Derivative and Hedging Instruments

12 Months Ended

Sep. 30, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Note 13—Derivative and Hedging Instruments

As of September 30, 2023 and 2022, the aggregate notional amount of the Company’s derivative contracts outstanding in its hedge program was $11.0 billion and $11.9 billion, respectively. As of September 30, 2023 and 2022, the aggregate notional amount of the derivative contracts not designated as hedging instruments was $0.8 billion and $1.5 billion, respectively.

The following table shows the Company’s derivative instruments at gross fair value:


		September 30,
	Balance Sheet Location	2023		2022(1)
		(in millions)
Assets
Designated as Hedging Instrument:
Foreign exchange forward contracts	Prepaid expenses and other current assets	$	100	$	718
Cross-currency swaps	Other assets	$	178	$	378

Not Designated as Hedging Instrument:
Foreign exchange forward contracts	Prepaid expenses and other current assets	$	15	$	35
Liabilities
Designated as Hedging Instrument:
Foreign exchange forward contracts	Accrued liabilities	$	66	$	49

Interest rate swaps	Other liabilities	$	314	$	322
Not Designated as Hedging Instrument:
Foreign exchange forward contracts	Accrued liabilities	$	16	$	47

(1)The fiscal 2022 amounts have been revised to conform to the fiscal 2023 presentation.

For fiscal 2023, 2022 and 2021, the Company recognized an increase (decrease) in earnings related to excluded forward points from forward contracts designated as net investment hedges and interest differentials from swap agreements of ($25) million, $151 million and $156 million, respectively.

Cash flow hedges. For fiscal 2023 and 2022, the Company recognized pre-tax net gains (losses) from cash flow hedges in other comprehensive income (loss) of ($126) million and $190 million, respectively. The amount recognized in other comprehensive income (loss) was not material for fiscal 2021.

The Company estimates that $46 million of pre-tax net gains related to cash flow hedges recorded in accumulated other comprehensive income (loss) as of September 30, 2023 will be reclassified into the consolidated statements of operations within the next 12 months.

Net investment hedges. For fiscal 2023, 2022 and 2021, the Company recognized pre-tax net gains (losses) in other comprehensive income (loss) related to net investment hedges of ($445) million, $845 million and $20 million, respectively. As of September 30, 2023 and 2022, the Company designated €3.0 billion and €1.2 billion, respectively, of Euro notes, a non-derivative financial instrument, as a hedge against a portion of the Company’s Euro-denominated net investment in Visa Europe.

Credit and market risks. The Company’s derivative financial instruments are subject to both credit and market risk. The Company monitors the credit-worthiness of the financial institutions that are counterparties to its derivative financial instruments and does not consider the risks of counterparty nonperformance to be significant. The Company mitigates this risk by entering into master netting agreements, and such agreements require each party to post collateral against its net liability position with the respective counterparty. As of September 30, 2023, the Company has received collateral of $91 million from counterparties, which is included in accrued liabilities on the consolidated balance sheets, and posted collateral of $47 million, which is included in prepaid expenses and other current assets on the consolidated balance sheets. Notwithstanding the Company’s efforts to manage foreign exchange risk, there can be no absolute assurance that its hedging activities will adequately protect against the risks associated with foreign currency fluctuations. As of September 30, 2023, credit and market risks related to derivative instruments were not considered significant.