Cross-Border: The Fee That Now Out-Earns HomeWide moat

Mastercard (MA) — moat facet

In 2025 Mastercard earned more assessing payments that crossed a border than payments that stayed at home.

The most valuable thing Mastercard does is move a payment across a border, and in 2025 that business became larger than the domestic one for the first time in the company's key-metrics table. Cross-border assessments were $12,021 million, up 18%, against domestic assessments of $11,029 million, up 8%1. A year earlier the two were almost level, at $10,181 million and $10,245 million2.

Payment network assessments ($M)10,245Domestic 202411,029Domestic 202510,181Cross-border 202412,021Cross-border 2025Mastercard Form 10-K FY2025 key metrics
Cross-border overtook domestic in 2025.

Cross-border pays better because it is harder. A payment from a British card at a Tokyo hotel has to be authorised, converted and settled between banks that may have no relationship with each other, and Mastercard says it switches substantially all cross-border transactions on its brands3. Local debit brands often serve as the main domestic schemes in their countries, while the international brands are used mostly for cross-border transactions4. That is the one role the national schemes do not try to take.

The growth has been extraordinary. Cross-border assessments were $3,498 million in 20205, so the line has more than tripled in five years6, helped by the recovery of travel and by online purchases from foreign merchants. In the second quarter of 2026 cross-border volume grew 12%7.

The advantage is real and it is also the most cyclical part of the business. Mastercard's filing says revenue from cross-border and currency-conversion transactions fluctuates with the levels and destinations of cross-border travel8. The strongest line is the one most exposed to a closed border.

Cross-border also carries currency conversion, and that part of the fee depends on currency volatility as well as travel. The filing says revenue from switching cross-border and currency conversion transactions fluctuates with customers' need for transactions to be converted into their base currency9. On the second-quarter call management attributed part of the recent acceleration to travel to the Middle East recovering and to card-not-present spending in Venezuela10, a reminder that the line responds to events a long way from Purchase, New York. It is the most profitable line and also the least predictable.

Cross-border volume growth each quarter is the tell; a quarter below the growth of domestic volume would say the post-pandemic catch-up is over and the richest line has become an ordinary one.

Moat trajectory: Widening

Cross-border assessments grew 18% in 2025 against 8% for domestic.

The number that tests this moat
Reported
Cross-border volume growth, latest quarter
+12% (Q2 2026); assessments $12,021M in 2025, +18%

The richest line's growth; falling below domestic volume growth would end the catch-up.

Source: Mastercard Q2 2026 results release ↗
⚠ Threats to the moat
⚠ THREAT 01
When Travel Stops, Cross-Border Falls by a Third
Mastercard's best line fell 37% in 2020 because people stopped flying, and nothing the company did could have prevented it.
References
  1. ReportedCross-border assessments were $12,021 million, up 18%, against domestic assessments of $11,029 million, up 8%.
    Mastercard Form 10-K for fiscal 2025 - Item 7 MD&A: key metrics, assessments and rebates. — FY2025 · publ. 11 February 2026 · source ↗
  2. ReportedA year earlier the two were almost level, at $10,181 million and $10,245 million.
    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 ↗
  3. ReportedA payment from a British card at a Tokyo hotel has to be authorised, converted and settled between banks that may have no relationship with each other, and Mastercard says it switches substantially all cross-border transactions on its brands.
    Mastercard Form 10-K for fiscal 2025 - Item 1A risk factors and Note 19 legal and regulatory proceedings. — FY2025 · publ. 11 February 2026 · source ↗
  4. ReportedLocal debit brands often serve as the main domestic schemes in their countries, while the international brands are used mostly for cross-border transactions.
    Mastercard Form 10-K for fiscal 2025 - Item 7 MD&A: key metrics, assessments and rebates. — FY2025 · publ. 11 February 2026 · source ↗
  5. ReportedCross-border assessments were $3,498 million in 2020, so the line has more than tripled in five years, helped by the recovery of travel and by online purchases from foreign merchants.
    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 ↗
  6. Moat Explorer calcCross-border assessments were $3,498 million in 2020, so the line has more than tripled in five years, helped by the recovery of travel and by online purchases from foreign merchants.
    Moat Explorer calculation from Mastercard's reported figures ($ 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.
  7. ReportedIn the second quarter of 2026 cross-border volume grew 12%.
    Mastercard second-quarter 2026 results release, Form 8-K exhibit 99.1 - statements, cash flow, balance sheet and operating metrics by region. — Q2 2026 · publ. 30 July 2026 · source ↗
  8. ReportedMastercard's filing says revenue from cross-border and currency-conversion transactions fluctuates with the levels and destinations of cross-border travel.
    Mastercard Form 10-K for fiscal 2025 - Item 7 MD&A: key metrics, assessments and rebates. — FY2025 · publ. 11 February 2026 · source ↗
  9. ReportedThe filing says revenue from switching cross-border and currency conversion transactions fluctuates with customers' need for transactions to be converted into their base currency.
    Mastercard Form 10-K for fiscal 2025 - Item 7 MD&A: key metrics, assessments and rebates. — FY2025 · publ. 11 February 2026 · source ↗
  10. ReportedOn the second-quarter call management attributed part of the recent acceleration to travel to the Middle East recovering and to card-not-present spending in Venezuela, a reminder that the line responds to events a long way from Purchase, New York.
    Yahoo Finance / GuruFocus, Mastercard Q2 2026 earnings call highlights (third-party summary of the call). — Q2 2026 · publ. 31 July 2026 · source ↗
Sources
Generated September 25, 2026