U.S. and Europe Retrospective Responsibility Plans

9 Months Ended

Jun. 30, 2024

Retrospective Responsibility Plans [Abstract]

U.S. and Europe Retrospective Responsibility Plans

Note 5—U.S. and Europe Retrospective Responsibility Plans

U.S. Retrospective Responsibility Plan

Under the terms of the U.S. retrospective responsibility plan, the Company maintains an escrow account from which settlements of, or judgments in, certain litigation (U.S. covered litigation) are paid. The accrual related to the U.S. covered litigation could be either higher or lower than the U.S. litigation escrow account balance. See Note 13—Legal Matters.

The following table presents the changes in the restricted cash equivalents—U.S. litigation escrow account:

	Nine Months Ended June 30,
	2024		2023
	(in millions)
Balance as of beginning of period	$	1,764	$	1,449
Deposits into the U.S. litigation escrow account	—		850
Payments to opt-out merchants(1), net of interest earned on escrow funds	(168)		(672)
Balance as of end of period	$	1,596	$	1,627

(1)These payments are associated with the interchange multidistrict litigation. See Note 13—Legal Matters.

Europe Retrospective Responsibility Plan

Visa Inc., Visa International and Visa Europe are parties to certain existing and potential litigation relating to the setting of multilateral interchange fee rates in the Visa Europe territory (VE territory covered litigation). Under the terms of the Europe retrospective responsibility plan, the Company is entitled to recover certain losses resulting from VE territory covered litigation (VE territory covered losses) through a periodic adjustment to the class A common stock conversion rates applicable to the series B and C preferred stock. VE territory covered losses are recorded in right to recover for covered losses, a contra-equity account within stockholders’ equity, before the corresponding adjustment to the applicable conversion rate is effected. Adjustments to the conversion rate may be executed once in any six-month period unless a single, individual loss greater than €20 million is incurred, in which case, the six-month limitation does not apply. When the adjustment to the conversion rate is made, the amount previously recorded in right to recover for covered losses is then recorded against the book value of the preferred stock within stockholders’ equity.

The following table presents the activities related to VE territory covered losses in preferred stock and right to recover for covered losses within stockholders’ equity:

	Nine Months Ended June 30, 2024
	Preferred Stock				Right to Recover for Covered Losses
	Series B		Series C
	(in millions)
Balance as of beginning of period	$	441	$	801	$	(140)
VE territory covered losses incurred(1)	—		—		(81)
Recovery through conversion rate adjustment(2)	(161)		(20)		175
Balance as of end of period	$	280	$	781	$	(46)

	Nine Months Ended June 30, 2023
	Preferred Stock				Right to Recover for Covered Losses
	Series B		Series C
	(in millions)
Balance as of beginning of period	$	460	$	812	$	(35)
VE territory covered losses incurred(1)	—		—		(21)
Recovery through conversion rate adjustment(2)	(19)		(11)		31
Balance as of end of period	$	441	$	801	$	(25)

(1)VE territory covered losses incurred reflect settlements with merchants and additional legal costs. See Note 13—Legal Matters.

(2)Adjustment to right to recover for covered losses for the conversion rate adjustment differs from the actual recovered amount due to differences in foreign exchange rates between the time the losses were incurred and the subsequent recovery through the conversion rate adjustment.

The following table presents the as-converted value of the preferred stock available to recover VE territory covered losses compared to the book value of preferred stock recorded within the Company’s consolidated balance sheets:

	June 30, 2024				September 30, 2023
	As-converted Value of Preferred Stock(1),(2)		Book Value of Preferred Stock(1)		As-converted Value of Preferred Stock(1),(3)		Book Value of Preferred Stock(1)
	(in millions)
Series B preferred stock	$	1,757	$	280	$	1,676	$	441
Series C preferred stock	2,987		781		2,635		801
Total	4,744		1,061		4,311		1,242
Less: right to recover for covered losses	(46)		(46)		(140)		(140)
Total recovery for covered losses available	$	4,698	$	1,015	$	4,171	$	1,102

(1)Figures in the table may not recalculate exactly due to rounding. As-converted and book values are based on unrounded numbers.

(2)As of June 30, 2024, the as-converted value of preferred stock is calculated as the product of: (a) 2 million and 3 million shares of the series B and C preferred stock outstanding, respectively; (b) 2.6980 and 3.6050, the class A common stock conversion rate applicable to the series B and C preferred stock outstanding, respectively; and (c) $262.47, Visa’s class A common stock closing stock price.

(3)As of September 30, 2023, the as-converted value of preferred stock is calculated as the product of: (a) 2 million and 3 million shares of the series B and C preferred stock outstanding, respectively; (b) 2.9370 and 3.6290, the class A common stock conversion rate applicable to the series B and C preferred stock outstanding, respectively; and (c) $230.01, Visa’s class A common stock closing stock price.

As required by the litigation management deed, on June 21, 2024, the eighth anniversary of the Visa Europe acquisition, Visa, in consultation with the VE territories litigation management committee, carried out a release assessment. After the completion of this assessment, the Company released approximately $2.7 billion of the as-converted value from its series B and C preferred stock and issued approximately 99,264 shares of series A preferred stock on July 19, 2024 (Eighth Anniversary Release). Each holder of a share of series B and C preferred stock received a number of series A preferred stock equal to the applicable conversion adjustment divided by 100. The Company paid cash in lieu of issuing fractional shares of series A preferred stock. Each share of series A preferred stock will be automatically converted into 100 shares of class A common stock in connection with a sale to a person eligible to hold class A common stock in accordance with Visa’s certificate of incorporation. Effective July 19, 2024, the release resulted in series B and C conversion rate reductions of 1.6950 and 1.8190, respectively.