South Carolina court upholds Mastercard’s transaction-based income sourcing

Section 12-6-2295(A)(5) attributes service receipts by where the income-producing activity occurs, including an allocation where activity occurs both inside and outside South Carolina. The court upheld the finding that Mastercard generated income when its cards were used for purchases from South Carolina merchants: its fees were based primarily on transaction numbers and dollar volumes.^[1]

The decision did not depend on treating merchants and cardholders as Mastercard’s contractual customers. Footnote 18 expressly rejects that factual finding as unsupported, while concluding that it did not affect the income-producing-activity analysis.^[1]

Multinational payment and service businesses should examine the revenue-generating activity and fee structure, not infer the answer solely from processing infrastructure or customer labels. The judgment applies the existing statute to this record; it does not establish a universal market-sourcing rule for every remote service. The court also upheld failure-to-file penalties for the audit period.^[1]