Settlement Guarantee Management

9 Months Ended

Jun. 30, 2020

Settlement Guarantee Management [Abstract]

Note 9—Settlement Guarantee Management

The Company indemnifies its clients for settlement losses suffered due to failure of any other client to fund its settlement obligations in accordance with the Visa operating 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.

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.

The Company’s settlement exposure is limited to the amount of unsettled Visa payment transactions at any point in time, which vary significantly day to day. The Company’s maximum daily settlement exposure was $97.3 billion and the average daily settlement exposure was $54.4 billion during the nine months ended June 30, 2020.

The Company maintains and regularly reviews global settlement risk policies and procedures to manage settlement exposure, which may require clients to post collateral if certain credit standards are not met. At June 30, 2020 and September 30, 2019, the Company held collateral as follows:


	June 30, 2020		September 30, 2019
	(in millions)
Restricted cash and restricted cash equivalents	$	1,759	$	1,648
Pledged securities at market value	281		259
Letters of credit	1,273		1,293
Guarantees	704		477
Total	$	4,017	$	3,677