MasterCard 2009 Annual Report Download - page 39

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If the approval of the settlements of our currency conversion cases is undermined by an appeal and we
are unsuccessful in any of our various lawsuits relating to our currency conversion practices, our business
may be materially and adversely affected.
We generate significant revenue from processing cross-border currency transactions for customers.
However, we are defendants in several state and federal lawsuits alleging that our currency conversion practices
are deceptive, anti-competitive or otherwise unlawful. In July 2006, MasterCard and other defendants in federal
class actions related to these matters entered into agreements to settle or otherwise dispose of such matters.
Pursuant to the settlement agreements, MasterCard has paid $72 million to be used for the defendants’ settlement
fund to settle the federal actions and $13 million to settle state cases. While the federal court has granted final
approval of the settlement agreements, the settlements are subject to appeals. If an appeal is filed and we are
unsuccessful in that appellate proceeding, the settlement agreements will terminate. If that occurs, and we are
unsuccessful in defending against these lawsuits or the state currency conversion cases, we may have to pay
restitution to cardholders who make claims that they used their cards in another country, or may be required to
modify our currency conversion practices. See Note 21 (Legal and Regulatory Proceedings) to the consolidated
financial statements included in Part II, Item 8.
If we determine in the future that we are required to establish reserves or we incur liabilities for any
litigation that has been or may be brought against us, our results of operations, cash flow and financial
condition could be materially and adversely affected.
Except as discussed in Note 21 (Legal and Regulatory Proceedings) to the consolidated financial statements
included in Part II, Item 8, we have not established reserves for any of the material legal proceedings in which we
are currently involved and we are unable to estimate at this time the amount of charges, if any, that may be
required to provide reserves for these matters in the future. We may determine in the future that a charge for all
or a portion of any of our legal proceedings is required, including charges related to legal fees. In addition, we
may be required to record an additional charge if we incur liabilities in excess of reserves that we have
previously recorded. Such charges, particularly in the event we may be found liable in a large class-action
lawsuit or on the basis of an antitrust claim entitling the plaintiff to treble damages or under which we were
jointly and severally liable, could be significant and could materially and adversely affect our results of
operations, cash flow and financial condition, or, in certain circumstances, even cause us to become insolvent.
See Note 21 (Legal and Regulatory Proceedings) to the consolidated financial statements included in Part II,
Item 8.
Limitations on our business and other penalties resulting from litigation or litigation settlements may
materially and adversely affect our revenue and profitability.
As a result of the settlement agreement in connection with the U.S. merchant lawsuit in 2003, merchants
have the right to reject our debit cards in the United States while still accepting other MasterCard-branded cards,
and vice versa. See Note 21 (Legal and Regulatory Proceedings) to the consolidated financial statements
included in Part II, Item 8. These limitations and any future limitations on our business resulting from litigation
or litigation settlements could reduce the volume of business that we do with our customers, which may
materially and adversely affect our revenue and profitability.
The payments industry is the subject of increasing global regulatory focus, which may result in the
imposition of costly new compliance burdens on us and our customers and may lead to increased costs and
decreased transaction volumes and revenues.
We are subject to regulations that affect the payment industry in the many countries in which our cards are
used. In particular, many of our customers are subject to regulations applicable to banks and other financial
institutions in the United States and abroad, and, consequently, MasterCard is at times affected by such
regulations. Regulation of the payments industry, including regulations applicable to us and our customers, has
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