Key questions and answers from the first quarter fiscal 2007 earnings call conducted by MasterCard Inc. on May 2, 2007.

Craig Maurer: You are in line with the industry in terms of pulling back marketing in the quarter. Could you comment on why you didn’t see the same level of opportunity in the quarter that you have seen in the past despite the exceptionally strong growth in all your volume numbers?

Chris McWilton What the firm wanted to do was keep a little bit of its powder dry for the second quarter. The company has some competitors who are cutting back on advertising marketing right now. MasterCard has some competitors who appear to be distracted with some internal organizational matters. The management believes that it can be more effective in deploying some of that advertising marketing in an impactful way in second quarter. Hence the firm took a look at its spend during the quarter and again, wanted to keep some of its powder dry for later in the year.

Christopher Mammone: The Banc of America is going to start issuing MasterCards in August. Can you talk a little bit about that deal?

Chris McWilton: The firm filed an 8-K with respect to that agreement earlier in the year. Obviously the management is very happy to have that arrangement in place with Banc of America. The management can’t comment specifically on a customer arrangement other than what is in that filing, for customer confidentiality purposes. The firm had a great relationship with MBNA prior to the acquisition by Banc of America. The company hopes to leverage that including some of its sponsorship assets and properties as Banc of America expanded net of portfolio.

Christopher Mammone: Can you give an update on SEPA? What is happening in Belgium and why they changed their mind on using Maestro?

Chris McWilton: Belgium is an interesting situation. They have a Belgian Banking Federation (BBF), it was basically acting as a collective bargaining agent for all of the banks in Belgium. Under SEPA, Interchange was introduced for the first time for domestic transactions in Belgium. The merchants did not like that and in response to merchant pushback, the BBF withdrew their collective bargaining position. The company does not look at it as a setback. MasterCard is in a position now to negotiate with each one of those banks individually and probably is in a better position to customize and tailor a program that meets their needs. Maestro is very strong in Europe. The company has over 300 million Maestro cards that’s in place for a long time. They are on the cards today for international acceptance, the Maestro brand. The management still feels very strong about SEPA opportunities and again, does not view Belgium as a setback.

Elizabeth Grausam: The firm’s revenue momentum is astounding right now. The process transaction and GDV continues to accelerate on a quarter to quarter basis for sometime. What is driving that?

Chris McWilton: This is global momentum. If you look at the operational statistics that are in the filings and then you look at the growth rates in Latin America and Asia-Pacific and the Middle East, they’re phenomenal. A lot of us who live in the US get accustomed to the fact that everybody has credit cards and use them on a regular basis. But there are large parts of the world where cash is still the dominant. In India, people go to the ATM machine, pull out cash and walk to the store and pay the merchant. The firm is seeing exceptional growth overseas. The firm continues to see strong international travel, and it makes a lot of money when people hop on an airplane and cross a border because it processes that transaction. The company receives currency conversion revenue from that. The volume goes on the card. Generally, people are putting high priced airline tickets and meals and entertainment on those cards. The global travel is still doing very well and the firm is seeing momentum across the board in all parts of the world.

Patrick Burton: Can you provide any update and any comment on some of the press reports coming out of Visa Europe about potentially working something out with the EU?

Chris McWilton: There is nothing on the AMEX Discover cases or the interchange cases other than that the firm has a trial date set by Judge Jones. The press release coming out of Visa Europe is consistent with what the commission said earlier in the year that they had taken a fairly radical stance on interchange basically saying they wanted to abolish interchange across Europe quite early in their reviews of the industry. In January, it came out with a more moderate position. They recognized that there was some value to interchange and abolishing it wasn’t necessarily the right answer. The statements were consistent with that. The management believes that interchange is a necessary part of a four-party payment system. It’s necessary to balance the costs between issue and acquiring and to get that robust base of those acceptance and issuance that’s necessary for card growth and for consumers to enjoy the benefits of use of card. The firm is all looking forward to a day when it settles and behind it because Europe is a big market. It is very important to the firm. The firm is doing well in Europe today, but there’s a little trepidation by its customers until they know the platform at which they’re going to be playing with respect to interchange.

Christopher Brendler: Even excluding the 5% from cross-border, 2.5% from currency, you’re looking at very strong at about 16% revenue growth. But, your long-term guidance is 8% to 10% revenue growth. What is driving such a strong growth? Is it a mix shift towards stronger transactions? Is it international that’s driving the revenue growth?

Chris McWilton: It is strong fundamentals in the business, process transactions. People are traveling and they are going across borders. The volume growth is strong in emerging markets and international parts of the world where they are not seeing perhaps some of the sub prime fallout that you are seeing in the US. There is a lot of uptake in secular momentum moving out of cash and electronic forms of payment. It is not one thing but the whole business seems to be firing on all cylinders right now. The firm’s global presence and unified global structure is paying off.

Christopher Brendler: On the legal front, do they need more time for discovery? Where do you stand and what was the reason for the delay? Does it impact your decision on the buyback?

Chris McWilton: There was no delay. Internally, the management had always thought that the trial would take place sometime in 2008. A lot of things go into a judge’s decision in when to set a trial date, what the docket looks like and how to seat a jury. September of 2008 was a nonevent around here. Obviously when the management talked to the Board about the buyback, their fiduciary duty is they need to think responsibly about the firm’s ability to take care of any litigation matters and at the same time buy stock back and return surplus equity to the stockholders. They were certainly aware and briefed on the litigation. That is not going to influence the firm’s plans to proceed with the repurchase.

Bruce Harting: Can you talk about the Brazil initiative and the processing you’re doing there?

Chris McWilton: Brazil is a case where the firm has an interesting ready card and does domestic processing in Brazil. Today the company does processing in the Anglo American countries, the US, the UK, Canada and Australia and build with respect to the ready card operation it has there. There’s a large swath of the world where the firm is not processing various settlement for domestic transactions purpose. The great example of that, the firm will process a cross-border transaction on its network, but within a certain country there are domestic payments schemes operated by the banks or consortiums of Banks that are doing the processing. These banks are starting to realize that these are subscale operations. They need to make investments in technology to make sure that they maintain a reliability and security and their opportunities for them to perhaps transition to switching and processing for MasterCard. The firm had the same thing with the UK with the switch deal, probably years ago, where the consortium of the bank is doing processing and realized there’s economy of scale that is having the firm do it its brand. The management is looking at these opportunities and they’re all over the world. There they do tend to develop slowly because they’re consortium owned banks and they have different interested nations. Simply the firm has looked at and walked way from because it thought the price was too high, but it loves to process transactions. Obviously the company became more relevant to the transaction, and those data analytic about those transactions to process them.

Gregory Smith: What was the growth in cross border transactions?

Chris McWilton: The international volume growth was 18.3%.

Gregory Smith: Are you seeing any other changes out of Visa ahead of their restructuring and IPO, anything that could be a problem or a further opportunity for you over the next year?