using our transaction processing services, issuers and acquirers facilitate payment transactions between cardholders and merchants throughout the world, providing merchants with an efficient and secure means of receiving payment, and consumers and businesses with a convenient, quick and secure payment method that is accepted worldwide.

We guarantee the settlement of many of these transactions among our customer financial institutions to ensure the integrity of our payment network. In addition, we undertake a variety of marketing activities designed to maintain and enhance the value of our brands. However, cardholder and merchant transaction relationships are managed principally by our customers.

Accordingly, we do not issue cards, extend credit to cardholders, determine the interest rates (if applicable) or other fees charged to cardholders by issuers, or establish the merchant discount charged by acquirers in connection with the acceptance of cards that carry our brands.

Our business has a global reach and has continued to experience growth. Gross dollar volume (“GDV”) on cards carrying the MasterCard brand as reported by our customers was approximately $2.5 trillion in 2008, an 11.5% increase in U.S. dollar terms and a 10.7% increase in local currency terms over the GDV reported in 2007. In 2008, we processed 21.0 billion transactions, an 11.8% increase over the number of transactions processed in 2007.

We believe the trend within the global payments industry from paper-based forms of payment, such as cash and checks, toward electronic forms of payment, such as card payment transactions, creates significant opportunities for the growth of our business. Our strategy is to continue to grow by further penetrating our existing customer base and by expanding our role in targeted geographies and higher-growth segments of the global payments industry (such as premium/affluent and contactless cards, commercial payments, debit, prepaid and issuer processor and terminal driving services), enhancing our merchant relationships, expanding points of acceptance for our brands, seeking to maintain unsurpassed acceptance and continuing to invest in our brands.

We also intend to pursue incremental payment processing opportunities throughout the world. We are committed to providing our customers with coordinated services through integrated, dedicated account teams in a manner that allows us to capitalize on our expertise in payment programs, marketing, product development, technology, processing and consulting and information services for these customers. By investing in strong customer relationships over the long term, we believe that we can increase our volume of business with customers over time.

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