Published
# Visa Inc. (V) — Business, Risks and Management's Discussion Visa's fiscal year ends September 30. The backbone of this narrative is the Annual Report on Form 10-K for the year ended September 30, 2025 (accession 0001403161-25-000089); the current-period sections come from the Quarterly Report on Form 10-Q for the quarter ended June 30, 2026 (accession 0001403161-26-000104), Visa's fiscal 2026 third quarter. --- ## Business *From the FY2025 10-K, accession 0001403161-25-000089.* Visa operates a global payments network. It provides transaction processing services — principally authorization, clearing and settlement — among consumers, issuing and acquiring financial institutions, and sellers, in what it calls the "four-party" model, extended over time to include digital banks, digital wallets, fintechs, governments and NGOs. Its proprietary processing network, VisaNet, reaches more than 200 countries and territories. Visa reports **one reportable segment, Payment Services**; all significant operating decisions are made on the basis of Visa as a single global business, and the chief operating decision maker (the CEO) assesses performance on consolidated net income. Crucially, **Visa is not a financial institution.** It does not issue cards, extend credit, or set rates and fees for account holders, and it earns no revenue from and bears no credit risk on those activities. It sets *default* interchange reimbursement fees (IRFs) that apply absent other settlement terms, but IRFs are paid by acquirers to issuers, and the fees Visa charges issuers and acquirers are set independently of both IRFs and the merchant discount rate (MDR). This distinction is the hinge of most of the litigation and regulation described further below: Visa sets a price it does not collect. **Scale in fiscal 2025.** 329 billion payments and cash transactions carrying Visa's brand were processed by Visa or other networks — roughly 901 million transactions a day — of which Visa itself processed 257.5 billion. Total payments and cash volume was $17 trillion. Visa had nearly 5 billion payment credentials outstanding, nearly 14,500 financial institution clients, and acceptance at more than 175 million merchant locations. The network connects approximately 12 billion cards, bank accounts and digital wallets. Workforce grew about 8% to approximately 34,100 employees across 86 countries, more than 60% of them outside the U.S. Four global data centers (U.S., United Kingdom, Singapore) carry the processing load. **How revenue is earned.** Net revenue has four gross components and one large contra-revenue line: - **Service revenue** — earned for services supporting client usage of Visa's payment services and certain Issuing Solutions. It is assessed primarily on the *prior* quarter's nominal payments volume, so it lags the volume cycle by a quarter. - **Data processing revenue** — authorization, clearing and settlement; Acceptance Solutions, Risk and Security Solutions and certain Issuing Solutions; network access and maintenance. Driven by processed transaction count. - **International transaction revenue** — cross-border transaction processing and currency conversion. Driven by cross-border volume and by currency volatility. - **Other revenue** — mainly value-added services in Advisory and Other Services and certain Issuing Solutions, brand and technology license fees, account holder services, certification and licensing. - **Client incentives** — payments to financial institution clients, sellers and partners to grow volume, acceptance and routing preference, recorded as a reduction of revenue (unless a separate identifiable benefit at fair value can be established, in which case they are operating expenses). **Strategy: three growth pillars.** 1. **Consumer Payments (CP).** Addressable consumer spend Visa sizes at more than $40 trillion annually, excluding Russia and China. Core products remain credit, debit and prepaid. Key enablers include "Tap to Everything" (Tap to Pay was 79% of face-to-face transactions globally and 66% in the U.S. in fiscal 2025; more than 1,000 contactless transit projects and over 2.4 billion contactless transit transactions in fiscal 2025; more than 20 million Tap to Phone transacting devices), token technology (more than 16 billion tokens provisioned as of September 30, 2025), cross-border capability, affluent and premium co-brand programs, and credit products such as Visa Flex Credential. Expansion beyond cards runs through Visa Pay (launched 2025) and, in account-to-account payments, Tink, the open banking platform acquired in 2022. 2. **Commercial & Money Movement Solutions (CMS).** Targets roughly $200 trillion of annual payment flows excluding Russia and China across P2P, B2C, B2B and G2C. Visa Commercial Solutions addresses approximately $35 trillion of B2B card and virtual-card opportunity; Visa Direct pursues approximately $55 trillion in P2P/B2C/G2C money movement and about $25 trillion in B2B flows. Visa Direct — built from the Visa network plus Earthport, Currencycloud and YellowPepper — reaches more than 195 countries and territories via more than 90 domestic payment schemes and more than 60 card and wallet networks, with potential reach of roughly 12 billion endpoints. In fiscal 2025 it processed more than 12.5 billion transactions for more than 650 partners. 3. **Value-Added Services (VAS).** Visa sizes this as roughly a $520 billion annual revenue opportunity, split approximately $125 billion Issuing Solutions, $95 billion Acceptance Solutions, $150 billion Risk and Security Solutions, and $150 billion Advisory and Other Services. More than 200 products and services as of September 30, 2025. Issuing Solutions is anchored by Cardholder Engagement plus the Visa DPS and Pismo issuer-processing and core-banking platforms. Acceptance Solutions includes Cybersource, Authorize.net, Token Management Service and Verifi. Risk and Security Solutions includes the Visa Protect suite (Visa Consumer Authentication Service, Visa Advanced Authorization, Visa Provisioning Intelligence, Visa Deep Authorization) and Featurespace, acquired in December 2024. Advisory and Other Services covers Visa Consulting and Analytics, Visa Marketing Services, Data Solutions and Tink. **Emerging areas.** Visa Intelligent Commerce combines tokenization, authentication and predictive analytics for agentic commerce, exposed through APIs and a Model Context Protocol server, with a Trusted Agent Protocol for agent verification at checkout; a pilot processed live agentic token transactions in 2025. In stablecoins, Visa has facilitated the purchase of more than $100 billion of crypto and stablecoin assets since 2020 and more than $35 billion of spend through crypto-linked credentials; stablecoin settlement supports four stablecoins across four blockchains and surpassed a $2.5 billion annualized run rate as of September 30, 2025, alongside settlement in more than 25 fiat currencies. **Competition.** Visa competes with cash and checks; other global and multi-regional networks; closed-loop systems including American Express, Discover, private-label networks, Alipay and WeChat Pay; local and regional networks such as UnionPay; real-time payment (RTP) networks and government-sponsored national schemes; digital wallet providers; payment processors; and, in value-added services, technology, information-services and consulting firms. --- ## Risk factors *From the FY2025 10-K, accession 0001403161-25-000089, condensed.* ### Regulatory **Interchange and network-fee regulation is the structural risk.** Visa generally receives no revenue from IRFs, but IRFs are a factor on which it competes and therefore an important determinant of the volume it processes; changes to them, voluntary or mandated, can substantially affect payments volume and net revenue. - **United States.** Federal Reserve rules cap large-issuer debit interchange at 21 cents plus 5 basis points per transaction, plus a possible 1-cent fraud adjustment; the Dodd-Frank Act limits network exclusivity and routing restrictions in debit and prepaid. An October 2023 Federal Reserve proposal would lower debit rates further with automatic biennial adjustment. In August 2025 the District Court for the District of North Dakota held that the Federal Reserve exceeded its authority in implementing Regulation II and **vacated the debit interchange fee standard**; the District Court in Kentucky subsequently held the Federal Reserve acted within its discretion. If the North Dakota decision is affirmed and prevails, it could result in a significantly lower U.S. debit interchange cap. The Credit Card Competition Act could be reintroduced. State-level action is spreading — Illinois' May 2024 law restricts assessing interchange on the tax and gratuity portions of a transaction and restricts use of transaction data, and remains under legal challenge. - **Europe and the U.K.** The EU Interchange Fee Regulation caps consumer credit and debit interchange at 30 and 20 basis points respectively, requires separation of scheme and processing activities, and limits exclusivity and routing; the European Commission intends another IFR impact assessment that could lower caps further or extend regulation to other products and fees. The U.K. Payment Systems Regulator is running market reviews of cross-border interchange and of scheme and processing fees, with possible remedies in governance, reporting and transparency. Visa's 2019 settlement with the European Commission limiting certain cross-border interchange rates runs through 2029. - **Rest of world.** Argentina, Brazil, Chile and Costa Rica have adopted or are exploring interchange caps; the Reserve Bank of Australia has proposed lowering existing caps and removing differential consumer/commercial treatment; New Zealand lowered domestic credit caps and in July 2025 adopted cross-border caps including commercial credit. India, Costa Rica and Turkey are using regulation to drive down MDR. Brazil requires government pre-approval of certain network rules. **Market-participation restrictions.** Governments in China, India, Indonesia, Thailand, Vietnam and South Africa promote domestic providers through ownership, localization or domestic-processing mandates. In China, UnionPay remains the predominant domestic processor; Visa's May 2020 application to operate a Bank Card Clearing Institution remains pending with no certainty of approval or of competitive success if approved, and restrictions on dual-branded cards have already reduced Visa's China volume and revenue. India's evolving data localization requirements carry cost and access implications. In Europe, the European Central Bank supports the European Payments Initiative's pan-European A2A system Wero and is exploring a digital euro. Central banks in Argentina, Australia, Brazil, Canada, Europe, India, Indonesia and Mexico are building or expanding RTP networks; the U.S. Federal Reserve launched FedNow in July 2023. Some jurisdictions have moved to reduce reliance on U.S. payments networks following the sanctions response to Russia, and Russia has pressed BRICS members to integrate their own payment systems. **Privacy, data, AI and cybersecurity regulation.** Cross-border data flow restrictions, localization mandates, GDPR enforcement, and a fragmented and still-forming AI regulatory landscape (the EU AI Act's high-risk provisions take effect in August 2026; California, Colorado and Utah have adopted AI frameworks). Agentic commerce, in which autonomous agents initiate transactions, sits at the intersection of payments, privacy and AI rules with little direct guidance and unclear liability allocation; Visa flags the possibility of more erroneous or disputed payments and increased chargebacks as it scales. **Tax.** Visa is under examination by or in dispute with the IRS and other tax authorities. Digital services taxes and the OECD 15% global minimum tax (Pillar Two) could affect the effective rate and cash taxes. ### Litigation Visa is subject to numerous antitrust, consumer-protection, privacy and intellectual-property actions. Adverse outcomes can require large payments — treble damages are available on U.S. antitrust class claims — and, as importantly, can force changes to default interchange rates, operating rules, fees or business practices. Certain matters are financially insulated by the U.S. and Europe retrospective responsibility plans, but **the plans differ in what they cover and how, and Visa states that the failure of one or both to adequately insulate it could materially harm its financial condition or cash flows, or even cause it to become insolvent.** ### Business - **Competition** from closed-loop systems, fintechs, RTP and A2A networks, digital wallets and government schemes. Stablecoins are called out specifically: with the U.S. GENIUS Act (July 2025) and comparable EU, U.K., Japanese, U.A.E., Hong Kong and Singapore frameworks bringing regulatory certainty, stablecoins "could potentially disrupt existing payment networks," particularly cross-border and B2B, and could serve as a store of value in countries with currency instability. AI cuts both ways — competitors may deploy it faster, and may hold proprietary rights that constrain Visa's own AI offerings. - **Client and seller concentration.** A significant portion of net revenue is concentrated in the largest clients, who generally retain flexibility to issue non-Visa products and, in some circumstances, to terminate on short notice without significant early-termination fees. Competitive pricing pressure drives up-front payments, discounts, rebates and performance-based incentives that directly reduce net revenue. - **Merchant and processor pressure** on acceptance costs, through legislation, regulatory intervention, litigation, surcharging and refusal to accept — with knock-on risk that issuers cut Visa issuance, reduce cardholder benefits or add fees. - **Brand and disintermediation** risk at the point of sale and in ecommerce and mobile channels. - **Macro and geopolitical.** More than half of net revenue is earned outside the U.S., and cross-border transaction revenue is a significant and strategically important component. Recessions, inflation, tariffs, trade disruption and declines in cross-border travel all transmit directly into volume. Visa suspended Russian operations in March 2022 and no longer generates Russia-related revenue. - **Settlement indemnification.** Visa indemnifies issuers and acquirers against settlement failures of other clients, creating exposure limited to unsettled transactions at any point in time. Concurrent failures or insolvencies among large clients or sponsor banks would create liquidity risk. ### Technology and cybersecurity Failure to keep pace with mobile, ecommerce, tokenization, distributed-ledger, cloud and biometric technologies would erode competitiveness. Visa states it has been the target of malicious cyber activity in the normal course, and that its own deployment of generative AI could expand its attack surface. As of September 30, 2025 Visa was not aware of any direct or third-party cybersecurity incident in the prior three fiscal years that materially affected its business strategy, results or financial condition. Its cybersecurity organization comprised approximately 1,000 professionals globally, run by a CISO reporting to the President of Technology, with board oversight delegated to the audit and risk committee. ### Structural and organizational Acquisition and joint-venture integration risk; dependence on and competition for key management and specialized talent in fintech, AI and cybersecurity; and dilution. On the last: under the U.S. retrospective responsibility plan, class B-1 and B-2 common stock become convertible into class A upon final resolution of the U.S. covered litigation; under the Europe plan, series B and C preferred stock will become fully convertible no later than 2028, subject to a holdback for pending claims. Holders of class B, class C and preferred stock are current and former financial institution clients whose interests may diverge from class A holders on the significant transactions they can vote on. --- ## Management's discussion — fiscal 2025 *From the FY2025 10-K, accession 0001403161-25-000089.* | ($ in millions, except per share) | FY2025 | FY2024 | FY2023 | 25 vs 24 | |---|---|---|---|---| | Net revenue | 40,000 | 35,926 | 32,653 | +11% | | Operating expenses | 16,006 | 12,331 | 11,653 | +30% | | Net income | 20,058 | 19,743 | 17,273 | +2% | | Diluted EPS | 10.20 | 9.73 | 8.28 | +5% | | Non-GAAP operating expenses | 12,906 | 11,609 | 10,481 | +11% | | Non-GAAP net income | 22,542 | 20,389 | 18,280 | +11% | | Non-GAAP diluted EPS | 11.47 | 10.05 | 8.77 | +14% | Net revenue grew 11% on growth in processed transactions, nominal cross-border volume and nominal payments volume, partly offset by higher client incentives; exchange rate movements were not material to the growth rate. The geographic mix continued to tilt outward: U.S. net revenue of $15,633 million grew 6% while international net revenue of $24,367 million grew 15%. By component: service revenue $17,539 million (+9%, on 7% nominal payments volume growth, select pricing and card benefits); data processing revenue $19,993 million (+13%, on 10% processed transaction growth and pricing); international transaction revenue $14,166 million (+12%, on 13% nominal cross-border volume growth excluding intra-Europe plus higher currency volatility, partly offset by business mix); other revenue $4,053 million (+27%); client incentives $(15,751) million (+14%, tracking payments volume). Visa processed 257,545 million transactions, up 10%. Value-added services revenue was $10.9 billion, up 24%, against $8.8 billion in fiscal 2024 and $7.2 billion in fiscal 2023. The 30% jump in GAAP operating expenses is almost entirely one line: **litigation provision of $2,562 million against $462 million in fiscal 2024**, driven by higher U.S. covered litigation accruals. Personnel expenses rose 11% to $6,961 million on headcount, acquisitions and severance to realign the organization; general and administrative rose 21% to $1,926 million on travel-related card benefits, the absence of a prior-year indirect-tax reserve release and higher indirect taxes; depreciation and amortization rose 18% to $1,220 million. Excluding litigation provision, severance, lease consolidation, acquisition-related costs, amortization of acquired intangibles, equity-investment gains and losses, and prior-year indirect-tax and charitable-contribution items, non-GAAP operating expenses rose 11%. **Fiscal 2025 capital and structural actions.** Visa acquired Featurespace in December 2024 for purchase consideration of $946 million. In May 2025 it issued €3.5 billion ($3.9 billion) of euro-denominated fixed-rate senior notes with maturities of 3 to 19 years. In August 2025 it released $1.4 billion of as-converted value from series B and C preferred stock, issuing 40,080 shares of series A preferred stock on the ninth anniversary of the Visa Europe acquisition. The board authorized a $30.0 billion repurchase program in April 2025; Visa repurchased 54 million class A shares for $18.2 billion during the year, leaving $24.9 billion authorized at year end, and declared and paid $4.6 billion of dividends. It recorded $2.2 billion of additional interchange multidistrict litigation accruals and deposited $875 million into the U.S. litigation escrow account. The exchange-offer machinery is worth understanding because it converts litigation resolution into share-count reduction. Visa may — but is not obliged to — conduct a successive exchange offer for class B common stock once a year has passed since the prior offer *and* the estimated interchange reimbursement fees at issue in unresolved U.S. covered litigation damages claims have fallen by 50% or more since the prior offer. That estimate was approximately $49.6 billion as of October 1, 2023 and approximately $39.4 billion as of October 1, 2025. **Liquidity at September 30, 2025.** Cash and cash equivalents of $17.2 billion and available-for-sale debt securities of $2.4 billion, of which $1.6 billion was current. No commercial paper outstanding and nothing drawn on the unsecured revolving credit facility. Senior notes outstanding of $25.4 billion in aggregate principal, with $4.0 billion due December 2025 and €1.4 billion ($1.6 billion) due June 2026 — the annual report's rounding of the €1.35 billion of principal the quarterly report records repaying at that maturity. The U.S. litigation escrow account held $3.0 billion. Visa held $9.2 billion of available liquidity against daily settlement in the event a client could not settle. Client incentive liabilities were $10.4 billion current and $0.2 billion long-term; uncertain tax positions $309 million; purchase obligations $1.6 billion current and $0.2 billion long-term. **Critical accounting estimates** are client incentives (recognized on estimated client performance, revised as forecasts change), legal and regulatory matters (accrued when probable and reasonably estimable, with the U.S. covered litigation accrual able to run above or below the escrow balance), and income taxes. --- ## Current quarter — fiscal 2026 third quarter (three and nine months ended June 30, 2026) *From the Form 10-Q, accession 0001403161-26-000104, and the fiscal Q3 2026 earnings release furnished on Form 8-K, accession 0001403161-26-000103.* | ($ in millions, except per share) | Q3 FY26 | Q3 FY25 | Δ | 9M FY26 | 9M FY25 | Δ | |---|---|---|---|---|---|---| | Net revenue | 11,633 | 10,172 | +14% | 33,764 | 29,276 | +15% | | Operating expenses | 4,756 | 3,995 | +19% | 12,916 | 11,430 | +13% | | Net income | 5,628 | 5,272 | +7% | 17,502 | 14,968 | +17% | | Diluted EPS | 2.97 | 2.69 | +10% | 9.14 | 7.59 | +20% | | Non-GAAP operating expenses | 3,878 | 3,307 | +17% | 10,868 | 9,295 | +17% | | Non-GAAP net income | 6,296 | 5,834 | +8% | 18,762 | 16,739 | +12% | | Non-GAAP diluted EPS | 3.32 | 2.98 | +11% | 9.79 | 8.49 | +15% | **Revenue.** Growth was driven by nominal cross-border volume, nominal payments volume and processed transactions, partly offset by higher client incentives. Management attributes volume growth to continued resilience in consumer spending and ongoing expansion in digital commerce, with cross-border supported by ecommerce and travel activity, and notes ecommerce continuing to grow faster than face-to-face spend. Exchange rate movements added roughly one percentage point to net revenue growth in both the quarter and nine months — net revenue grew 13% on a constant-dollar basis in the quarter. U.S. net revenue was $4,410 million (+12%); international $7,223 million (+16%). By component for the quarter: service revenue $4,922 million (+14%); data processing revenue $6,042 million (+17%); international transaction revenue $3,853 million (+6%, on 14% nominal cross-border volume growth excluding intra-Europe, held back by lower currency volatility and business mix); other revenue $1,496 million (+45%); client incentives $(4,680) million (+18%). **Value-added services revenue reached $3.8 billion in the quarter, up 33%, and $10.3 billion over nine months, up 32%** — meaningfully faster than the network business and now a material share of the top line. Growth came from Issuing Solutions, Acceptance Solutions and Advisory and Other Services; client consulting engagements rose approximately 30%, and marketing-services demand was lifted by sponsorship of the FIFA World Cup 2026 and, in the nine-month period, the Olympic and Paralympic Winter Games Milano Cortina 2026. **Volume and transactions.** Visa processed 71,662 million transactions in the quarter, up 10% (207,148 million over nine months, up 9%). On the March-quarter volume base that drives fiscal-Q3 service revenue, total nominal payments volume was $3,728 billion, up 11% nominal and 9% constant-dollar, with U.S. up 8% and international up 15% nominal (10% constant). Consumer debit led internationally (+17% nominal, +10% constant) and commercial grew 13% nominal worldwide. On a current-quarter basis, the earnings release reports constant-dollar payments volume up 10%, cross-border volume excluding intra-Europe up 12%, total cross-border volume up 13%, and payment credentials up 8%. **Expenses.** The 19% increase was concentrated in two lines. **Personnel expense rose 40% to $2,458 million**, driven by higher severance costs from actions taken to drive operational efficiencies and reinvest in high-growth opportunities, plus headcount, compensation and acquisitions — the earnings release quantifies the quarter's severance special item at $563 million. **Marketing rose 54% to $649 million** on client marketing and campaigns tied to the FIFA World Cup 2026. Professional fees rose 32% to $246 million on legal fees and, over the nine months, costs of the Prisma and Newpay acquisition. Working the other way, **litigation provision fell 59% to $253 million** (nine months: $1,290 million, down 22%) on lower U.S. covered litigation accruals. Network and processing was $280 million (+25%); depreciation and amortization $367 million (+16%); general and administrative $503 million (+4%). **Below the line.** Non-operating expense of $44 million reversed $156 million of income a year earlier, as interest expense rose to $194 million from $39 million — the prior-year figure benefited from an interest benefit related to taxes — while investment income fell to $150 million on lower interest income on cash and investments, partly offset by equity-investment gains. The effective tax rate was 18% for the quarter and 16% for nine months (17.6% for the quarter as reported in the earnings release), helped by a deferred tax benefit of $18 million in the quarter and $351 million over nine months from a change in the U.S. taxation of certain foreign earnings, and a $217 million nine-month benefit from a tax position taken on certain expenses. **Acquisition.** Prisma Medios de Pago S.A.U. and Newpay S.A.U. closed in February 2026 for $1.5 billion in cash. The purchase price allocation records technology of $184 million (3-year weighted-average life), customer relationships of $405 million (6 years), deferred tax liabilities of $(199) million, other net assets of $85 million and **goodwill of $1,034 million** — about two-thirds of the price — attributed to expected synergies and assembled workforce and not deductible for tax. The allocation may be revised within a year of closing. The acquisition, though closed, remains subject to review by the Argentine competition authority. **Capital structure.** In May 2026 Visa accepted 3 million class B-1 and 120 million class B-2 shares in its exchange offer and issued 61 million class B-3 and 23 million class C shares; the tendered class B-1 and B-2 shares were retired. Future escrow-driven conversion-rate adjustments on class B-3 carry four times the impact of a class B-1 adjustment and twice that of a class B-2. As-converted class A shares outstanding fell to 1,880 million at June 30, 2026 from 1,930 million at September 30, 2025. Visa repurchased 14 million class A shares in the quarter at an average $330.71 for $4,878 million, and 50 million shares for $16,537 million over nine months, with $28.4 billion of authorization remaining after the April 2026 addition of a $20.0 billion program to the April 2025 $30.0 billion program. Dividends were $1,273 million in the quarter and $3.9 billion over nine months. **Liquidity and debt.** Nine-month operating cash flow was $16,342 million, down from $16,821 million, on higher litigation payments, higher incentive payments and income-tax timing, partly offset by underlying business growth. Investing used $755 million (prior year provided $404 million) on lower proceeds from maturities and sales of investment securities. Financing used $21,540 million against $12,963 million, reflecting senior note repayments at maturity, higher buybacks and lower note issuance proceeds, partly offset by net commercial paper issuance. Visa repaid $4.0 billion and €1.35 billion ($1.6 billion) of maturing senior notes during the nine months and issued $3.0 billion of fixed-rate notes in February 2026 at coupons of 3.80% to 4.70% with 3-to-10-year maturities. Total debt was $24,131 million at June 30, 2026 (carrying value $23,858 million) against $25,392 million at September 30, 2025, including $1.5 billion of commercial paper at a 3.77% weighted-average rate. The next senior note maturity is $1.5 billion in April 2027. Cash, cash equivalents and investment securities were $13.9 billion at June 30, 2026. **Settlement exposure.** Maximum daily settlement exposure over the nine months was $168.6 billion and the average was $99.5 billion, against total collateral of $9.5 billion at June 30, 2026 ($8.8 billion at September 30, 2025). Visa flags a forward change: in response to Brazilian regulatory developments it has submitted enhanced operating rule provisions to the Central Bank of Brazil that **will require Visa to extend settlement guarantees to sellers**; when approved, Visa expects settlement exposure to increase and is reassessing collateral requirements and its risk mitigation framework. Visa did not publish a quantitative outlook for fiscal 2026 in the quarterly report or the earnings release. Management's forward comments are limited to expecting the shift toward digital commerce and electronic payments to continue, with the extent of volume support depending on consumer spending levels and broader macroeconomic conditions. --- ## Litigation position and the retrospective responsibility plans *From Note 5 and Note 16 of the Form 10-Q, accession 0001403161-26-000104, which supersede the corresponding FY2025 10-K disclosures.* Litigation is not a footnote for Visa; it is a recurring cash cost, a driver of the reported expense line, and — through the retrospective responsibility plans — a mechanism that converts legal losses into share-count reduction rather than class A shareholder loss. **Accrual roll-forward, nine months ended June 30, 2026 ($ millions).** Total accrued litigation fell from $3,033 to $1,274, as $159 of provision for uncovered matters and $1,224 for covered matters were more than offset by $3,142 of payments (prior-year nine months: $1,053 of payments). Within that, the **U.S. covered litigation accrual fell from $2,698 to $822**, with $1,131 of interchange multidistrict litigation provision against $3,007 of payments. The VE territory covered litigation accrual rose from $9 to $89 on $93 of provision. That $93 is why the $1,383 of total provision in the roll-forward exceeds the $1,290 litigation provision on the income statement: under the Europe plan a VE territory covered loss is accrued against a reduction in stockholders' equity rather than charged to the litigation provision expense line, so the income-statement figure is the $159 of uncovered provision plus the $1,131 of U.S. covered accruals. **U.S. retrospective responsibility plan.** Settlements of and judgments in U.S. covered litigation are paid from an escrow account. Over the nine months the escrow went from $2,990 to **$888 million**, absorbing $875 million of deposits and $2,977 million of net payments to opt-out and injunctive-relief-class merchants. The accrual can sit above or below the escrow balance. Each escrow deposit dilutes the class B-1, B-2 and B-3 conversion rates into class A — economically equivalent to a class A repurchase. Over the nine months, deposits of $875 million reduced the as-converted class A count by 3 million shares at an effective price of $341.73. **Europe retrospective responsibility plan.** There is no escrow; recovery runs through periodic adjustments to the class A conversion rates on series B and C preferred stock, with covered losses first booked to a contra-equity "right to recover" account. At June 30, 2026 the as-converted value of series B and C preferred stock was $1,269 million (from $1,389 million at September 30, 2025) against book value of $112 million, less $111 million of right to recover, leaving **$1,158 million of as-converted recovery capacity available**. Series B preferred book value has been reduced to zero, so further series B recoveries run against accumulated income — $3 million was recognized that way in the nine months. **Where the cases stand.** The interchange multidistrict litigation — *In re Payment Card Interchange Fee and Merchant Discount Antitrust Litigation*, MDL 1720, consolidated in the Eastern District of New York since 2005 — is the U.S. merchants' antitrust challenge to Visa's and Mastercard's setting of default interchange reimbursement fees and to related operating rules such as honor-all-cards and the no-surcharge rules. On remand from the Second Circuit the district court split the merchants into two putative classes: a Damages Class, resolved by the 2018 amended settlement agreement, and an Injunctive Relief Class, certified in September 2021 without opt-out rights. On November 10, 2025 Visa and Mastercard reached a superseding and amended settlement with the injunctive-relief class (Form 8-K, accession 0001403161-25-000093). Its terms reach the interchange price itself: a **10-basis-point reduction in the U.S. combined average effective credit interchange rate for five years**, a five-year cap on posted U.S. credit interchange rates with standard U.S. consumer credit capped at **125 basis points**, expanded merchant rights to surcharge credit (including where a merchant does not surcharge other credit networks), the ability for merchants to accept U.S. credit cards selectively by category — commercial, premium consumer and standard consumer — and a new merchant education program. That settlement received preliminary court approval on June 9, 2026. On the individual merchant side, **Visa has settled with merchants representing approximately 95% of the Visa-branded payment card sales volume of merchants who opted out of the amended damages-class settlement**, and settlements reached in the March 2026 quarter resolved all actions that had been scheduled for trial beginning April 2026 in the Southern District of New York. Three damages-class merchants moved in April 2026 for a declaration that the amended settlement's forward-looking release is invalid; Visa and Mastercard moved in June 2026 to enforce the settlement against them. In the Visa Europe territory, proceedings have been brought by more than 1,200 merchant groups since July 2013; **Visa has settled the claims of over 950, with over 100 outstanding**, and anticipates additional claims — some merchants have entered standstill agreements and the full scope of unfiled claims is not yet known. The U.K. Competition Appeal Tribunal ruled in February 2026 that, outside certain merchant categories, interchange was not passed on by merchants; Visa has sought permission to appeal, and separately obtained permission in March 2026 to appeal the CAT's June 2025 decision that certain interchange rates restrict competition. Other active matters include the U.S. debit class actions, U.S. ATM access fee litigation, and German ATM litigation, on which the German Federal Court of Justice referred questions to the European Court of Justice in June 2026. --- ## Subsequent events *Post-period disclosures in the Form 10-Q for the quarter ended June 30, 2026, accession 0001403161-26-000104.* - **Commercial paper capacity expanded.** In July 2026 Visa increased the authorized amount of outstanding notes issuable under its commercial paper program **from $3.0 billion to $7.0 billion**. Outstanding commercial paper was $500 million as of July 28, 2026, down from $1.5 billion at June 30, 2026. - **Dividend declared.** On July 28, 2026 the board declared a quarterly cash dividend of $0.67 per class A common share (on an as-converted basis for all other outstanding common and preferred stock), payable September 1, 2026 to holders of record as of August 11, 2026. - **Interchange settlement approval step.** On July 15, 2026 the injunctive-relief-class plaintiffs in the interchange multidistrict litigation filed a motion for final approval of the settlement that had received preliminary approval on June 9, 2026. - **New long-dated spending commitments.** In July 2026 Visa entered into sponsorship and software arrangements carrying aggregate future minimum payment commitments of **approximately $820 million through fiscal 2035**. Beyond the items above, the quarterly report disclosed no acquisitions, divestitures or debt or equity financings occurring after June 30, 2026.