Settlement Guarantee Management

9 Months Ended

Jun. 30, 2018

Settlement Guarantee Management [Abstract]

Note 5—Settlement Guarantee Management

The Company indemnifies its clients for settlement losses suffered due to failure of any other clients to fund its settlement obligations in accordance with the Visa rules. This indemnification creates settlement risk for the Company due to the difference in timing between the date of a payment transaction and the date of subsequent settlement. The Company’s settlement exposure is limited to the amount of unsettled Visa payment transactions at any point in time. The Company requires certain clients that do not meet its credit standards to post collateral to offset potential losses from their estimated unsettled transactions. The Company’s estimated maximum settlement exposure was $73.2 billion during the three months ended June 30, 2018, compared to $67.7 billion during the three months ended September 30, 2017. Of these amounts, $2.8 billion was covered by collateral at June 30, 2018 and September 30, 2017. The total available collateral balances presented in the table below were greater than the settlement exposure covered by customer collateral held due to instances in which the available collateral exceeded the total settlement exposure for certain financial institutions at each date presented.

The Company maintained collateral as follows:



	June 30, 2018		September 30, 2017
	(in millions)
Cash equivalents⁽¹⁾	$	1,746	$	1,490
Pledged securities at market value	164		167
Letters of credit	1,349		1,316
Guarantees	677		941
Total	$	3,936	$	3,914


⁽¹⁾	Cash collateral held by Visa Europe is not included on the Company’s consolidated balance sheets as its clients retain beneficial ownership and the cash is only accessible to the Company in the event of default by the client on its settlement obligations.

Historically, the Company has experienced minimal losses as a result of its settlement risk guarantee. However, the Company’s future obligations, which could be material under its guarantees, are not determinable as they are dependent upon future events.