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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q

☑ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2021
OR

☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 001-33977
VISA INC.
(Exact name of Registrant as specified in its charter)

Delaware |  | 26-0267673
(State or other jurisdiction of incorporation or organization) |  | (IRS Employer Identification No.)
P.O. Box 8999 |  | 94128-8999
San Francisco, | California |  |
(Address of principal executive offices) |  | (Zip Code)

(650) 432-3200
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:

Title of each class |  | Trading Symbol |  | Name of each exchange on which registered
Class A Common Stock, par value $0.0001 per share |  | V |  | New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☑ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer | ☑ |  | Accelerated filer | ☐
Non-accelerated filer | ☐ |  | Smaller reporting company | ☐
|  |  | Emerging growth company | ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑
As of January 19, 2022, there were 1,658,423,632 shares outstanding of the registrant’s class A common stock, par value $0.0001 per share, 245,513,385 shares outstanding of the registrant’s class B common stock, par value $0.0001 per share, and 10,281,997 shares outstanding of the registrant’s class C common stock, par value $0.0001 per share.

Table of Contents
VISA INC.
TABLE OF CONTENTS

|  | Page
PART I. | Financial Information | 4
Item 1. | Financial Statements (Unaudited) | 4
| Consolidated Balance Sheets—December 3 1, 2021 and September 30, 202 1 | 4
| Consolidated Statements of Operations—Three Months Ended December 31, 2021 and 2020 | 5
| Consolidated Statements of Comprehensive Income—Three Months Ended December 3 1, 2021 and 2020 | 6
| Consolidated Statements of Changes in Equity—Three Months Ended December 31, 2021 and 2020 | 7
| Consolidated Statements of Cash Flows—Three Months Ended De c ember 31, 2021 and 2020 | 9
| Notes to Consolidated Financial Statements (Unaudited) | 10
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 23
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 31
Item 4. | Controls and Procedures | 32
PART II. | Other Information | 33
Item 1. | Legal Proceedings | 33
Item 1A. | Risk Factors | 33
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 33
Item 3. | Defaults Upon Senior Securities | 34
Item 4. | Mine Safety Disclosures | 34
Item 5. | Other Information | 34
Item 6. | Exhibits | 35
| Signatures | 37

3

Table of Contents
PART I. FINANCIAL INFORMATION

ITEM 1. | Financial Statements (Unaudited)

VISA INC.
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)

| December 31, 2021 |  | September 30, 2021
| (in millions, except per share data)
Assets |  |  |
Cash and cash equivalents | $ | 14,720 |  |  | $ | 16,487 |
Restricted cash equivalents—U.S. litigation escrow | 1,144 |  |  | 894 |
Investment securities | 1,201 |  |  | 2,025 |
Settlement receivable | 1,788 |  |  | 1,758 |
Accounts receivable | 2,168 |  |  | 1,968 |
Customer collateral | 2,284 |  |  | 2,260 |
Current portion of client incentives | 1,334 |  |  | 1,359 |
Prepaid expenses and other current assets | 1,267 |  |  | 856 |
Total current assets | 25,906 |  |  | 27,607 |
Investment securities | 2,087 |  |  | 1,705 |
Client incentives | 3,290 |  |  | 3,245 |
Property, equipment and technology, net | 2,908 |  |  | 2,715 |
Goodwill | 16,555 |  |  | 15,958 |
Intangible assets, net | 27,272 |  |  | 27,664 |
Other assets | 3,911 |  |  | 4,002 |
Total assets | $ | 81,929 |  |  | $ | 82,896 |
Liabilities |  |  |
Accounts payable | $ | 252 |  |  | $ | 266 |
Settlement payable | 2,774 |  |  | 2,443 |
Customer collateral | 2,284 |  |  | 2,260 |
Accrued compensation and benefits | 725 |  |  | 1,211 |
Client incentives | 5,294 |  |  | 5,243 |
Accrued liabilities | 2,965 |  |  | 2,334 |
Current maturities of debt | 3,247 |  |  | 999 |
Accrued litigation | 1,027 |  |  | 983 |
Total current liabilities | 18,568 |  |  | 15,739 |
Long-term debt | 17,673 |  |  | 19,978 |
Deferred tax liabilities | 6,078 |  |  | 6,128 |
Other liabilities | 3,416 |  |  | 3,462 |
Total liabilities | 45,735 |  |  | 45,307 |
Equity |  |  |
Preferred stock, $0.0001 par value, 25 shares authorized and 5 shares issued and outstanding as follows: |  |  |
Series A convertible participating preferred stock, less than one shares issued and outstanding at December 31, 2021 and September 30, 2021 (the “series A preferred stock”) | 430 |  |  | 486 |
Series B convertible participating preferred stock, 2 shares issued and outstanding at December 31, 2021 and September 30, 2021 (the “series B preferred stock”) | 1,045 |  |  | 1,071 |
Series C convertible participating preferred stock, 3 shares issued and outstanding at December 31, 2021 and September 30, 2021 (the “series C preferred stock”) | 1,520 |  |  | 1,523 |
Class A common stock, $0.0001 par value, 2,001,622 shares authorized, 1,661 and 1,677 shares issued and outstanding at December 31, 2021 and September 30, 2021 respectively | — |  |  | — |
Class B common stock, $0.0001 par value, 622 shares authorized, 245 shares issued and outstanding at December 31, 2021 and September 30, 2021 | — |  |  | — |
Class C common stock, $0.0001 par value, 1,097 shares authorized, 10 shares issued and outstanding at December 31, 2021 and September 30, 2021 | — |  |  | — |
Right to recover for covered losses | (111) |  |  | (133) |
Additional paid-in capital | 18,776 |  |  | 18,855 |
Accumulated income | 14,606 |  |  | 15,351 |
Accumulated other comprehensive income (loss), net: |  |  |
Investment securities | (9) |  |  | (1) |
Defined benefit pension and other postretirement plans | (47) |  |  | (49) |
Derivative instruments | (171) |  |  | (257) |
Foreign currency translation adjustments | 155 |  |  | 743 |
Total accumulated other comprehensive income (loss), net | (72) |  |  | 436 |
Total equity | 36,194 |  |  | 37,589 |
Total liabilities and equity | $ | 81,929 |  |  | $ | 82,896 |

See accompanying notes, which are an integral part of these unaudited consolidated financial statements.
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VISA INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

|  |  | Three Months Ended December 31,
|  |  |  |  | 2021 |  | 2020
|  |  |  |  | (in millions, except per share data)
Net revenues |  |  |  |  | $ | 7,059 |  |  | $ | 5,687 |
Operating Expenses |  |  |  |  |  |  |
Personnel |  |  |  |  | 1,125 |  |  | 981 |
Marketing |  |  |  |  | 280 |  |  | 205 |
Network and processing |  |  |  |  | 190 |  |  | 173 |
Professional fees |  |  |  |  | 100 |  |  | 83 |
Depreciation and amortization |  |  |  |  | 198 |  |  | 197 |
General and administrative |  |  |  |  | 242 |  |  | 203 |
Litigation provision |  |  |  |  | 148 |  |  | 1 |
Total operating expenses |  |  |  |  | 2,283 |  |  | 1,843 |
Operating income |  |  |  |  | 4,776 |  |  | 3,844 |
Non-operating Income (Expense) |  |  |  |  |  |  |
Interest expense, net |  |  |  |  | (134) |  |  | (136) |
Investment income and other |  |  |  |  | 255 |  |  | 40 |
Total non-operating income (expense) |  |  |  |  | 121 |  |  | (96) |
Income before income taxes |  |  |  |  | 4,897 |  |  | 3,748 |
Income tax provision |  |  |  |  | 938 |  |  | 622 |
Net income |  |  |  |  | $ | 3,959 |  |  | $ | 3,126 |
Basic Earnings Per Share |  |  |  |  |  |  |
Class A common stock |  |  |  |  | $ | 1.84 |  |  | $ | 1.42 |
Class B common stock |  |  |  |  | $ | 2.98 |  |  | $ | 2.31 |
Class C common stock |  |  |  |  | $ | 7.35 |  |  | $ | 5.69 |
Basic Weighted-average Shares Outstanding |  |  |  |  |  |  |
Class A common stock |  |  |  |  | 1,669 |  |  | 1,694 |
Class B common stock |  |  |  |  | 245 |  |  | 245 |
Class C common stock |  |  |  |  | 10 |  |  | 11 |
Diluted Earnings Per Share |  |  |  |  |  |  |
Class A common stock |  |  |  |  | $ | 1.83 |  |  | $ | 1.42 |
Class B common stock |  |  |  |  | $ | 2.98 |  |  | $ | 2.31 |
Class C common stock |  |  |  |  | $ | 7.34 |  |  | $ | 5.68 |
Diluted Weighted-average Shares Outstanding |  |  |  |  |  |  |
Class A common stock |  |  |  |  | 2,159 |  |  | 2,200 |
Class B common stock |  |  |  |  | 245 |  |  | 245 |
Class C common stock |  |  |  |  | 10 |  |  | 11 |

See accompanying notes, which are an integral part of these unaudited consolidated financial statements.
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VISA INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)

|  |  | Three Months Ended December 31,
|  |  |  |  | 2021 |  | 2020
|  |  |  |  | (in millions)
Net income |  |  |  |  | $ | 3,959 |  |  | $ | 3,126 |
Other comprehensive income (loss), net of tax: |  |  |  |  |  |  |
Investment securities: |  |  |  |  |  |  |
Net unrealized gain (loss) |  |  |  |  | (10) |  |  | (1) |
Income tax effect |  |  |  |  | 2 |  |  | — |
Defined benefit pension and other postretirement plans: |  |  |  |  |  |  |
Net unrealized actuarial gain (loss) and prior service credit (cost) |  |  |  |  | 1 |  |  | (1) |
Income tax effect |  |  |  |  | — |  |  | 1 |
Reclassification adjustments |  |  |  |  | 1 |  |  | 3 |
Income tax effect |  |  |  |  | — |  |  | (1) |
Derivative instruments: |  |  |  |  |  |  |
Net unrealized gain (loss) |  |  |  |  | 114 |  |  | (297) |
Income tax effect |  |  |  |  | (22) |  |  | 63 |
Reclassification adjustments |  |  |  |  | (6) |  |  | (18) |
Income tax effect |  |  |  |  | — |  |  | 5 |
Foreign currency translation adjustments |  |  |  |  | (588) |  |  | 1,046 |
Other comprehensive income (loss), net of tax |  |  |  |  | (508) |  |  | 800 |
Comprehensive income |  |  |  |  | $ | 3,451 |  |  | $ | 3,926 |

See accompanying notes, which are an integral part of these unaudited consolidated financial statements.
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VISA INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(UNAUDITED)

| Three Months Ended December 31, 2021
| Preferred Stock |  | Common Stock |  | Preferred Stock |  | Right to Recover for Covered Losses |  | Additional Paid-In Capital |  | Accumulated Income |  | Accumulated Other Comprehensive Income (Loss), Net |  | Total Equity
| Series A |  | Series B |  | Series C |  | Class A |  | Class B |  | Class C |
| (in millions, except per share data)
Balance as of September 30, 2021 | — |  | (1) | 2 |  |  | 3 |  |  | 1,677 |  |  | 245 |  |  | 10 |  |  | $ | 3,080 |  |  | $ | (133) |  |  | $ | 18,855 |  |  | $ | 15,351 |  |  | $ | 436 |  |  | $ | 37,589 |
Net income |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 3,959 |  |  |  |  | 3,959 |
Other comprehensive income (loss), net of tax |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (508) |  |  | (508) |
Comprehensive income |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 3,451 |
VE territory covered losses incurred |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (7) |  |  |  |  |  |  |  |  | (7) |
Recovery through conversion rate adjustment |  |  |  |  |  |  |  |  |  |  |  |  | (29) |  |  | 29 |  |  |  |  |  |  |  |  | — |
Conversion of series A preferred stock upon sales into public market | — |  | (1) |  |  |  |  | 1 |  |  |  |  |  |  | (56) |  |  |  |  | 56 |  |  |  |  |  |  | — |
Conversion of class C common stock upon sales into public market |  |  |  |  |  |  | — |  | (1) |  |  | — |  | (1) |  |  |  |  |  |  |  |  |  |  | — |
Share-based compensation, net of forfeitures |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 128 |  |  |  |  |  |  | 128 |
Vesting of restricted stock and performance-based shares |  |  |  |  |  |  | 2 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | — |
Restricted stock and performance-based shares settled in cash for taxes |  |  |  |  |  |  | — |  | (1) |  |  |  |  |  |  |  |  | (113) |  |  |  |  |  |  | (113) |
Cash proceeds from issuance of class A common stock under employee equity plans |  |  |  |  |  |  |  | (1) |  |  |  |  |  |  |  |  | 59 |  |  |  |  |  |  | 59 |
Cash dividends declared and paid, at a quarterly amount of $0.375 per class A common stock |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (809) |  |  |  |  | (809) |
Repurchase of class A common stock |  |  |  |  |  |  | (19) |  |  |  |  |  |  |  |  |  |  | (209) |  |  | (3,895) |  |  |  |  | (4,104) |
Balance as of December 31, 2021 | — |  | (1) | 2 |  |  | 3 |  |  | 1,661 |  |  | 245 |  |  | 10 |  |  | $ | 2,995 |  |  | $ | (111) |  |  | $ | 18,776 |  |  | $ | 14,606 |  |  | $ | (72) |  |  | $ | 36,194 |

(1)Increase, decrease or balance is less than one million shares.
See accompanying notes, which are an integral part of these unaudited consolidated financial statements.
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VISA INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY—(Continued)
(UNAUDITED)

| Three Months Ended December 31, 2020
| Preferred Stock |  | Common Stock |  | Preferred Stock |  | Right to Recover for Covered Losses |  | Additional Paid-In Capital |  | Accumulated Income |  | Accumulated Other Comprehensive Income (Loss), Net |  | Total Equity
| Series A |  | Series B |  | Series C |  | Class A |  | Class B |  | Class C |
| (in millions, except per share data)
Balance as of September 30, 2020 | — |  | (1) | 2 |  |  | 3 |  |  | 1,683 |  |  | 245 |  |  | 11 |  |  | $ | 5,086 |  |  | $ | (39) |  |  | $ | 16,721 |  |  | $ | 14,088 |  |  | $ | 354 |  |  | $ | 36,210 |
Net income |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 3,126 |  |  |  |  | 3,126 |
Other comprehensive income (loss), net of tax |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 800 |  |  | 800 |
Comprehensive income |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 3,926 |
Adoption of new accounting standards |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 3 |  |  |  |  | 3 |
VE territory covered losses incurred |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (10) |  |  |  |  |  |  |  |  | (10) |
Recovery through conversion rate adjustment |  |  |  |  |  |  |  |  |  |  |  |  | (15) |  |  | 15 |  |  |  |  |  |  |  |  | — |
Conversion of series A preferred stock upon sales into public market | — |  | (1) |  |  |  |  | 20 |  |  |  |  |  |  | (1,388) |  |  |  |  | 1,388 |  |  |  |  |  |  | — |
Conversion of class C common stock upon sales into public market |  |  |  |  |  |  | — |  | (1) |  |  | — |  | (1) |  |  |  |  |  |  |  |  |  |  | — |
Share-based compensation, net of forfeitures |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 122 |  |  |  |  |  |  | 122 |
Vesting of restricted stock and performance-based shares |  |  |  |  |  |  | 3 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | — |
Restricted stock and performance-based shares settled in cash for taxes |  |  |  |  |  |  | (1) |  |  |  |  |  |  |  |  |  |  | (134) |  |  |  |  |  |  | (134) |
Cash proceeds from issuance of class A common stock under employee equity plans |  |  |  |  |  |  | — |  | (1) |  |  |  |  |  |  |  |  | 61 |  |  |  |  |  |  | 61 |
Cash dividends declared and paid, at a quarterly amount of $0.32 per class A common stock |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | (703) |  |  |  |  | (703) |
Repurchase of class A common stock |  |  |  |  |  |  | (9) |  |  |  |  |  |  |  |  |  |  | (95) |  |  | (1,701) |  |  |  |  | (1,796) |
Balance as of December 31, 2020 | — |  | (1) | 2 |  |  | 3 |  |  | 1,696 |  |  | 245 |  |  | 11 |  |  | $ | 3,683 |  |  | $ | (34) |  |  | $ | 18,063 |  |  | $ | 14,813 |  |  | $ | 1,154 |  |  | $ | 37,679 |

(1)Increase, decrease or balance is less than one million shares.
See accompanying notes, which are an integral part of these unaudited consolidated financial statements.
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VISA INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

| Three Months Ended December 31,
| 2021 |  | 2020
| (in millions)
Operating Activities |  |  |
Net income | $ | 3,959 |  |  | $ | 3,126 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: |  |  |
Client incentives | 2,371 |  |  | 1,858 |
Share-based compensation | 128 |  |  | 122 |
Depreciation and amortization of property, equipment, technology and intangible assets | 198 |  |  | 197 |
Deferred income taxes | (15) |  |  | 5 |
VE territory covered losses incurred | (7) |  |  | (10) |
(Gains) losses on equity investments, net | (231) |  |  | (16) |
Other | (32) |  |  | 41 |
Change in operating assets and liabilities: |  |  |
Settlement receivable | (76) |  |  | (244) |
Accounts receivable | (213) |  |  | (108) |
Client incentives | (2,339) |  |  | (1,485) |
Other assets | (163) |  |  | 235 |
Accounts payable | (9) |  |  | (39) |
Settlement payable | 409 |  |  | 194 |
Accrued and other liabilities | 206 |  |  | (357) |
Accrued litigation | 46 |  |  | (6) |
Net cash provided by (used in) operating activities | 4,232 |  |  | 3,513 |
Investing Activities |  |  |
Purchases of property, equipment and technology | (173) |  |  | (160) |
Investment securities: |  |  |
Purchases | (951) |  |  | (1,315) |
Proceeds from maturities and sales | 1,374 |  |  | 2,163 |
Acquisitions, net of cash acquired | (832) |  |  | (75) |
Purchases of / contributions to other investments | (37) |  |  | (18) |
Other investing activities | 72 |  |  | 44 |
Net cash provided by (used in) investing activities | (547) |  |  | 639 |
Financing Activities |  |  |
Repurchase of class A common stock | (4,104) |  |  | (1,796) |
Repayments of debt | — |  |  | (3,000) |
Dividends paid | (809) |  |  | (703) |
Cash proceeds from issuance of class A common stock under employee equity plans | 59 |  |  | 61 |
Restricted stock and performance-based shares settled in cash for taxes | (113) |  |  | (134) |
Net cash provided by (used in) financing activities | (4,967) |  |  | (5,572) |
Effect of exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents | (194) |  |  | 304 |
Increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents | (1,476) |  |  | (1,116) |
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period | 19,799 |  |  | 19,171 |
Cash, cash equivalents, restricted cash and restricted cash equivalents at end of period | $ | 18,323 |  |  | $ | 18,055 |
Supplemental Disclosure |  |  |
Cash paid for income taxes, net | $ | 268 |  |  | $ | 252 |
Interest payments on debt | $ | 244 |  |  | $ | 281 |
Accruals related to purchases of property, equipment and technology | $ | 53 |  |  | $ | 13 |

See accompanying notes, which are an integral part of these unaudited consolidated financial statements.
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VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note 1—Summary of Significant Accounting Policies
Organization. Visa Inc. (“Visa” or the “Company”) is a global payments technology company that facilitates global commerce and money movement across more than 200 countries and territories. Visa and its wholly-owned consolidated subsidiaries operate one of the world’s largest electronic payments network — VisaNet — which provides transaction processing services (primarily authorization, clearing and settlement). The Company offers products and solutions that facilitate secure, reliable and efficient money movement for all participants in the ecosystem. Visa is not a financial institution and does not issue cards, extend credit or set rates and fees for account holders of Visa products. In most cases, account holder and merchant relationships belong to, and are managed by, Visa’s financial institution clients.
Consolidation and basis of presentation. The accompanying unaudited consolidated financial statements include the accounts of Visa and its consolidated entities and are presented in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The Company consolidates its majority-owned and controlled entities, including variable interest entities (“VIEs”) for which the Company is the primary beneficiary. The Company’s investments in VIEs have not been material to its unaudited consolidated financial statements as of and for the periods presented. All significant intercompany accounts and transactions are eliminated in consolidation.
The accompanying unaudited consolidated financial statements are presented in accordance with the U.S. Securities and Exchange Commission (“SEC”) requirements for Quarterly Reports on Form 10-Q and, consequently, do not include all of the annual disclosures required by U.S. GAAP. Reference should be made to the Visa Annual Report on Form 10-K for the year ended September 30, 2021 for additional disclosures, including a summary of the Company’s significant accounting policies.
In the opinion of management, the accompanying unaudited consolidated financial statements include all normal recurring adjustments necessary for a fair presentation of the Company’s financial position, results of operations and cash flows for the interim periods presented. The results of operations for interim periods are not necessarily indicative of results for the full year.
Use of estimates. The preparation of the accompanying unaudited consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions about future events. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited consolidated financial statements and reported amounts of revenues and expenses during the reporting period. These estimates may change as new events occur and additional information is obtained, and will be recognized in the period in which such changes occur. Future actual results could differ materially from these estimates. As the effects of the evolving coronavirus (“COVID-19”) pandemic continue, much remains uncertain. There have been no comparable recent events and as a result the ultimate impact of COVID-19 and the extent to which COVID-19 and new variants continue to impact the Company’s business, results of operations and financial condition will depend on future developments, which are highly uncertain and difficult to predict.
Recently Adopted Accounting Pronouncements
In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2019-12, which simplifies the accounting for income taxes by removing certain exceptions to the general principles in the existing guidance and making other minor improvements. The Company adopted this guidance effective October 1, 2021. The adoption did not have a material impact on the consolidated financial statements.
In January 2020, the FASB issued ASU 2020-01, which clarifies that an entity should consider observable transactions that require it to either apply or discontinue the equity method of accounting for purposes of applying the fair value measurement alternative. The Company adopted this guidance effective October 1, 2021. The adoption did not have a material impact on the consolidated financial statements.
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VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)
Note 2—Acquisitions
Closed Acquisition
On December 20, 2021, Visa acquired The Currency Cloud Group Limited (“Currencycloud”), a UK-based global platform that enables banks and fintechs to provide innovative foreign exchange solutions for cross-border payments, for a total purchase consideration of $893 million (which includes the fair value of Visa’s previously held equity interest in Currencycloud). As a result of this transaction closing days before the quarter-end, the initial allocation of the purchase price has not yet been completed. On a provisional basis, the Company allocated $210 million to technology, intangible assets and deferred tax liabilities and $683 million to goodwill. The Company expects to finalize the purchase price allocation once the information required to complete the accounting is available, but no later than one year from the acquisition date.
Pending Acquisition
On June 24, 2021, Visa entered into a definitive agreement to acquire Tink AB (“Tink”) for €1.8 billion, inclusive of cash and retention incentives. Tink is a European open banking platform that enables financial institutions, fintechs and merchants to build tailored financial management tools, products and services for European consumers and businesses based on their financial data. This acquisition is subject to customary closing conditions, including regulatory reviews and approvals.
Note 3—Revenues
The nature, amount, timing and uncertainty of the Company’s revenues and cash flows and how they are affected by economic factors are most appropriately depicted through the Company’s revenue categories and geographical markets. The following tables disaggregate the Company’s net revenues by revenue category and by geography:

| Three Months Ended December 31, |  |
| 2021 |  | 2020 |  |  |  |
| (in millions)
Service revenues | $ | 3,193 |  |  | $ | 2,677 |  |  |  |  |
Data processing revenues | 3,614 |  |  | 3,033 |  |  |  |  |
International transaction revenues | 2,174 |  |  | 1,451 |  |  |  |  |
Other revenues | 449 |  |  | 384 |  |  |  |  |
Client incentives | (2,371) |  |  | (1,858) |  |  |  |  |
Net revenues | $ | 7,059 |  |  | $ | 5,687 |  |  |  |  |

| Three Months Ended December 31, |  |
| 2021 |  | 2020 |  |  |  |
| (in millions)
U.S. | $ | 3,178 |  |  | $ | 2,667 |  |  |  |  |
International | 3,881 |  |  | 3,020 |  |  |  |  |
Net revenues | $ | 7,059 |  |  | $ | 5,687 |  |  |  |  |

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VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)
Note 4—Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents
The Company reconciles cash, cash equivalents, restricted cash and restricted cash equivalents reported in the consolidated balance sheets that aggregate to the beginning and ending balances shown in the consolidated statements of cash flows as follows:

| December 31, 2021 |  | September 30, 2021
| (in millions)
Cash and cash equivalents | $ | 14,720 |  |  | $ | 16,487 |
Restricted cash and restricted cash equivalents: |  |  |
U.S. litigation escrow | 1,144 |  |  | 894 |
Customer collateral | 2,284 |  |  | 2,260 |
Prepaid expenses and other current assets | 175 |  |  | 158 |
Cash, cash equivalents, restricted cash and restricted cash equivalents | $ | 18,323 |  |  | $ | 19,799 |

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 referred to as the “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:

| Three Months Ended December 31,
| 2021 |  | 2020
| (in millions)
Balance at beginning of period | $ | 894 |  |  | $ | 901 |
Deposits into the litigation escrow account | 250 |  |  | — |
Payments to opt-out merchants(1) and interest earned on escrow funds | — |  |  | (7) |
Balance at end of period | $ | 1,144 |  |  | $ | 894 |

(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 (the “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 (the “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” 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” as contra-equity is then recorded against the book value of the preferred stock within stockholders’ equity. During the three months ended December 31, 2021, the Company recovered $29 million of VE territory covered losses through adjustments to the class A common stock conversion rates applicable to the series B and C preferred stock.
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VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)
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:

| Preferred Stock |  | Right to Recover for Covered Losses
| Series B |  | Series C |
| (in millions)
Balance as of September 30, 2021 | $ | 1,071 |  |  | $ | 1,523 |  |  | $ | (133) |
VE territory covered losses incurred(1) | — |  |  | — |  |  | (7) |
Recovery through conversion rate adjustment | (26) |  |  | (3) |  |  | 29 |
Balance as of December 31, 2021 | $ | 1,045 |  |  | $ | 1,520 |  |  | $ | (111) |

| Preferred Stock |  | Right to Recover for Covered Losses
| Series B |  | Series C |
| (in millions)
Balance as of September 30, 2020 | $ | 1,106 |  |  | $ | 1,543 |  |  | $ | (39) |
VE territory covered losses incurred(1) | — |  |  | — |  |  | (10) |
Recovery through conversion rate adjustment | (9) |  |  | (6) |  |  | 15 |
Balance as of December 31, 2020 | $ | 1,097 |  |  | $ | 1,537 |  |  | $ | (34) |

(1)VE territory covered losses incurred reflect settlements with merchants and additional legal costs. See Note 13—Legal Matters.
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 in stockholders’ equity within the Company’s consolidated balance sheets:

| December 31, 2021 |  | September 30, 2021
| 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 | $ | 3,371 |  |  | $ | 1,045 |  |  | $ | 3,493 |  |  | $ | 1,071 |
Series C preferred stock | 4,672 |  |  | 1,520 |  |  | 4,806 |  |  | 1,523 |
Total | 8,043 |  |  | 2,565 |  |  | 8,299 |  |  | 2,594 |
Less: right to recover for covered losses | (111) |  |  | (111) |  |  | (133) |  |  | (133) |
Total recovery for covered losses available | $ | 7,932 |  |  | $ | 2,454 |  |  | $ | 8,166 |  |  | $ | 2,461 |

(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 December 31, 2021, 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) 6.271 and 6.829, the class A common stock conversion rate applicable to the series B and C preferred stock outstanding, respectively; and (c) $216.71, Visa’s class A common stock closing stock price.
(3)As of September 30, 2021, 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) 6.321 and 6.834, the class A common stock conversion rate applicable to the series B and C preferred stock outstanding, respectively; and (c) $222.75, Visa’s class A common stock closing stock price.
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VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)
Note 6—Fair Value Measurements and Investments
Assets and Liabilities Measured at Fair Value on a Recurring Basis

| Fair Value Measurements Using Inputs Considered as
| Level 1 |  | Level 2 |  |
| December 31, 2021 |  | September 30, 2021 |  | December 31, 2021 |  | September 30, 2021 |  |  |  |
| (in millions)
Assets |  |  |  |  |  |  |  |  |  |  |
Cash equivalents and restricted cash equivalents: |  |  |  |  |  |  |  |  |  |  |
Money market funds | $ | 11,084 |  |  | $ | 11,779 |  |  | $ | — |  |  | $ | — |  |  |  |  |
U.S. government-sponsored debt securities | — |  |  | — |  |  | 541 |  |  | 100 |  |  |  |  |
U.S. Treasury securities | 1,075 |  |  | 2,400 |  |  | — |  |  | — |  |  |  |  |
Investment securities: |  |  |  |  |  |  |  |  |  |  |
Marketable equity securities | 481 |  |  | 490 |  |  | — |  |  | — |  |  |  |  |
U.S. government-sponsored debt securities | — |  |  | — |  |  | 510 |  |  | 245 |  |  |  |  |
U.S. Treasury securities | 2,287 |  |  | 2,985 |  |  | — |  |  | — |  |  |  |  |
Other current and non-current assets: |  |  |  |  |  |  |  |  |  |  |
Money market funds | 4 |  |  | 4 |  |  | — |  |  | — |  |  |  |  |
Derivative instruments | — |  |  | — |  |  | 408 |  |  | 410 |  |  |  |  |
Total | $ | 14,931 |  |  | $ | 17,658 |  |  | $ | 1,459 |  |  | $ | 755 |  |  |  |  |
Liabilities |  |  |  |  |  |  |  |  |  |  |
Accrued compensation and benefits: |  |  |  |  |  |  |  |  |  |  |
Deferred compensation liability | $ | 209 |  |  | $ | 167 |  |  | $ | — |  |  | $ | — |  |  |  |  |
Accrued and other liabilities: |  |  |  |  |  |  |  |  |  |  |
Derivative instruments | — |  |  | — |  |  | 62 |  |  | 109 |  |  |  |  |
Total | $ | 209 |  |  | $ | 167 |  |  | $ | 62 |  |  | $ | 109 |  |  |  |  |

Level 1 assets and liabilities. Money market funds, marketable equity securities and U.S. Treasury securities are classified as Level 1 within the fair value hierarchy, as fair value is based on unadjusted quoted prices in active markets for identical assets and liabilities. The Company’s deferred compensation liability is measured at fair value based on marketable equity securities held under the deferred compensation plan.
Level 2 assets and liabilities. The fair value of U.S. government-sponsored debt securities, as provided by third-party pricing vendors, is based on quoted prices in active markets for similar, not identical, assets. Derivative instruments are valued using inputs that are observable in the market or can be derived principally from or corroborated by observable market data.
U.S. government-sponsored debt securities and U.S. Treasury securities. As of December 31, 2021 and September 30, 2021, gross unrealized gains and losses were not material. As of December 31, 2021, $2.3 billion of the Company’s debt securities are due within one year and $2.1 billion is due between one to five years.
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VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)
Assets Measured at Fair Value on a Non-recurring Basis
Non-marketable equity securities. The Company’s non-marketable equity securities are investments in privately held companies without readily determinable market values. These investments are classified as Level 3 due to the absence of quoted market prices, the inherent lack of liquidity and the fact that inputs used to measure fair value are unobservable and require management’s judgment.
The following table summarizes the total carrying value of the Company’s non-marketable equity securities held as of December 31, 2021 including cumulative unrealized gains and losses:

| December 31, 2021
| (in millions)
Initial cost basis | $ | 893 |
Adjustments: |
Upward adjustments | 818 |
Downward adjustments (including impairment) | (13) |
Carrying amount, end of period | $ | 1,698 |

Unrealized gains and losses included in the carrying value of the Company’s non-marketable equity securities still held as of December 31, 2021 and 2020 were as follows:

| Three Months Ended December 31, |  |
| 2021 |  | 2020 |  |  |  |
| (in millions)
Upward adjustments | $ | 224 |  |  | $ | 14 |  |  |  |  |
Downward adjustments (including impairment) | $ | — |  |  | $ | (2) |  |  |  |  |

The Company recognized net unrealized gains on marketable and non-marketable equity securities still held as of quarter end of $172 million and $29 million for the three months ended December 31, 2021 and 2020, respectively.
Non-financial assets and liabilities. Certain non-financial assets such as goodwill, intangible assets and property, equipment and technology are only recognized at fair value if they are deemed to be impaired. As of December 31, 2021, there were no impairment indicators.
Other Fair Value Disclosures
Debt. Debt instruments are measured at amortized cost on the Company’s unaudited consolidated balance sheets. The fair value of the debt instruments, as provided by third-party pricing vendors, is based on quoted prices in active markets for similar, not identical, assets. If measured at fair value in the financial statements, these instruments would be classified as Level 2 in the fair value hierarchy. As of December 31, 2021, the carrying value and estimated fair value of debt was $20.9 billion and $22.5 billion, respectively. As of September 30, 2021, the carrying value and estimated fair value of debt was $21.0 billion and $22.5 billion, respectively.
Other financial instruments not measured at fair value. At December 31, 2021, the carrying value of settlement receivable and payable and customer collateral approximates fair value due to their generally short maturities. If measured at fair value in the financial statements, these financial instruments would be classified as Level 2 in the fair value hierarchy.
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VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)
Note 7—Debt
The Company had outstanding debt as follows:

| December 31, 2021 |  | September 30, 2021 |  | Effective Interest Rate(1)
| (in millions, except percentages)
2.15% Senior Notes due September 2022 | $ | 1,000 |  |  | $ | 1,000 |  |  | 2.30 | %
2.80% Senior Notes due December 2022 | 2,250 |  |  | 2,250 |  |  | 2.89 | %
3.15% Senior Notes due December 2025 | 4,000 |  |  | 4,000 |  |  | 3.26 | %
1.90% Senior Notes due April 2027 | 1,500 |  |  | 1,500 |  |  | 2.02 | %
0.75% Senior Notes due August 2027 | 500 |  |  | 500 |  |  | 0.84 | %
2.75% Senior Notes due September 2027 | 750 |  |  | 750 |  |  | 2.91 | %
2.05% Senior Notes due April 2030 | 1,500 |  |  | 1,500 |  |  | 2.13 | %
1.10% Senior Notes due February 2031 | 1,000 |  |  | 1,000 |  |  | 1.20 | %
4.15% Senior Notes due December 2035 | 1,500 |  |  | 1,500 |  |  | 4.23 | %
2.70% Senior Notes due April 2040 | 1,000 |  |  | 1,000 |  |  | 2.80 | %
4.30% Senior Notes due December 2045 | 3,500 |  |  | 3,500 |  |  | 4.37 | %
3.65% Senior Notes due September 2047 | 750 |  |  | 750 |  |  | 3.73 | %
2.00% Senior Notes due August 2050 | 1,750 |  |  | 1,750 |  |  | 2.09 | %
Total debt | 21,000 |  |  | 21,000 |  |  |
Unamortized discounts and debt issuance costs | (158) |  |  | (161) |  |  |
Hedge accounting fair value adjustments(2) | 78 |  |  | 138 |  |  |
Total carrying value of debt | $ | 20,920 |  |  | $ | 20,977 |  |  |
Reported as: |  |  |  |  |
Current maturities of debt | $ | 3,247 |  |  | $ | 999 |  |  |
Long-term debt | 17,673 |  |  | 19,978 |  |  |
Total carrying value of debt | $ | 20,920 |  |  | $ | 20,977 |  |  |

(1)Effective interest rates disclosed do not reflect hedge accounting adjustments.
(2)Represents the change in fair value of interest rate swap agreements entered into on a portion of the outstanding senior notes.
Note 8—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. During the three months ended December 31, 2021, the Company’s maximum daily settlement exposure was $112.7 billion and the average daily settlement exposure was $72.4 billion.
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VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)
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. The Company held the following collateral to manage settlement exposure:

| December 31, 2021 |  | September 30, 2021
| (in millions)
Restricted cash and restricted cash equivalents | $ | 2,284 |  |  | $ | 2,260 |
Pledged securities at market value | 273 |  |  | 254 |
Letters of credit | 1,545 |  |  | 1,518 |
Guarantees | 765 |  |  | 758 |
Total | $ | 4,867 |  |  | $ | 4,790 |

Note 9—Stockholders’ Equity
As-converted class A common stock. The number of shares of each series and class, and the number of shares of class A common stock on an as-converted basis were as follows:

| December 31, 2021 |  | September 30, 2021 |
| Shares Outstanding |  | Conversion Rate Into Class A Common Stock |  | As-converted Class A Common Stock(1) |  | Shares Outstanding |  | Conversion Rate Into Class A Common Stock |  | As-converted Class A Common Stock(1) |
| (in millions, except conversion rate) |
Series A preferred stock | — |  | (2) | 100.0000 |  |  | 6 |  |  | — |  | (2) | 100.0000 |  |  | 7 |  |
Series B preferred stock | 2 |  |  | 6.2710 |  |  | 16 |  |  | 2 |  |  | 6.3210 |  |  | 16 |  |
Series C preferred stock | 3 |  |  | 6.8290 |  |  | 22 |  |  | 3 |  |  | 6.8340 |  |  | 22 |  |
Class A common stock(3) | 1,661 |  |  | — |  | 1,661 |  |  | 1,677 |  |  | — |  |  | 1,677 |  |
Class B common stock | 245 |  |  | 1.6181 |  | (4) | 397 |  |  | 245 |  |  | 1.6228 |  | (4) | 398 |  |
Class C common stock | 10 |  |  | 4.0000 |  |  | 40 |  |  | 10 |  |  | 4.0000 |  |  | 41 |  |
Total |  |  |  |  | 2,142 |  |  |  |  |  |  | 2,161 |  |

(1)Figures in the table may not recalculate exactly due to rounding. As-converted class A common stock is calculated based on unrounded numbers.
(2)The number of shares outstanding was less than one million.
(3)Class A common stock shares outstanding reflect repurchases that settled on or before December 31, 2021 and September 30, 2021, respectively.
(4)The class B to class A common stock conversion rate is presented on a rounded basis. Conversion calculations for dividend payments are based on a conversion rate rounded to the tenth decimal.
Reduction in as-converted shares. Under the terms of the U.S. retrospective responsibility plan, when the Company funds the U.S. litigation escrow account, the value of the Company’s class B common stock is subject to dilution through a downward adjustment to the conversion rate of the shares of class B common stock to shares of class A common stock. Under the terms of the Europe retrospective responsibility plan, the Company is entitled to recover VE territory covered losses through periodic adjustments to the class A common stock conversion rates applicable to the series B and C preferred stock. The deposit and recovery have the same economic effect on earnings per share as repurchasing the Company’s class A common stock, because it reduces the class B common stock and the series B and C preferred stock conversion rates and consequently, reduces the as-converted class A common stock share count. See Note 5—U.S. and Europe Retrospective Responsibility Plans.
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VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)
The following table presents the reduction in the number of as-converted class B common stock after deposit into the U.S. litigation escrow account for the three months ended December 31, 2021. There was no comparable adjustment recorded for class B common stock for the three months ended December 31, 2020.

| Three Months Ended December 31, 2021 |  |
| (in millions, except per share data)
Reduction in equivalent number of class A common stock | 1 |  |  |
Effective price per share(1) | $ | 217.61 |  |  |
Deposits under the U.S. retrospective responsibility plan | $ | 250 |  |  |

(1)Effective price per share is calculated using the volume-weighted average price of the Company’s class A common stock over a pricing period in accordance with the Company’s current certificate of incorporation.
The following table presents the reduction in the number of as-converted series B and C preferred stock after the Company recovered VE territory covered losses through conversion rate adjustments:

| Three Months Ended December 31, 2021 |  | Three Months Ended December 31, 2020 |
| Series B |  | Series C |  | Series B |  | Series C |
| (in millions, except per share data) |
Reduction in equivalent number of class A common stock | — |  | (1) | — |  | (1) | — |  | (1) | — |  | (1)
Effective price per share(2) | $ | 201.68 |  |  | $ | 201.68 |  |  | $ | 209.89 |  |  | $ | 209.89 |  |
Recovery through conversion rate adjustment | $ | 26 |  |  | $ | 3 |  |  | $ | 9 |  |  | $ | 6 |  |

(1)The reduction in equivalent number of shares of class A common stock was less than one million shares.
(2)Effective price per share for the quarter is calculated using the volume-weighted average price of the Company’s class A common stock over a pricing period in accordance with the Company’s current certificates of designations for its series B and C preferred stock. Effective price per share is calculated using the weighted-average effective prices of the respective adjustments made during the year.
Common stock repurchases. The following table presents share repurchases in the open market:

| Three Months Ended December 31, |  |
| 2021 |  | 2020 |  |  |  |
| (in millions, except per share data)
Shares repurchased in the open market(1) | 19 |  |  | 9 |  |  |  |  |
Average repurchase price per share(2) | $ | 210.32 |  |  | $ | 201.73 |  |  |  |  |
Total cost(2) | $ | 4,104 |  |  | $ | 1,796 |  |  |  |  |

(1)Shares repurchased in the open market reflect repurchases that settled during the three months ended December 31, 2021 and 2020, respectively. All shares repurchased in the open market have been retired and constitute authorized but unissued shares.
(2)Figures in the table may not recalculate exactly due to rounding. Average repurchase price per share and total cost are calculated based on unrounded numbers.
In December 2021, the Company’s board of directors authorized a new $12.0 billion share repurchase program. Previously, in January 2021, the Company’s board of directors authorized an $8.0 billion share repurchase program (the “January 2021 Program”). These authorizations have no expiration date. As of December 31, 2021, the Company’s repurchase programs had remaining authorized funds of $12.7 billion. All share repurchase programs authorized prior to the January 2021 Program have been completed.
Dividends. On January 25, 2022, the Company’s board of directors declared a quarterly cash dividend of $0.375 per share of class A common stock (determined in the case of class B and C common stock and series A, B and C preferred stock on an as-converted basis), which will be paid on March 1, 2022, to all holders of record as of February 11, 2022. The Company declared and paid dividends of $809 million and $703 million during the three months ended December 31, 2021 and 2020, respectively.
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VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)
Note 10—Earnings Per Share
Basic earnings per share is computed by dividing net income available to each class of shares by the weighted-average number of shares of common stock outstanding and participating securities during the period. Participating securities include the Company’s series A, B and C preferred stock and restricted stock units (“RSUs”) that contain non-forfeitable rights to dividends or dividend equivalents. Net income is allocated to each class of common stock and participating securities based on its proportional ownership on an as-converted basis. The weighted-average number of shares outstanding of each class of common stock reflects changes in ownership over the periods presented. See Note 9—Stockholders’ Equity.
Diluted earnings per share is computed by dividing net income available by the weighted-average number of shares of common stock outstanding, participating securities and, if dilutive, potential class A common stock equivalent shares outstanding during the period. Dilutive class A common stock equivalents may consist of: (1) shares of class A common stock issuable upon the conversion of series A, B and C preferred stock and class B and C common stock based on the conversion rates in effect through the period, and (2) incremental shares of class A common stock calculated by applying the treasury stock method to the assumed exercise of employee stock options, the assumed purchase of stock under the Company’s Employee Stock Purchase Plan and the assumed vesting of unearned performance shares.
The following table presents earnings per share for the three months ended December 31, 2021:

| Basic Earnings Per Share |  | Diluted Earnings Per Share
| Income Allocation (A)(1) |  | Weighted- Average Shares Outstanding (B) |  | Earnings per Share = (A)/(B)(2) |  | Income Allocation (A)(1) |  | Weighted- Average Shares Outstanding (B) |  | Earnings per Share = (A)/(B)(2)
| (in millions, except per share data)
Class A common stock | $ | 3,065 |  |  | 1,669 |  |  | $ | 1.84 |  |  | $ | 3,959 |  |  | 2,159 |  | (3) | $ | 1.83 |
Class B common stock | 732 |  |  | 245 |  |  | $ | 2.98 |  |  | $ | 731 |  |  | 245 |  |  | $ | 2.98 |
Class C common stock | 74 |  |  | 10 |  |  | $ | 7.35 |  |  | $ | 74 |  |  | 10 |  |  | $ | 7.34 |
Participating securities(4) | 88 |  |  | Not presented |  | Not presented |  | $ | 88 |  |  | Not presented |  | Not presented
Net income | $ | 3,959 |  |  |  |  |  |  |  |  |  |  |

The following table presents earnings per share for the three months ended December 31, 2020:

| Basic Earnings Per Share |  | Diluted Earnings Per Share
| Income Allocation (A)(1) |  | Weighted- Average Shares Outstanding (B) |  | Earnings per Share = (A)/(B)(2) |  | Income Allocation (A)(1) |  | Weighted- Average Shares Outstanding (B) |  | Earnings per Share = (A)/(B)(2)
| (in millions, except per share data)
Class A common stock | $ | 2,410 |  |  | 1,694 |  |  | $ | 1.42 |  |  | $ | 3,126 |  |  | 2,200 |  | (3) | $ | 1.42 |
Class B common stock | 567 |  |  | 245 |  |  | $ | 2.31 |  |  | $ | 566 |  |  | 245 |  |  | $ | 2.31 |
Class C common stock | 61 |  |  | 11 |  |  | $ | 5.69 |  |  | $ | 61 |  |  | 11 |  |  | $ | 5.68 |
Participating securities | 88 |  |  | Not presented |  | Not presented |  | $ | 89 |  |  | Not presented |  | Not presented
Net income | $ | 3,126 |  |  |  |  |  |  |  |  |  |  |

(1)Net income is allocated based on proportional ownership on an as-converted basis. The weighted-average number of shares of as-converted class B common stock used in the income allocation was 398 million for the three months ended December 31, 2021 and 2020. The weighted-average number of shares of as-converted class C common stock used in the income allocation was 40 million and 43 million for the three months ended December 31, 2021 and 2020, respectively. The weighted-average number of shares of preferred stock included within participating securities was 7 million and 21 million of as-converted series A preferred stock for the three months ended December 31, 2021 and 2020, respectively, 16 million of as-converted series B preferred stock for the three months ended December 31, 2021 and 2020, and 22 million of as-converted series C preferred stock for the three months ended December 31, 2021 and 2020.
(2)Figures in the table may not recalculate exactly due to rounding. Earnings per share is calculated based on unrounded numbers.
(3)Weighted-average diluted shares outstanding are calculated on an as-converted basis and include incremental common stock equivalents, as calculated under the treasury stock method. The common stock equivalents are not material for the three months ended December 31, 2021 and 2020.
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VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)
Note 11—Share-based Compensation
The Company granted the following equity awards to employees and non-employee directors under the 2007 Equity Incentive Compensation Plan, or the EIP, during the three months ended December 31, 2021:

| Granted |  | Weighted-Average Grant Date Fair Value |  | Weighted-Average Exercise Price
Non-qualified stock options | 961,570 |  |  | $ | 43.16 |  |  | $ | 200.86 |
Restricted stock units | 2,655,547 |  |  | $ | 201.27 |  |  |
Performance-based shares(1) | 440,722 |  |  | $ | 186.50 |  |  |

(1)Represents the maximum number of performance-based shares which could be earned.
Related to the EIP, the Company recorded share-based compensation cost, net of estimated forfeitures, of $121 million and $116 million for the three months ended December 31, 2021 and 2020, respectively.
Note 12—Income Taxes
For the three months ended December 31, 2021 and 2020, the effective income tax rates were 19% and 17%, respectively. The difference in the effective tax rates is primarily due to an $81 million tax benefit recognized during the three months ended December 31, 2020 as a result of the conclusion of audits by taxing authorities.
During the three months ended December 31, 2021, the Company’s gross unrecognized tax benefits increased by $78 million, of which $29 million would favorably impact the effective tax rate, if recognized. The change in unrecognized tax benefits is primarily related to various tax positions across several jurisdictions.
The Company’s tax filings are subject to examination by U.S. federal, state and foreign taxing authorities. The timing and outcome of the final resolutions of the various ongoing income tax examinations are highly uncertain. It is not reasonably possible to estimate the increase or decrease in unrecognized tax benefits within the next twelve months.
Note 13—Legal Matters
The Company is party to various legal and regulatory proceedings. Some of these proceedings involve complex claims that are subject to substantial uncertainties and unascertainable damages. Accordingly, except as disclosed, the Company has not established reserves or ranges of possible loss related to these proceedings, as at this time in the proceedings, the matters do not relate to a probable loss and/or the amount or range of losses are not reasonably estimable. Although the Company believes that it has strong defenses for the litigation and regulatory proceedings described below, it could, in the future, incur judgments or fines or enter into settlements of claims that could have a material adverse effect on the Company’s financial position, results of operations or cash flows. From time to time, the Company may engage in settlement discussions or mediations with respect to one or more of its outstanding litigation matters, either on its own behalf or collectively with other parties.
The litigation accrual is an estimate and is based on management’s understanding of its litigation profile, the specifics of each case, advice of counsel to the extent appropriate and management’s best estimate of incurred loss as of the balance sheet date.
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VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)
The following table summarizes the activity related to accrued litigation:

| Three Months Ended December 31,
| 2021 |  | 2020
| (in millions)
Balance at beginning of period | $ | 983 |  |  | $ | 914 |
Provision for uncovered legal matters | 1 |  |  | 1 |
Provision for covered legal matters | 146 |  |  | 10 |
Payments for legal matters | (103) |  |  | (16) |
Balance at end of period | $ | 1,027 |  |  | $ | 909 |

Accrual Summary—U.S. Covered Litigation
Visa Inc., Visa U.S.A. and Visa International are parties to certain legal proceedings that are covered by the U.S. retrospective responsibility plan, which the Company refers to as the U.S. covered litigation. An accrual for the U.S. covered litigation and a charge to the litigation provision are recorded when a loss is deemed to be probable and reasonably estimable. In making this determination, the Company evaluates available information, including but not limited to actions taken by the Company’s litigation committee. The total accrual related to the U.S. covered litigation could be either higher or lower than the escrow account balance. See further discussion below under U.S. Covered Litigation and Note 5—U.S. and Europe Retrospective Responsibility Plans.
The following table summarizes the accrual activity related to U.S. covered litigation:

| Three Months Ended December 31,
| 2021 |  | 2020
| (in millions)
Balance at beginning of period | $ | 881 |  |  | $ | 888 |
Provision for interchange multidistrict litigation | 145 |  |  | — |
Payments for U.S. covered litigation | — |  |  | (7) |
Balance at end of period | $ | 1,026 |  |  | $ | 881 |

During the quarter ended December 31, 2021, the Company recorded an additional accrual of $145 million and deposited $250 million into the U.S. litigation escrow account to address claims of certain merchants who opted out of the Amended Settlement Agreement. The U.S. covered litigation accrual balance is consistent with the Company’s estimate of its share of the lower end of a probable and reasonably estimable loss with respect to U.S. covered litigation. While this estimate is consistent with the Company’s view of the current status of the litigation, the probable and reasonably estimable loss or range of such loss could materially vary based on developments in the litigation. The Company will continue to consider and reevaluate this estimate in light of the substantial uncertainties with respect to the litigation. The Company is unable to estimate a potential loss or range of loss, if any, at trial if negotiated resolutions cannot be reached.
Accrual Summary—VE Territory Covered Litigation
Visa Inc., Visa International and Visa Europe are parties to certain legal proceedings that are covered by the Europe retrospective responsibility plan. Unlike the U.S. retrospective responsibility plan, the Europe retrospective responsibility plan does not have an escrow account that is used to fund settlements or judgments. The Company is entitled to recover VE territory covered losses through periodic adjustments to the conversion rates applicable to the series B and C preferred stock. An accrual for the VE territory covered losses and a reduction to stockholders’ equity will be recorded when the loss is deemed to be probable and reasonably estimable. See further discussion below under VE Territory Covered Litigation and Note 5—U.S. and Europe Retrospective Responsibility Plans.
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VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)—(Continued)
The following table summarizes the accrual activity related to VE territory covered litigation:

| Three Months Ended December 31,
| 2021 |  | 2020
| (in millions)
Balance at beginning of period | $ | 102 |  |  | $ | 21 |
Provision for VE territory covered litigation | 1 |  |  | 10 |
Payments for VE territory covered litigation | (102) |  |  | (9) |
Balance at end of period | $ | 1 |  |  | $ | 22 |

U.S. Covered Litigation
Interchange Multidistrict Litigation (MDL) - Individual Merchant Actions
Visa has reached settlements with a number of merchants representing approximately 40% of the Visa-branded payment card sales volume of merchants who opted out of the Amended Settlement Agreement with the Damages Class plaintiffs.
VE Territory Covered Litigation
Europe Merchant Litigation
Since July 2013, in excess of 800 Merchants (the capitalized term “Merchant,” when used in this section, means a merchant together with subsidiary/affiliate companies that are party to the same claim) have commenced proceedings against Visa Europe, Visa Inc. and other Visa subsidiaries in the UK, Belgium and Poland primarily relating to interchange rates in Europe and in some cases relating to fees charged by Visa and certain Visa rules. As of the filing date, Visa has settled the claims asserted by over 150 Merchants, leaving more than 650 Merchants with outstanding claims. In addition, over 30 additional Merchants have threatened to commence similar proceedings. Standstill agreements have been entered into with respect to some of those threatened Merchant claims, several of which have been settled.
On November 26, 2021, with respect to certain pending Merchant claims, the UK Competition Appeal Tribunal (CAT) found that UK and certain other domestic and intra-European Economic Area consumer interchange fees before the introduction of the Interchange Fee Regulation (IFR) were a restriction of competition, but that the question of whether those fees are a restriction of competition after the introduction of the IFR would need to be resolved at trial. Whether any interchange fees are exempt from the finding of restriction under applicable law and the assessment of damages, if any, will also need to be considered at trial.
Other Litigation
German ATM Litigation
In December 2021 and January 2022, Visa was served with claims in Germany brought by German savings banks against Visa Europe and Visa Inc. The banks claim that Visa’s ATM rules prohibiting the charging of access fees on domestic cash withdrawals are anti-competitive and they are seeking damages.
Foreign Currency Exchange Rate Litigation
On December 6, 2021, an amended complaint making similar allegations regarding the setting of foreign exchange rates was filed by several individuals on behalf of a nationwide class, and/or California, Washington, Massachusetts or New Jersey subclasses, of cardholders who made a transaction in a foreign currency. The amended complaint asserts claims for unjust enrichment and restitution as well as violations of the California Unfair Competition Law, the Washington Consumer Protection Act, the Massachusetts Consumer Protection Act, and the New Jersey Consumer Fraud Act. On January 19, 2022, Visa filed a motion to dismiss the amended complaint.
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ITEM 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations

This management’s discussion and analysis provides a review of the results of operations, financial condition and the liquidity and capital resources of Visa Inc. and its subsidiaries (“Visa,” “we,” “us,” “our” or the “Company”) on a historical basis and outlines the factors that have affected recent earnings, as well as those factors that may affect future earnings. The following discussion and analysis should be read in conjunction with our unaudited consolidated financial statements and related notes included in Item 1—Financial Statements of this report.
Forward-Looking Statements
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 that relate to, among other things, the impact on our future financial position, results of operations and cash flows as a result of the ongoing effects of the coronavirus (“COVID-19”) pandemic, the measures taken in response, as well as the speed and strength of an economic recovery, including the reopening of borders and resumption of international travel; prospects, developments, strategies and growth of our business; anticipated expansion of our products in certain countries; industry developments; anticipated timing and benefits of our acquisitions; expectations regarding litigation matters, investigations and proceedings; timing and amount of stock repurchases; sufficiency of sources of liquidity and funding; effectiveness of our risk management programs; and expectations regarding the impact of recent accounting pronouncements on our consolidated financial statements. Forward-looking statements generally are identified by words such as “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “projects,” “could,” “should,” “will,” “continue” and other similar expressions. All statements other than statements of historical fact could be forward-looking statements, which speak only as of the date they are made, are not guarantees of future performance and are subject to certain risks, uncertainties and other factors, many of which are beyond our control and are difficult to predict. We describe risks and uncertainties that could cause actual results to differ materially from those expressed in, or implied by, any of these forward-looking statements in our SEC filings, including our Annual Report on Form 10-K, for the year ended September 30, 2021 and our subsequent reports on Forms 10-Q and 8-K. Except as required by law, we do not intend to update or revise any forward-looking statements as a result of new information, future events or otherwise.
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Overview
Visa is a global payments technology company that facilitates global commerce and money movement across more than 200 countries and territories among a global network of consumers, merchants, financial institutions and government entities through innovative technologies. We provide transaction processing services (primarily authorization, clearing and settlement) to our financial institutions and merchants through VisaNet, our advanced transaction processing network. We offer products and solutions that facilitate secure, reliable and efficient money movement for all participants in the ecosystem.
Financial overview. A summary of our as-reported U.S. GAAP and non-GAAP operating results is as follows:

| Three Months Ended December 31, |  |
| 2021 |  | 2020 |  | % Change(1) |  |  |  |  |  |
| (in millions, except percentages and per share data)
Net revenues | $ | 7,059 |  |  | $ | 5,687 |  |  | 24 | % |  |  |  |  |  |
Operating expenses | $ | 2,283 |  |  | $ | 1,843 |  |  | 24 | % |  |  |  |  |  |
Net income | $ | 3,959 |  |  | $ | 3,126 |  |  | 27 | % |  |  |  |  |  |
Diluted earnings per share | $ | 1.83 |  |  | $ | 1.42 |  |  | 29 | % |  |  |  |  |  |
Non-GAAP operating expenses(2) | $ | 2,115 |  |  | $ | 1,828 |  |  | 16 | % |  |  |  |  |  |
Non-GAAP net income(2) | $ | 3,901 |  |  | $ | 3,125 |  |  | 25 | % |  |  |  |  |  |
Non-GAAP diluted earnings per share(2) | $ | 1.81 |  |  | $ | 1.42 |  |  | 27 | % |  |  |  |  |  |

(1)Figures in the table may not recalculate exactly due to rounding. Percentage changes are calculated based on unrounded numbers.
(2)For a full reconciliation of our GAAP to non-GAAP financial results, see tables in Non-GAAP financial results below.
Coronavirus. As the effects of the evolving coronavirus (“COVID-19”) pandemic continue, much remains uncertain. Our priority remains the safety of our employees, clients and the communities in which we live and operate. We are taking a phased approach to reopening our offices, with most of our employees currently working remotely. We continue to remain in close and regular contact with our employees, clients, partners and governments globally to help them navigate these challenging times.
The ongoing effects of COVID-19 remain difficult to predict due to numerous uncertainties, including the transmissibility, severity, duration and resurgence of the outbreak, new variants of the virus, the uptake and effectiveness of health and safety measures or actions that are voluntarily adopted by the public or required by governments or public health authorities, including vaccines and treatments, the speed and strength of an economic recovery, including the reopening of borders and the resumption of international travel, and the impact to our employees and our operations, the business of our clients, suppliers and business partners, and other factors identified in Part I, Item 1A “Risk Factors” in our Annual Report on Form 10-K for the year ended September 30 2021. We will continue to evaluate the nature and extent of the impact to our business.
Highlights for the first quarter of fiscal 2022. For the three months ended December 31, 2021, net revenues were $7.1 billion, an increase of 24% over the prior-year comparable period, primarily due to the growth in nominal payments volume, processed transactions and nominal cross-border volume, partially offset by higher client incentives. During the three months ended December 31, 2021, exchange rate movements and our hedging program negatively impacted our net revenues growth by approximately one percentage point.
For the three months ended December 31, 2021, GAAP operating expenses were $2.3 billion, an increase of 24% over the prior-year comparable period, primarily driven by higher litigation provision, higher personnel expenses reflecting our strategy to invest in future growth and higher marketing expenses as we lapped planned reductions in spending in the prior year.
For the three months ended December 31, 2021, non-GAAP operating expenses were $2.1 billion, an increase of 16% over the prior-year comparable period, primarily due to higher personnel expenses reflecting our strategy to invest in future growth and higher marketing expenses as we lapped planned reductions in spending in the prior year.
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Closed acquisition. On December 20, 2021, we acquired The Currency Cloud Group Limited (“Currencycloud”), a UK-based global platform that enables banks and fintechs to provide innovative foreign exchange solutions for cross-border payments, for a total purchase consideration of $893 million (which includes the fair value of our previously held equity interest in Currencycloud). See Note 2—Acquisitions to our unaudited consolidated financial statements.
Pending acquisition. On June 24, 2021, we entered into a definitive agreement to acquire Tink AB (“Tink”) for €1.8 billion, inclusive of cash and retention incentives. Tink is a European open banking platform that enables financial institutions, fintechs and merchants to build tailored financial management tools, products and services for European consumers and businesses based on their financial data. This acquisition is subject to customary closing conditions, including regulatory reviews and approvals.
Interchange multidistrict litigation. During the three months ended December 31, 2021, we recorded an additional accrual of $145 million to address claims associated with the interchange multidistrict litigation. We also deposited $250 million into the U.S. litigation escrow account. See Note 5—U.S. and Europe Retrospective Responsibility Plans and Note 13—Legal Matters to our unaudited consolidated financial statements.
Common stock repurchases. In December 2021, our board of directors authorized a new $12.0 billion share repurchase program. Previously, in January 2021, our board of directors authorized an $8.0 billion share repurchase program. During the three months ended December 31, 2021, we repurchased 19 million shares of our class A common stock in the open market for $4.1 billion. As of December 31, 2021, our repurchase programs had remaining authorized funds of $12.7 billion. See Note 9—Stockholders’ Equity to our unaudited consolidated financial statements.
Non-GAAP financial results. We use non-GAAP financial measures of our performance which exclude certain items which we believe are not representative of our continuing operations, as they may be non-recurring or have no cash impact, and may distort our longer-term operating trends. We consider non-GAAP measures useful to investors because they provide greater transparency into management’s view and assessment of our ongoing operating performance.
•Gains and losses on equity investments. Gains and losses on equity investments include periodic non-cash fair value adjustments and gains and losses upon sale of an investment. These long-term investments are strategic in nature and are primarily private company investments. Gains and losses and the related tax impacts associated with these investments are tied to the performance of the companies that we invest in and therefore do not correlate to the underlying performance of our business.
•Amortization of acquired intangible assets. Amortization of acquired intangible assets consists of amortization of intangible assets such as developed technology, customer relationships and brands acquired in connection with business combinations executed beginning in fiscal 2019. Amortization charges for our acquired intangible assets are non-cash and are significantly affected by the timing, frequency and size of our acquisitions, rather than our core operations. As such, we have excluded this amount and the related tax impact to facilitate an evaluation of our current operating performance and comparison to our past operating performance.
•Acquisition-related costs. Acquisition-related costs consist primarily of one-time transaction and integration costs associated with our business combinations. These costs include professional fees, technology integration fees, restructuring activities and other direct costs related to the purchase and integration of acquired entities. It also includes retention equity and deferred equity compensation when they are agreed upon as part of the purchase price of the transaction but are required to be recognized as expense post-combination. We have excluded these amounts and the related tax impacts as the expenses are recognized for a limited duration and do not reflect the underlying performance of our business.
•Litigation provision. During the three months ended December 31, 2021, we recorded an additional accrual to address claims associated with the interchange multidistrict litigation of $145 million, and related tax benefit of $32 million determined by applying applicable tax rates. Under the U.S. retrospective responsibility plan, we recover the monetary liabilities related to the U.S. covered litigation through a downward adjustment to the conversion rate of our class B common stock to shares of class A common stock. See Note 5—U.S. and Europe Retrospective Responsibility Plans and Note 13—Legal Matters to our unaudited consolidated financial statements.
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Non-GAAP operating expenses, non-operating income (expense), income tax provision, effective income tax rate, net income and diluted earnings per share should not be relied upon as substitutes for, or considered in isolation from, measures calculated in accordance with U.S. GAAP. The following tables reconcile our as-reported financial measures, calculated in accordance with U.S. GAAP, to our respective non-GAAP financial measures:

| Three Months Ended December 31, 2021
| Operating Expenses |  |  |  | Non-operating Income (Expense) |  |  |  | Income Tax Provision |  | Effective Income Tax Rate(1) |  | Net Income |  | Diluted Earnings Per Share(1)
| (in millions, except percentages and per share data)
As reported | $ | 2,283 |  |  |  |  | $ | 121 |  |  |  |  | $ | 938 |  |  | 19.1 | % |  | $ | 3,959 |  |  | $ | 1.83 |
(Gains) losses on equity investments, net | — |  |  |  |  | (231) |  |  |  |  | (42) |  |  |  |  | (189) |  |  | (0.09) |
Amortization of acquired intangible assets | (13) |  |  |  |  | — |  |  |  |  | 3 |  |  |  |  | 10 |  |  | — |
Acquisition-related costs | (10) |  |  |  |  | — |  |  |  |  | 2 |  |  |  |  | 8 |  |  | — |
Litigation provision | (145) |  |  |  |  | — |  |  |  |  | 32 |  |  |  |  | 113 |  |  | 0.05 |
Non-GAAP | $ | 2,115 |  |  |  |  | $ | (110) |  |  |  |  | $ | 933 |  |  | 19.3 | % |  | $ | 3,901 |  |  | $ | 1.81 |

| Three Months Ended December 31, 2020
| Operating Expenses |  |  |  | Non-operating Income (Expense) |  |  |  | Income Tax Provision |  | Effective Income Tax Rate(1) |  | Net Income |  | Diluted Earnings Per Share(1)
| (in millions, except percentages and per share data)
As reported | $ | 1,843 |  |  |  |  | $ | (96) |  |  |  |  | $ | 622 |  |  | 16.6 | % |  | $ | 3,126 |  |  | $ | 1.42 |
(Gains) losses on equity investments, net | — |  |  |  |  | (16) |  |  |  |  | (4) |  |  |  |  | (12) |  |  | (0.01) |
Amortization of acquired intangible assets | (12) |  |  |  |  | — |  |  |  |  | 3 |  |  |  |  | 9 |  |  | — |
Acquisition-related costs | (3) |  |  |  |  | — |  |  |  |  | 1 |  |  |  |  | 2 |  |  | — |
Non-GAAP | $ | 1,828 |  |  |  |  | $ | (112) |  |  |  |  | $ | 622 |  |  | 16.6 | % |  | $ | 3,125 |  |  | $ | 1.42 |

(1)Figures in the table may not recalculate exactly due to rounding. Effective income tax rate, diluted earnings per share and their respective totals are calculated based on unrounded numbers.
Payments volume and processed transactions. Payments volume is the primary driver for our service revenues, and the number of processed transactions is the primary driver for our data processing revenues.
Payments volume represents the aggregate dollar amount of purchases made with cards and other form factors carrying the Visa, Visa Electron, V PAY and Interlink brands and excludes Europe co-badged volume. Nominal payments volume is denominated in U.S. dollars and is calculated each quarter by applying an established U.S. dollar/local currency exchange rate for each local currency in which our volumes are reported. Processed transactions represent transactions using cards and other form factors carrying the Visa, Visa Electron, V PAY, Interlink and PLUS brands processed on Visa’s networks.
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The following table presents nominal payments and cash volume:

| U.S. |  | International |  | Visa Inc.
| Three Months Ended September 30,(1) |  | Three Months Ended September 30,(1) |  | Three Months Ended September 30,(1)
| 2021 |  | 2020 |  | % Change(2) |  | 2021 |  | 2020 |  | % Change(2) |  | 2021 |  | 2020 |  | % Change(2)
| (in billions, except percentages)
Nominal payments volume |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consumer credit | $ | 480 |  |  | $ | 378 |  |  | 27 | % |  | $ | 651 |  |  | $ | 574 |  |  | 13 | % |  | $ | 1,131 |  |  | $ | 951 |  |  | 19 | %
Consumer debit(3) | 640 |  |  | 555 |  |  | 15 | % |  | 690 |  |  | 585 |  |  | 18 | % |  | 1,330 |  |  | 1,140 |  |  | 17 | %
Commercial(4) | 205 |  |  | 164 |  |  | 25 | % |  | 117 |  |  | 94 |  |  | 24 | % |  | 322 |  |  | 258 |  |  | 25 | %
Total nominal payments volume(2) | $ | 1,325 |  |  | $ | 1,097 |  |  | 21 | % |  | $ | 1,458 |  |  | $ | 1,253 |  |  | 16 | % |  | $ | 2,784 |  |  | $ | 2,349 |  |  | 18 | %
Cash volume(5) | 180 |  |  | 165 |  |  | 9 | % |  | 496 |  |  | 482 |  |  | 3 | % |  | 676 |  |  | 647 |  |  | 5 | %
Total nominal volume(2),(6) | $ | 1,506 |  |  | $ | 1,262 |  |  | 19 | % |  | $ | 1,955 |  |  | $ | 1,734 |  |  | 13 | % |  | $ | 3,460 |  |  | $ | 2,996 |  |  | 15 | %

The following table presents the change in nominal and constant payments and cash volume:

| International |  | Visa Inc. |  |  |  |
| Three Months Ended September 30, 2021 vs. 2020(1),(2) |  | Three Months Ended September 30, 2021 vs. 2020(1),(2) |  |  |  |
| Nominal |  | Constant(7) |  | Nominal |  | Constant(7) |  |  |  |  |  |  |  |
Payments volume growth |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Consumer credit growth | 13 | % |  | 11 | % |  | 19 | % |  | 17 | % |  |  |  |  |  |  |  |
Consumer debit growth(3) | 18 | % |  | 14 | % |  | 17 | % |  | 15 | % |  |  |  |  |  |  |  |
Commercial growth(4) | 24 | % |  | 21 | % |  | 25 | % |  | 24 | % |  |  |  |  |  |  |  |
Total payments volume growth | 16 | % |  | 13 | % |  | 18 | % |  | 17 | % |  |  |  |  |  |  |  |
Cash volume growth(5) | 3 | % |  | 4 | % |  | 5 | % |  | 5 | % |  |  |  |  |  |  |  |
Total volume growth | 13 | % |  | 11 | % |  | 15 | % |  | 14 | % |  |  |  |  |  |  |  |

(1)Service revenues in a given quarter are assessed based on nominal payments volume in the prior quarter. Therefore, service revenues reported for the three months ended December 31, 2021 and 2020, respectively, were based on nominal payments volume reported by our financial institution clients for the three months ended September 30, 2021 and 2020, respectively. On occasion, previously presented volume information may be updated. Prior-period updates are not material.
(2)Figures in the table may not recalculate exactly due to rounding. Percentage changes and totals are calculated based on unrounded numbers.
(3)Includes consumer prepaid volume and Interlink volume.
(4)Includes large, medium and small business credit and debit, as well as commercial prepaid volume.
(5)Cash volume generally consists of cash access transactions, balance access transactions, balance transfers and convenience checks.
(6)Total nominal volume is the sum of total nominal payments volume and cash volume. Total nominal volume is provided by our financial institution clients, subject to review by Visa.
(7)Growth on a constant-dollar basis excludes the impact of foreign currency fluctuations against the U.S. dollar.
The following table presents the number of processed transactions:

| Three Months Ended December 31, |  |
2021 |  | 2020 |  | % Change(1) |  |  |  |  |  |
(in millions, except percentages)
Visa processed transactions | 47,558 |  |  | 39,213 |  |  | 21 | % |  |  |  |  |  |

(1)Figures in the table may not recalculate exactly due to rounding. Percentage change is calculated based on unrounded numbers. On occasion, previously presented information may be updated. Prior period updates are not material.
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Results of Operations
Net Revenues
The following table presents our net revenues earned in the U.S. and internationally:

| Three Months Ended December 31, |  |
| 2021 |  | 2020 |  |  |  | % Change(1) |  |  |  |  |  |  |  |
| (in millions, except percentages)
U.S. | $ | 3,178 |  |  | $ | 2,667 |  |  |  |  | 19 | % |  |  |  |  |  |  |  |
International | 3,881 |  |  | 3,020 |  |  |  |  | 28 | % |  |  |  |  |  |  |  |
Net revenues | $ | 7,059 |  |  | $ | 5,687 |  |  |  |  | 24 | % |  |  |  |  |  |  |  |

(1)Figures in the table may not recalculate exactly due to rounding. Percentage changes are calculated based on unrounded numbers.
Net revenues increased primarily due to the growth in nominal payments volume, processed transactions and nominal cross-border volume, partially offset by higher client incentives.
Our net revenues are impacted by the overall strengthening or weakening of the U.S. dollar as payments volume and related revenues denominated in local currencies are converted to U.S. dollars. During the three months ended December 31, 2021, exchange rate movements and our hedging program negatively impacted our net revenues growth by approximately one percentage point.
The following table presents the components of our net revenues:

| Three Months Ended December 31, |  |
| 2021 |  | 2020 |  |  |  | % Change(1) |  |  |  |  |  |  |  |
| (in millions, except percentages)
Service revenues | $ | 3,193 |  |  | $ | 2,677 |  |  |  |  | 19 | % |  |  |  |  |  |  |  |
Data processing revenues | 3,614 |  |  | 3,033 |  |  |  |  | 19 | % |  |  |  |  |  |  |  |
International transaction revenues | 2,174 |  |  | 1,451 |  |  |  |  | 50 | % |  |  |  |  |  |  |  |
Other revenues | 449 |  |  | 384 |  |  |  |  | 17 | % |  |  |  |  |  |  |  |
Client incentives | (2,371) |  |  | (1,858) |  |  |  |  | 28 | % |  |  |  |  |  |  |  |
Net revenues | $ | 7,059 |  |  | $ | 5,687 |  |  |  |  | 24 | % |  |  |  |  |  |  |  |

(1)Figures in the table may not recalculate exactly due to rounding. Percentage changes are calculated based on unrounded numbers.
•Service revenues increased primarily due to 18% growth in nominal payments volume.
•Data processing revenues increased primarily due to overall growth in processed transactions of 21%.
•International transaction revenues increased primarily due to growth in nominal cross-border volumes, excluding transactions within Europe, of 49%.
•Other revenues increased primarily due to higher consulting revenues and other value added services.
•Client incentives increased primarily due to growth in payments volume. The amount of client incentives we record in future periods will vary based on changes in performance expectations, actual client performance, amendments to existing contracts or execution of new contracts.
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Operating Expenses
The following table presents the components of our total operating expenses:

| Three Months Ended December 31, |  |
| 2021 |  | 2020 |  |  |  | % Change(1) |  |  |  |  |  |  |  |
| (in millions, except percentages)
Personnel | $ | 1,125 |  |  | $ | 981 |  |  |  |  | 15 | % |  |  |  |  |  |  |  |
Marketing | 280 |  |  | 205 |  |  |  |  | 36 | % |  |  |  |  |  |  |  |
Network and processing | 190 |  |  | 173 |  |  |  |  | 9 | % |  |  |  |  |  |  |  |
Professional fees | 100 |  |  | 83 |  |  |  |  | 19 | % |  |  |  |  |  |  |  |
Depreciation and amortization | 198 |  |  | 197 |  |  |  |  | 1 | % |  |  |  |  |  |  |  |
General and administrative | 242 |  |  | 203 |  |  |  |  | 19 | % |  |  |  |  |  |  |  |
Litigation provision | 148 |  |  | 1 |  |  |  |  | NM |  |  |  |  |  |  |  |
Total operating expenses | $ | 2,283 |  |  | $ | 1,843 |  |  |  |  | 24 | % |  |  |  |  |  |  |  |

NM - Not meaningful
(1)Figures in the table may not recalculate exactly due to rounding. Percentage changes are calculated based on unrounded numbers.
Total operating expenses increased primarily due to our planned reduction and delay of our spend as revenue was impacted by the COVID-19 pandemic in the first half of the prior year.
•Personnel expenses increased primarily due to higher headcount and compensation, reflecting our strategy to invest in future growth.
•Marketing expenses increased as we lapped planned reductions in spending in the prior year as well as higher spending in various campaigns.
•Network and processing expenses increased mainly due to higher continued technology and processing network investments to support growth.
•Professional fees increased primarily due to higher consulting fees as we lapped planned reductions in spending in the prior year.
•General and administrative expenses increased primarily as a result of higher usage of travel related card benefits and unfavorable foreign currency fluctuations, partially offset by lower indirect taxes.
•Litigation provision increased primarily due to an additional $145 million accrual related to the U.S. covered litigation. See Note 5—U.S. and Europe Retrospective Responsibility Plans and Note 13—Legal Matters to our unaudited consolidated financial statements.
Non-operating Income (Expense)
The following table presents the components of our non-operating income (expense):

|  |  | Three Months Ended December 31,
|  |  |  |  |  |  |  |  | 2021 |  | 2020 |  | % Change(1)
|  |  |  |  |  |  |  |  | (in millions, except percentages)
Interest expense, net |  |  |  |  |  |  |  |  | $ | (134) |  |  | $ | (136) |  |  | (1 | %)
Investment income and other |  |  |  |  |  |  |  |  | 255 |  |  | 40 |  |  | 544 | %
Total non-operating income (expense) |  |  |  |  |  |  |  |  | $ | 121 |  |  | $ | (96) |  |  | (225 | %)

(1)Figures in the table may not recalculate exactly due to rounding. Percentage changes are calculated based on unrounded numbers.
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•Interest expense, net decreased primarily as a result of lower interest expense due to lower outstanding debt and derivative instruments that lowered the cost of borrowing, partially offset by an increase in interest expense related to income tax liabilities.
•Investment income and other increased primarily due to higher gains on our equity investments.
Effective Income Tax Rate
The following table presents our effective income tax rates:

| Three Months Ended December 31,
| 2021 |  | 2020
Effective income tax rate | 19 | % |  | 17 | %

The difference in the effective tax rates is primarily due to an $81 million tax benefit recognized during the three months ended December 31, 2020 as a result of the conclusion of audits by taxing authorities.
Liquidity and Capital Resources
Cash Flow Data
The following table summarizes our cash flow activity for the periods presented:

| Three Months Ended December 31,
| 2021 |  | 2020
| (in millions)
Total cash provided by (used in): |  |  |
Operating activities | $ | 4,232 |  |  | $ | 3,513 |
Investing activities | (547) |  |  | 639 |
Financing activities | (4,967) |  |  | (5,572) |
Effect of exchange rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents | (194) |  |  | 304 |
Increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents | $ | (1,476) |  |  | $ | (1,116) |

Operating activities. Cash provided by operating activities for the three months ended December 31, 2021 was higher than the prior-year comparable period primarily due to growth in our underlying business, partially offset by higher client incentive payments.
Investing activities. Cash was used in investing activities for the three months ended December 31, 2021 as compared to cash provided by investing activities during the prior-year comparable period, primarily due to higher cash paid for acquisitions and lower proceeds from sales and maturities, net of purchases of investment securities. See Note 2—Acquisitions to our unaudited consolidated financial statements.
Financing activities. Cash used in financing activities for the three months ended December 31, 2021 was lower than the prior-year comparable period primarily due to the absence of the principal debt payment made in the prior year, partially offset by higher share repurchases and higher dividends paid. See Note 9—Stockholders’ Equity to our unaudited consolidated financial statements.
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Sources of Liquidity
Our primary sources of liquidity are cash on hand, cash flow from our operations, our investment portfolio and access to various equity and borrowing arrangements. Funds from operations are maintained in cash and cash equivalents and short-term or long-term investment securities based upon our funding requirements, access to liquidity from these holdings and the returns that these holdings provide. Based on our current cash flow budgets and forecasts of our short-term and long-term liquidity needs, we believe that our current and projected sources of liquidity will be sufficient to meet our projected liquidity needs for more than the next 12 months. We will continue to assess our liquidity position and potential sources of supplemental liquidity in view of our operating performance, current economic and capital market conditions and other relevant circumstances.
Uses of Liquidity
There has been no significant change to our primary uses of liquidity since September 30, 2021, except as discussed below.
Common stock repurchases. In December 2021, our board of directors authorized a new $12.0 billion share repurchase program. During the three months ended December 31, 2021, we repurchased 19 million shares of our class A common stock in the open market for $4.1 billion. As of December 31, 2021, our repurchase programs had remaining authorized funds of $12.7 billion. See Note 9—Stockholders’ Equity to our unaudited consolidated financial statements.
Dividends. During the three months ended December 31, 2021, we declared and paid $809 million in dividends to holders of our common and preferred stock. On January 25, 2022, our board of directors declared a cash dividend in the amount of $0.375 per share of class A common stock (determined in the case of class B and C common stock and series A, B and C convertible participating preferred stock on an as-converted basis), which will be paid on March 1, 2022, to all holders of record as of February 11, 2022. See Note 9—Stockholders’ Equity to our unaudited consolidated financial statements. We expect to continue paying quarterly dividends in cash, subject to approval by the board of directors. All preferred and class B and C common stock will share ratably on an as-converted basis in such future dividends.
Senior notes. Principal payments on our fixed-rate senior notes of $1.0 billion and $2.3 billion are due in September 2022 and December 2022, respectively, for which we have sufficient liquidity. See Note 7—Debt to our unaudited consolidated financial statements.
Litigation. During December 2021, we deposited $250 million into the U.S. litigation escrow account to address claims associated with the interchange multidistrict litigation. See Note 5—U.S. and Europe Retrospective Responsibility Plans and Note 13—Legal Matters to our unaudited consolidated financial statements.
Closed acquisition. On December 20, 2021, we acquired Currencycloud for a total purchase consideration of $893 million (which includes the fair value of our previously held equity interest in Currencycloud). See Note 2—Acquisitions to our unaudited consolidated financial statements.
Pending acquisition. On June 24, 2021, we entered into a definitive agreement to acquire Tink for €1.8 billion, inclusive of cash and retention incentives. This acquisition is subject to customary closing conditions, including regulatory reviews and approvals.
Accounting Pronouncements Not Yet Adopted
In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-04, which provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships and other transactions that reference the London Interbank Offered Rate or another reference rate expected to be discontinued because of reference rate reform. Subsequently, the FASB also issued an amendment to this standard. The amendments in the ASU are effective upon issuance through December 31, 2022. We are evaluating the effect ASU 2020-04 and its subsequent amendment will have on our consolidated financial statements. The adoption is not expected to have a material impact on our consolidated financial statements.

ITEM 3. | Quantitative and Qualitative Disclosures about Market Risk

There have been no significant changes to our market risks since September 30, 2021.
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ITEM 4. | Controls and Procedures

Disclosure controls and procedures. Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the design and operation of the disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) of Visa Inc. at the end of the period covered by this report and, based on such evaluation, have concluded that the disclosure controls and procedures of Visa Inc. were effective at the reasonable assurance level as of such date.
Changes in internal control over financial reporting. There have been no changes in our internal control over financial reporting that occurred during our first quarter of fiscal 2022 that have materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
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PART II. OTHER INFORMATION

ITEM 1. | Legal Proceedings.

Refer to Note 13—Legal Matters to the unaudited consolidated financial statements included in this Form 10-Q for a description of the Company’s current material legal proceedings.

ITEM 1A. | Risk Factors.

For a discussion of the Company’s risk factors, see the information under the heading “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended September 30, 2021.

ITEM 2. | Unregistered Sales of Equity Securities and Use of Proceeds.

ISSUER PURCHASES OF EQUITY SECURITIES
The table below presents our purchases of common stock during the quarter ended December 31, 2021:

Period |  | Total Number of Shares Purchased |  | Average Purchase Price per Share |  | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(1) |  | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs(1)
|  | (in millions, except per share data)
October 1 - 31, 2021 |  | 4 |  |  | $ | 220.89 |  |  | 4 |  |  | $ | 3,741 |
November 1 - 30, 2021 |  | 9 |  |  | $ | 205.82 |  |  | 9 |  |  | $ | 1,905 |
December 1 - 31, 2021 |  | 6 |  |  | $ | 208.72 |  |  | 6 |  |  | $ | 12,600 |
Total |  | 19 |  |  | $ | 210.05 |  |  | 19 |  |  |

(1)The figures in the table reflect transactions according to the trade dates. For purposes of our unaudited consolidated financial statements included in this Form 10-Q, the impact of these repurchases is recorded according to the settlement dates.
See Note 9—Stockholders’ Equity to our unaudited consolidated financial statements for further discussion on our share repurchase programs.
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ITEM 3. | Defaults Upon Senior Securities.

None.

ITEM 4. | Mine Safety Disclosures.

Not applicable.

ITEM 5. | Other Information.

None.
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ITEM 6. | Exhibits.

EXHIBIT INDEX

|  |  |  | Incorporated by Reference
Exhibit Number |  | Description of Documents |  | Schedule/ Form |  | File Number |  | Exhibit |  | Filing Date
10.1+ |  | LIBOR Transition Amendment, dated October 18, 2021, by and among Visa Inc., Visa International Service Association, Visa U.S.A. Inc. and Visa Europe Limited, as borrowers, and Bank of America, N.A., as administrative agent |  |  |  |  |  |  |  |
10.2*+ |  | Form of Visa Inc. 2007 Equity Incentive Compensation Plan Restricted Stock Unit Award Agreement for the CEO for awards granted after November 1, 2021 |  |  |  |  |  |  |  |
10.3*+ |  | Form of Visa Inc. 2007 Equity Incentive Compensation Plan Stock Option Award Agreement for the CEO for awards granted after November 1, 2021 |  |  |  |  |  |  |  |
10.4*+ |  | Form of Visa Inc. 2007 Equity Incentive Compensation Plan Performance Share Award Agreement for the CEO for awards granted after November 1, 2021 |  |  |  |  |  |  |  |
10.5*+ |  | Form of Visa Inc. 2007 Equity Incentive Compensation Plan Restricted Stock Unit Award Agreement for awards granted after November 1, 2021 |  |  |  |  |  |  |  |
10.6*+ |  | Form of Visa Inc. 2007 Equity Incentive Compensation Plan Stock Option Award Agreement for awards granted after November 1, 2021 |  |  |  |  |  |  |  |
10.7*+ |  | Form of Visa Inc. 2007 Equity Incentive Compensation Plan Performance Share Award Agreement for awards granted after November 1, 2021 |  |  |  |  |  |  |  |
10.8*+ |  | Visa Inc. Executive Severance Plan, effective as of January 1, 2022 |  |  |  |  |  |  |  |
31.1+ |  | Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer |  |  |  |  |  |  |  |
31.2+ |  | Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer |  |  |  |  |  |  |  |
32.1+ |  | Section 1350 Certification of Principal Executive and Financial Officer |  |  |  |  |  |  |  |
101.INS+ |  | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |  |  |  |  |  |  |  |
101.SCH+ |  | Inline XBRL Taxonomy Extension Schema Document |  |  |  |  |  |  |  |

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101.CAL+ |  | Inline XBRL Taxonomy Extension Calculation Linkbase Document |  |  |  |  |  |  |  |
101.DEF+ |  | Inline XBRL Taxonomy Extension Definition Linkbase Document |  |  |  |  |  |  |  |
101.LAB+ |  | Inline XBRL Taxonomy Extension Label Linkbase Document |  |  |  |  |  |  |  |
101.PRE+ |  | Inline XBRL Taxonomy Extension Presentation Linkbase Document |  |  |  |  |  |  |  |
104 |  | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |  |  |  |  |  |  |  |

* | Management contract, compensatory plan or arrangement.
+ | Filed or furnished herewith.

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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

|  | VISA INC.
Date: | January 28, 2022 | By: |  | /s/ Alfred F. Kelly, Jr.
|  | Name: |  | Alfred F. Kelly, Jr.
|  | Title: |  | Chairman and Chief Executive Officer (Principal Executive Officer)
Date: | January 28, 2022 | By: |  | /s/ Vasant M. Prabhu
|  | Name: |  | Vasant M. Prabhu
|  | Title: |  | Vice Chair, Chief Financial Officer (Principal Financial Officer)
Date: | January 28, 2022 | By: |  | /s/ James H. Hoffmeister
|  | Name: |  | James H. Hoffmeister
|  | Title: |  | Global Corporate Controller, Chief Accounting Officer (Principal Accounting Officer)

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