. Due to Standard & Poor’s Ratings Services’ (S&P) assessment of MasterCard’s
vulnerability to legal risk, on May 16, 2003, S&P lowered MasterCard’s counterparty
credit rating to A-/A-2, subordinated debt rating to BBB+ and placed MasterCard on
negative outlook.

. Following the announcement of this offering, S&P placed MA’s on credit watch with
negative implications.

. Upon completion of the initial public offering, S&P expects to lower our counterparty
credit ratings from A-/A-2 to BBB+/A-2 and our subordinated debt rating from BBB+ to
BBB, both with stable outlook.

If MA is unable to grow its debit business, particularly in the United States, it may fail to
maintain and increase our revenue growth.

In recent years, MA believes that industry-wide offline and online debit transactions have
grown more rapidly than credit or charge transactions. However, in the United States, MA
believes that transactions involving MA brands account for a smaller share of all offline,
signature-based debit transactions than they do credit or charge transactions. In addition,
many of competitors process a greater number of online, PIN-based debit transactions at
the point of sale than MA does, since MA’s Maestro brand has relatively low market
penetration in the United States. MA may not be able to increase its market penetration
for debit transactions in the United States since many of competitors have long-standing
and strong market positions. MA may also be impacted adversely by any tendency
among U.S. consumers or financial institutions to migrate from offline, signature-based
debit transactions to online, PIN-based transactions, because the latter types of
transactions are more likely to be processed by other ATM/debit point-of-sale networks.
In addition, MA generally earns higher revenues on point-of-sale purchase transactions
than on cash access transactions, and on domestic credit and offline debit transactions
than on comparable online debit transactions.

MA has repealed its Competitive Programs Policy as a result of a final judgment in
litigation with the U.S. Department of Justice, and our business may suffer as a result.

"Based on a final judgment of our litigation with the U.S. Department of Justice, in
October 2004, our CPP, which prohibited financial institutions participating in our system
from issuing competing proprietary payment cards, became unenforceable and was
subsequently repealed. As a result, MA issuers are now permitted to issue general
purpose credit or debit cards in the United States on any other general purpose card
network (such as American Express or Discover).

This may cause MA members to issue fewer cards with our brand and to enter into
arrangements with our competitors to issue cards, thereby reducing the volume of
transactions that we process, decreasing our
revenues.

"A number of our large customers, including Bank of America, Citibank, HSBC,
USAA and GE Finance, have begun to issue or have announced that they will issue
American Express or Discover-branded cards." Accordingly, the repeal of the CPP
may have a material adverse effect on MA’s business, revenue and profitability.

. "Interchange fees, which represent a sharing of payment system costs among the
financial institutions participating in a four-party payment card system such as ours, are
generally the largest component of the costs that acquirers charge merchants in
connection with the acceptance of payment cards.

. "Typically, interchange fees are paid by the merchant bank (the acquirer) to the
cardholder bank (the issuer) in connection with transactions initiated with our payment
system’s cards. Interchange fees, including MasterCard’s default interchange fees
(MIFs), are subject to increasingly intense regulatory scrutiny worldwide as they have
increased in recent years and as card-based forms of payment have become relatively
more important to local economies.

. "Regulators are seeking to reduce these costs through regulatory action. For example:
‘-- In the European Union, the European Commission has issued a Statement of
Objections challenging MasterCard’s cross-border MIF under European Union
competition rules and has recently stated that it intends to issue a supplemental
statement of objections in the near future. If we do not obtain a favorable ruling, the
European Commission could order MA’s to change the manner in which MasterCard
calculates its cross-border MIF.

‘--In the United Kingdom the Office of Fair Trading (OFT) issued a decision on September
6, 2005 concluding that MasterCard’s U.K. MIFs contravene U.K. and European Union
competition law. If this decision is upheld on appeal, it could have a significant adverse
impact on the revenues of MasterCard’s U.K. members and on MasterCard’s competitive
position and overall business in the U.K. In addition, the OFT has stated that it will
commence a new investigation of MasterCard’s current U.K. MIFs and, if it determines
that they contravene U.K. and European Union competition law, it will issue a new
decision and possibly levy fines accruing from the date of its first decision. This new
investigation will examine whether the new methodology for setting U.K. MIFs adopted by
MasterCard in November 2004—in connection with which MasterCard withdrew the
authority of the U.K. members to set domestic MIFs and related fees and conferred such
authority exclusively on MasterCard’s President and Chief Executive Officer
‘—contravenes applicable law.

‘-- In Australia, the Reserve Bank of Australia has enacted regulations controlling the
costs that can be considered in setting interchange fees for four-party payment card
systems such as ours, but do not regulate the merchant discount charged by proprietary
end-to-end networks (such as those offered by American Express or Discover), which
have already benefited from these regulations.

Interchange fees are also being reviewed in a number of other jurisdictions, including
Colombia, Mexico, New Zealand, Poland, Portugal, Norway, Sweden, Brazil, Hungary
and Spain. We believe that regulators are increasingly adopting a coordinated approach
to interchange matters and, as a result, developments in any one jurisdiction may
influence regulators’ approach to interchange in other jurisdictions. In the United States,
interchange fees have also been the topic of increased congressional and regulatory
interest. In particular, the U.S. House of Representatives has passed a bill that would
commission a study by the Federal Trade Commission of the role of interchange in
alleged price gouging at gas stations. In February 2006, the Energy and Commerce
Committee of the U.S. House of Representatives held a hearing on interchange fees.
Also, the general topic of interchange fees has been raised in hearings and other forums,
including conferences held by various Federal Reserve banks. Individual state
legislatures in the United States are also reviewing interchange fees. For instance,
legislators in the states of Washington, Tennessee and Kentucky have proposed bills that
would limit or cap interchange fees. Finally, the Merchants Payment Coalition, a coalition
of trade associations representing businesses that accept credit and debit cards, is
mounting a challenge to interchange fees in the United States by seeking legislative and
regulatory intervention.

In addition

"In addition, merchants are seeking to reduce interchange fees through litigation. In the
United States, merchants have filed over forty class-action suits alleging that our
interchange fees violate federal antitrust laws. These suits allege, among other things,
that MasterCard’s purported setting of interchange fees constitutes horizontal price-fixing
between and among MasterCard, Visa and their member banks in violation of Section 1
of the Sherman Act, which prohibits contracts, combinations or conspiracies that
unreasonably restrain trade. The suits seek treble damages in an unspecified amount,
attorney’s fees and injunctive relief. MA is devoting substantial management and
financial resources to the defense of MIFs and to the other legal and regulatory
challenges MA faces.

MA expects to record a significant net loss for the second quarter and full year of 2006 as
a result of the donation of shares of our Class A common stock and cash to The
MasterCard Foundation, and we may make additional cash donations to The MasterCard
Foundation to allow it to make charitable disbursements during the first four years of its
operations.

At the time of this offering, MA intends to donate 13,496,933 newly-issued shares of the
new Class A common stock, representing approximately 10% of equity, to The
MasterCard Foundation, a private charitable foundation incorporated in Canada.

MA also expects to donate an estimated $40 million in cash to the Foundation in support
of its operating expenses and charitable disbursements for the first four years of its
operations, and we may make additional cash contributions to the Foundation during and
after this period.

Because the Foundation’s operations are currently being established, the overall size and
timing of MA’s expected initial cash donation have not been finally determined.