VISA INC., 10-K filed on 11/15/2016
Annual Report
Document and Entity Information Document (USD $)
In Millions, except Share data, unless otherwise specified
12 Months Ended
Sep. 30, 2016
Mar. 31, 2016
Nov. 9, 2016
Class A common stock
Nov. 9, 2016
Class B common stock
Nov. 9, 2016
Class C common stock
Entity Information [Line Items]
 
 
 
 
 
Entity Registrant Name
VISA INC. 
 
 
 
 
Entity Central Index Key
0001403161 
 
 
 
 
Current Fiscal Year End Date
--09-30 
 
 
 
 
Entity Filer Category
Large Accelerated Filer 
 
 
 
 
Document Type
10-K 
 
 
 
 
Document Period End Date
Sep. 30, 2016 
 
 
 
 
Document Fiscal Year Focus
2016 
 
 
 
 
Document Fiscal Period Focus
FY 
 
 
 
 
Amendment Flag
false 
 
 
 
 
Entity Common Stock, Shares Outstanding
 
 
1,867,580,597 
245,513,385 
16,814,896 
Entity Well-known Seasoned Issuer
Yes 
 
 
 
 
Entity Voluntary Filers
No 
 
 
 
 
Entity Current Reporting Status
Yes 
 
 
 
 
Entity Public Float
 
$ 145,500 
 
 
 
CONSOLIDATED BALANCE SHEETS (USD $)
In Millions, unless otherwise specified
Sep. 30, 2016
Sep. 30, 2015
Assets
 
 
Cash and cash equivalents
$ 5,619 
$ 3,518 
Restricted cash—U.S. litigation escrow (Note 3)
1,027 
1,072 
Investment securities (Note 4):
 
 
Trading
71 
66 
Available-for-sale
3,248 
2,431 
Settlement receivable
1,467 
408 
Accounts receivable
1,041 
847 
Customer collateral (Note 11)
1,001 
1,023 
Current portion of client incentives
284 
303 
Prepaid expenses and other current assets (Note 5)
555 
353 
Total current assets
14,313 
10,021 
Investment securities, available-for-sale (Note 4)
3,931 
3,384 
Client incentives
448 
110 
Property, equipment and technology, net (Note 6)
2,150 
1,888 
Other assets (Note 5)
893 
778 
Intangible assets, net (Note 7)
27,234 
11,361 
Goodwill
15,066 
11,825 
Total assets
64,035 
39,367 
Liabilities
 
 
Accounts payable
203 
127 
Settlement payable
2,084 
780 
Customer collateral (Note 11)
1,001 
1,023 
Accrued compensation and benefits
673 
503 
Client incentives
1,976 
1,049 
Accrued liabilities (Note 8)
1,128 
849 
Accrued litigation (Note 20)
981 
1,024 
Total current liabilities
8,046 
5,355 
Long-term debt (Note 9)
15,882 
0 
Deferred tax liabilities (Note 19)
4,808 
3,273 
Deferred purchase consideration (Note 2)
1,225 
0 
Other liabilities (Note 8)
1,162 
897 
Total liabilities
31,123 
9,525 
Commitments and contingencies (Note 17)
   
   
Equity
 
 
Treasury stock (Note 2 and Note 14)
(170)
0 
Right to recover for covered losses (Note 3)
(34)
0 
Additional paid-in capital
17,395 
18,073 
Accumulated income
10,462 
11,843 
Accumulated other comprehensive loss, net:
 
 
Investment securities, available-for-sale
36 
5 
Defined benefit pension and other postretirement plans
(225)
(161)
Derivative instruments classified as cash flow hedges
(50)
83 
Foreign currency translation adjustments
(219)
(1)
Total accumulated other comprehensive loss, net
(458)
(74)
Total equity
32,912 
29,842 
Total liabilities and equity
64,035 
39,367 
Series A convertible participating preferred stock
 
 
Equity
 
 
Preferred stock (Note 14)
0 
0 
Series B convertible participating preferred stock
 
 
Equity
 
 
Preferred stock (Note 14)
2,516 
0 
Series C convertible participating preferred stock
 
 
Equity
 
 
Preferred stock (Note 14)
3,201 
0 
Class A common stock
 
 
Equity
 
 
Common stock (Note 14)
0 
0 
Class B common stock
 
 
Equity
 
 
Common stock (Note 14)
0 
0 
Class C common stock
 
 
Equity
 
 
Common stock (Note 14)
$ 0 
$ 0 
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)
Sep. 30, 2016
Sep. 30, 2015
Series A convertible participating preferred stock
 
 
Preferred stock, shares issued
0 
0 
Series B convertible participating preferred stock
 
 
Preferred stock, shares issued
2,000,000 
0 
Preferred stock, shares outstanding
2,000,000 
0 
Series C convertible participating preferred stock
 
 
Preferred stock, shares issued
3,000,000 
0 
Preferred stock, shares outstanding
3,000,000 
0 
Class A common stock
 
 
Common stock, par value
$ 0.0001 
$ 0.0001 
Common stock, shares authorized
2,001,622,000,000 
2,001,622,000,000 
Common stock, shares, issued
1,871,000,000 
1,950,000,000 
Common stock, shares, outstanding
1,871,000,000 1
1,950,000,000 
Class B common stock
 
 
Common stock, par value
$ 0.0001 
$ 0.0001 
Common stock, shares authorized
622,000,000 
622,000,000 
Common stock, shares, issued
245,000,000 
245,000,000 
Common stock, shares, outstanding
245,000,000 
245,000,000 
Class C common stock
 
 
Common stock, par value
$ 0.0001 
$ 0.0001 
Common stock, shares authorized
1,097,000,000 
1,097,000,000 
Common stock, shares, issued
17,000,000 
20,000,000 
Common stock, shares, outstanding
17,000,000 
20,000,000 
Preferred Stock
 
 
Preferred stock, par value
$ 0.0001 
$ 0.0001 
Preferred stock, shares authorized
25,000,000 
25,000,000 
Preferred stock, shares issued
5,000,000 
0 
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $)
In Millions, except Per Share data, unless otherwise specified
12 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Sep. 30, 2014
Operating Revenues
 
 
 
Service revenues
$ 6,747 1
$ 6,302 
$ 5,797 
Data processing revenues
6,272 1
5,552 
5,167 
International transaction revenues
4,649 1
4,064 
3,560 
Other revenues
823 1
823 
770 
Client incentives
(3,409)1
(2,861)
(2,592)
Net operating revenues
15,082 1
13,880 
12,702 
Operating Expenses
 
 
 
Personnel
2,226 1
2,079 
1,875 
Marketing
869 1
872 
900 
Network and processing
538 1
474 
507 
Professional fees
389 1
336 
328 
Depreciation and amortization
502 1
494 
435 
General and administrative
796 1
547 
507 
Litigation provision (Note 20)
2 1
14 
453 
Visa Europe Framework Agreement loss (Note 2)
1,877 
0 
0 
Total operating expenses
7,199 1
4,816 
5,005 
Operating income
7,883 1
9,064 
7,697 
Non-operating Income (Expense)
 
 
 
Interest expense
(427)1
(3)
(8)
Other (Note 4 and Note 12)
556 1
(66)
35 
Non-operating income (expense)
129 1
(69)
27 
Income before income taxes
8,012 1
8,995 
7,724 
Income tax provision (Note 19)
2,021 1
2,667 
2,286 
Net income
$ 5,991 1
$ 6,328 
$ 5,438 
Class A common stock
 
 
 
Earnings Per Share [Abstract]
 
 
 
Basic earnings per share (Note 15)
$ 2.49 1 2
$ 2.58 
$ 2.16 
Basic weighted-average shares outstanding (Note 15)
1,906 1
1,954 
1,993 
Diluted earnings per share (Note 15)
$ 2.48 1 2
$ 2.58 
$ 2.16 
Diluted weighted-average shares outstanding (Note 15)
2,414 1 2 3
2,457 
2,523 
Class B common stock
 
 
 
Earnings Per Share [Abstract]
 
 
 
Basic earnings per share (Note 15)
$ 4.10 1 2 4
$ 4.26 
$ 3.63 
Basic weighted-average shares outstanding (Note 15)
245 1
245 
245 
Diluted earnings per share (Note 15)
$ 4.09 1 2 4
$ 4.25 
$ 3.62 
Diluted weighted-average shares outstanding (Note 15)
245 1 2 4
245 
245 
Class C common stock
 
 
 
Earnings Per Share [Abstract]
 
 
 
Basic earnings per share (Note 15)
$ 9.94 1 2 4
$ 10.33 
$ 8.65 
Basic weighted-average shares outstanding (Note 15)
19 1
22 
26 
Diluted earnings per share (Note 15)
$ 9.93 1 2 4
$ 10.30 
$ 8.62 
Diluted weighted-average shares outstanding (Note 15)
19 1 2 4
22 
26 
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $)
In Millions, unless otherwise specified
12 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Sep. 30, 2014
Statement of Comprehensive Income [Abstract]
 
 
 
Net income
$ 5,991 1
$ 6,328 
$ 5,438 
Investment securities, available-for-sale:
 
 
 
Net unrealized gain (loss)
51 
(21)
(44)
Income tax effect
(18)
8 
17 
Reclassification adjustment for net gain realized in net income
(3)
(21)
(1)
Income tax effect
1 
8 
0 
Defined benefit pension and other postretirement plans:
 
 
 
Net unrealized actuarial gain (loss) and prior service credit
(106)
(122)
(27)
Income tax effect
36 
45 
8 
Amortization of actuarial loss (gain) and prior service credit realized in net income
10 
(1)
(8)
Income tax effect
(4)
1 
3 
Derivative instruments classified as cash flow hedges:
 
 
 
Net unrealized (loss) gain
(74)
172 
65 
Income tax effect
9 
(51)
(13)
Reclassification adjustment for net gain realized in net income
(103)
(102)
(46)
Income tax effect
35 
26 
9 
Foreign currency translation adjustments
(218)
1 
(1)
Other comprehensive loss, net of tax
(384)
(57)
(38)
Comprehensive income
$ 5,607 
$ 6,271 
$ 5,400 
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (USD $)
In Millions
Total
USD ($)
Class A common stock
USD ($)
Class B common stock
USD ($)
Class C common stock
USD ($)
Preferred Stock
USD ($)
Preferred Stock
Series B Preferred Stock
Preferred Stock
Series C Preferred Stock
Common Stock
Class A common stock
Common Stock
Class B common stock
Common Stock
Class C common stock
Treasury Stock
USD ($)
Right to Recover for Covered Losses
USD ($)
Additional Paid-In Capital
USD ($)
Accumulated Income
USD ($)
Accumulated Other Comprehensive Income (Loss)
USD ($)
Beginning Balance at Sep. 30, 2013
$ 26,870 
 
 
 
 
 
 
 
 
 
 
 
$ 18,875 
$ 7,974 
$ 21 
Beginning Balance (in shares) at Sep. 30, 2013
 
 
 
 
 
 
 
2,031 
245 
27 
 
 
 
 
 
Net income
5,438 1
4,307 1
892 1 2
222 1 2
 
 
 
 
 
 
 
 
 
5,438 
 
Other comprehensive loss, net of tax
(38)
 
 
 
 
 
 
 
 
 
 
 
 
 
(38)
Comprehensive income
5,400 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Conversion of class C common stock upon sale into public market (in shares)
 
 
 
 
 
 
 
19 
 
(5)
 
 
 
 
 
Issuance and vesting of restricted stock and performance-based shares (in shares)
 
 
 
 
 
 
 
4 
 
 
 
 
 
 
 
Share-based compensation, net of forfeitures (Note 16) (in shares)3
 
 
 
 
 
 
 
(1)
 
 
 
 
 
 
 
Share-based compensation, net of forfeitures (Note 16)
172 
 
 
 
 
 
 
 
 
 
 
 
172 
 
 
Restricted stock and performance-based shares settled in cash for taxes (in shares)
 
 
 
 
 
 
 
(1)
 
 
 
 
 
 
 
Restricted stock and performance-based shares settled in cash for taxes
86 
 
 
 
 
 
 
 
 
 
 
 
86 
 
 
Excess tax benefit for share-based compensation
90 
 
 
 
 
 
 
 
 
 
 
 
90 
 
 
Cash proceeds from issuance of common stock under employee equity plans (in shares)
 
 
 
 
 
 
 
5 
 
 
 
 
 
 
 
Cash proceeds from issuance of common stock under employee equity plans
91 
 
 
 
 
 
 
 
 
 
 
 
91 
 
 
Cash dividends declared and paid, at a quarterly amount of $0.14 in FY 2016, $0.12 in FY 2015, and $0.10 in FY 2014 per as-converted share
(1,006)
 
 
 
 
 
 
 
 
 
 
 
 
(1,006)
 
Repurchase of class A common stock (in shares)
 
 
 
 
 
 
 
(79)
 
 
 
 
 
 
 
Repurchase of class A common stock
(4,118)
 
 
 
 
 
 
 
 
 
 
 
(843)
(3,275)
 
Ending Balance at Sep. 30, 2014
27,413 
 
 
 
 
 
 
 
 
 
 
 
18,299 
9,131 
(17)
Ending Balance (in shares) at Sep. 30, 2014
 
 
 
 
 
 
 
1,978 
245 
22 
 
 
 
 
 
Net income
6,328 1
5,044 1
1,045 1 2
224 1 2
 
 
 
 
 
 
 
 
 
6,328 
 
Other comprehensive loss, net of tax
(57)
 
 
 
 
 
 
 
 
 
 
 
 
 
(57)
Comprehensive income
6,271 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Conversion of class C common stock upon sale into public market (in shares)
 
 
 
 
 
 
 
11 
 
(2)
 
 
 
 
 
Issuance and vesting of restricted stock and performance-based shares (in shares)
 
 
 
 
 
 
 
4 
 
 
 
 
 
 
 
Share-based compensation, net of forfeitures (Note 16) (in shares)3
 
 
 
 
 
 
 
(1)
 
 
 
 
 
 
 
Share-based compensation, net of forfeitures (Note 16)
187 
 
 
 
 
 
 
 
 
 
 
 
187 
 
 
Restricted stock and performance-based shares settled in cash for taxes (in shares)
 
 
 
 
 
 
 
(1)
 
 
 
 
 
 
 
Restricted stock and performance-based shares settled in cash for taxes
108 
 
 
 
 
 
 
 
 
 
 
 
108 
 
 
Excess tax benefit for share-based compensation
84 
 
 
 
 
 
 
 
 
 
 
 
84 
 
 
Cash proceeds from issuance of common stock under employee equity plans (in shares)
 
 
 
 
 
 
 
3 
 
 
 
 
 
 
 
Cash proceeds from issuance of common stock under employee equity plans
82 
 
 
 
 
 
 
 
 
 
 
 
82 
 
 
Cash dividends declared and paid, at a quarterly amount of $0.14 in FY 2016, $0.12 in FY 2015, and $0.10 in FY 2014 per as-converted share
(1,177)
 
 
 
 
 
 
 
 
 
 
 
 
(1,177)
 
Repurchase of class A common stock (in shares)
 
(44)4
 
 
 
 
 
(44)
 
 
 
 
 
 
 
Repurchase of class A common stock
(2,910)
(2,910)
 
 
 
 
 
 
 
 
 
 
(471)
(2,439)
 
Ending Balance at Sep. 30, 2015
29,842 
 
 
 
0 
 
 
 
 
 
0 
0 
18,073 
11,843 
(74)
Ending Balance (in shares) at Sep. 30, 2015
 
 
 
 
 
0 5
0 5
1,950 
245 
20 
 
 
 
 
 
Net income
5,991 1
4,738 1
1,006 1 2
185 1 2
 
 
 
 
 
 
 
 
 
5,991 
 
Other comprehensive loss, net of tax
(384)
 
 
 
 
 
 
 
 
 
 
 
 
 
(384)
Comprehensive income
5,607 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Issuance of preferred stock (Note 2 and Note 14) (in shares)5
 
 
 
 
 
2 
3 
 
 
 
 
 
 
 
 
Issuance of preferred stock (Note 2 and Note 14)
5,717 
 
 
 
5,717 
 
 
 
 
 
 
 
 
 
 
VE territory covered losses incurred (Note 3)
(34)
 
 
 
 
 
 
 
 
 
 
(34)
 
 
 
Class C common stock held by Visa Europe, a wholly-owned subsidiary of Visa Inc. (Note 2 and Note 14) (in shares)
 
 
 
 
 
 
 
 
 
(1)
 
 
 
 
 
Class C common stock held by Visa Europe, a wholly-owned subsidiary of Visa Inc. (Note 2 and Note 14)
0 
 
 
 
 
 
 
 
 
 
(170)
 
 
 
 
Conversion of class C common stock upon sale into public market (in shares)
 
 
 
 
 
 
 
8 
 
(2)
 
 
 
 
 
Issuance and vesting of restricted stock and performance-based shares (in shares)
 
 
 
 
 
 
 
2 
 
 
 
 
 
 
 
Share-based compensation, net of forfeitures (Note 16) (in shares)3
 
 
 
 
 
 
 
0 
 
 
 
 
 
 
 
Share-based compensation, net of forfeitures (Note 16)
221 
 
 
 
 
 
 
 
 
 
 
 
221 
 
 
Restricted stock and performance-based shares settled in cash for taxes (in shares)
 
 
 
 
 
 
 
(1)
 
 
 
 
 
 
 
Restricted stock and performance-based shares settled in cash for taxes
92 
 
 
 
 
 
 
 
 
 
 
 
92 
 
 
Excess tax benefit for share-based compensation
63 
 
 
 
 
 
 
 
 
 
 
 
63 
 
 
Cash proceeds from issuance of common stock under employee equity plans (in shares)
 
 
 
 
 
 
 
3 
 
 
 
 
 
 
 
Cash proceeds from issuance of common stock under employee equity plans
95 
 
 
 
 
 
 
 
 
 
 
 
95 
 
 
Cash dividends declared and paid, at a quarterly amount of $0.14 in FY 2016, $0.12 in FY 2015, and $0.10 in FY 2014 per as-converted share
(1,350)
 
 
 
 
 
 
 
 
 
 
 
 
(1,350)
 
Repurchase of class A common stock (in shares)
 
(91)4 6
 
 
 
 
 
(91)
 
 
 
 
 
 
 
Repurchase of class A common stock
(6,987)
(6,987)6
 
 
 
 
 
 
 
 
 
 
(965)
(6,022)
 
Ending Balance at Sep. 30, 2016
32,912 
 
 
 
5,717 
 
 
 
 
 
(170)
(34)
17,395 
10,462 
(458)
Ending Balance (in shares) at Sep. 30, 2016
 
 
 
 
 
2 5
3 5
1,871 
245 
17 
 
 
 
 
 
Beginning Balance at Sep. 29, 2016
32,912 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Conversion of class C common stock upon sale into public market (in shares)8
2,422 
1,871 7
405 
67 
 
 
 
 
 
 
 
 
 
 
 
Repurchase of class A common stock (in shares)
(1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Repurchase of class A common stock
$ (120)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Ending Balance (in shares) at Sep. 30, 2016
 
 
 
 
 
 
 
 
245 
 
 
 
 
 
 
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Parenthetical)
12 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Sep. 30, 2014
Statement of Stockholders' Equity [Abstract]
 
 
 
Cash dividends declared and paid, quarterly, per as-converted share
$ 0.14 
$ 0.12 
$ 0.10 
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)
In Millions, unless otherwise specified
12 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Sep. 30, 2014
Operating Activities
 
 
 
Net income
$ 5,991 1
$ 6,328 
$ 5,438 
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Client incentives
3,409 
2,861 
2,592 
Fair value adjustment for the Visa Europe put option
(255)
110 
0 
Share-based compensation
221 
187 
172 
Excess tax benefit for share-based compensation
(63)
(84)
(90)
Depreciation and amortization of property, equipment, technology and intangible assets
502 1
494 
435 
Deferred income taxes
(764)
195 
(580)
Right to recover for covered losses recorded in equity
(9)
0 
0 
Litigation provision (Note 20)
4 
14 
453 
Other
64 
24 
37 
Change in operating assets and liabilities:
 
 
 
Settlement receivable
391 
378 
13 
Accounts receivable
(65)
(19)
(53)
Client incentives
(3,508)
(2,970)
(2,395)
Other assets
(315)
(41)
(379)
Accounts payable
43 
(13)
(56)
Settlement payable
(302)
(552)
107 
Accrued and other liabilities
277 
118 
513 
Accrued litigation (Note 20)
(47)
(446)
998 
Net cash provided by operating activities
5,574 
6,584 
7,205 
Investing Activities
 
 
 
Purchases of property, equipment, technology and intangible assets
(523)
(414)
(553)
Proceeds from sales of property, equipment and technology
0 
10 
0 
Investment securities, available-for-sale:
 
 
 
Purchases
(28,004)
(2,850)
(2,572)
Proceeds from maturities and sales
26,697 
1,925 
2,342 
Acquisitions, net of $2.8 billion cash received from Visa Europe (Note 2)
(9,082)
(93)
(149)
Purchases of / contributions to other investments
(10)
(25)
(9)
Proceeds / distributions from other investments
6 
12 
0 
Net cash used in investing activities
(10,916)
(1,435)
(941)
Financing Activities
 
 
 
Dividends paid (Note 14)
(1,350)
(1,177)
(1,006)
Proceeds from issuance of senior notes (Note 9)
15,971 
0 
0 
Debt issuance costs (Note 9)
(98)
0 
0 
Deposit into U.S. litigation escrow account—U.S. retrospective responsibility plan (Note 3 and Note 20)
0 
0 
(450)
Payments from (return to) U.S. litigation escrow account—U.S. retrospective responsibility plan (Note 3 and Note 20)
45 
426 
(999)
Cash proceeds from issuance of common stock under employee equity plans
95 
82 
91 
Restricted stock and performance-based shares settled in cash for taxes
(92)
(108)
(86)
Excess tax benefit for share-based compensation
63 
84 
90 
Net cash provided by (used in) financing activities
7,477 
(3,603)
(6,478)
Effect of exchange rate changes on cash and cash equivalents
(34)
1 
(1)
Increase (decrease) in cash and cash equivalents
2,101 
1,547 
(215)
Cash and cash equivalents at beginning of year
3,518 
1,971 
2,186 
Cash and cash equivalents at end of year
5,619 
3,518 
1,971 
Supplemental Disclosure
 
 
 
Series B and C convertible participating preferred stock issued in Visa Europe acquisition (Note 2)
5,717 
0 
0 
Deferred purchase consideration recorded for Visa Europe acquisition (Note 2)
1,236 
0 
0 
Income taxes paid, net of refunds
2,842 
2,486 
2,656 
Interest payments on debt
244 
0 
0 
Accruals related to purchases of property, equipment, technology and intangible assets
42 
81 
62 
Right to recover for covered losses related to Visa Europe acquisition (Note 2)
(34)
0 
0 
Class A common stock
 
 
 
Financing Activities
 
 
 
Repurchase of common stock
(6,987)
(2,910)
(4,118)
Class C common stock
 
 
 
Financing Activities
 
 
 
Repurchase of common stock
$ (170)
$ 0 
$ 0 
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies
Note 1—Summary of Significant Accounting Policies
Organization. In a series of transactions from October 1 to October 3, 2007, Visa Inc. (Visa or the Company) undertook a reorganization in which Visa U.S.A. Inc. (Visa U.S.A.), Visa International Service Association (Visa International), Visa Canada Corporation (Visa Canada) and Inovant LLC (Inovant) became direct or indirect subsidiaries of Visa and established the U.S. retrospective responsibility plan (the October 2007 reorganization or reorganization). See Note 3—U.S. and Europe Retrospective Responsibility Plans. The reorganization was reflected as a single transaction on October 1, 2007 using the purchase method of accounting with Visa U.S.A. as the accounting acquirer. Visa Europe Limited (Visa Europe) did not become a subsidiary of Visa Inc., but rather remained owned and governed by its European member financial institutions. On June 21, 2016, the Company acquired 100% of the share capital of Visa Europe. The Company's consolidated statements of operations do not reflect the financial results of Visa Europe for the 10 days from the acquisition date through June 30, 2016 as the impact was immaterial. See Note 2—Acquisition of Visa Europe.
Visa is a global payments technology company that connects consumers, merchants, financial institutions, businesses, strategic partners and governments in more than 200 countries and territories to fast, secure and reliable electronic payments. Visa and its wholly-owned consolidated subsidiaries, including Visa U.S.A., Visa International, Visa Worldwide Pte. Limited (VWPL), Visa Europe Limited (Visa Europe), Visa Canada, Inovant and CyberSource Corporation (CyberSource), operate one of the world's largest retail electronic payments network — VisaNet — which facilitates authorization, clearing and settlement of payment transactions and enables us to provide our financial institution and merchant clients a wide range of products, platforms and value-added services. VisaNet also offers fraud protection for account holders and assured payment for merchants. Visa is not a bank and does not issue cards, extend credit or set rates and fees for account holders on 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 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 consolidated financial statements as of and for the periods presented. All significant intercompany accounts and transactions are eliminated in consolidation.
On March 18, 2015, the Company completed a four-for-one split of its class A common stock effected in the form of a stock dividend. All per share amounts and number of shares outstanding in the consolidated financial statements and accompanying notes are presented on a post-split basis. See Note 14—Stockholders' Equity.
The Company's activities are interrelated, and each activity is dependent upon and supportive of the other. All significant operating decisions are based on analysis of Visa as a single global business. Accordingly, the Company has one reportable segment, Payment Services.
Use of estimates. The preparation of 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 consolidated financial statements and reported amounts of revenues and expenses during the reporting period. Future actual results could differ materially from these estimates. The use of estimates in specific accounting policies is described further below as appropriate.
Cash and cash equivalents. Cash and cash equivalents include cash and certain highly liquid investments with original maturities of 90 days or less from the date of purchase. Cash equivalents are primarily recorded at cost, which approximates fair value due to their generally short maturities.
Restricted cash—U.S. litigation escrow. The Company maintains an escrow account from which monetary liabilities from settlements of, or judgments in, the U.S. covered litigation are paid. See Note 3—U.S. and Europe Retrospective Responsibility Plans and Note 20—Legal Matters for a discussion of the U.S. covered litigation. The escrow funds are held in money market investments, together with the interest earned, less applicable taxes payable, and classified as restricted cash on the consolidated balance sheets. Interest earned on escrow funds is included in non-operating income on the consolidated statements of operations.
Investments and fair value. The Company measures certain assets and liabilities at fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements are reported under a three-level valuation hierarchy. See Note 4—Fair Value Measurements and Investments. The classification of the Company’s financial assets and liabilities within the hierarchy is as follows:
Level 1—Inputs to the valuation methodology are unadjusted quoted prices in active markets for identical assets or liabilities. The Company’s Level 1 assets include money market funds, publicly-traded equity securities and U.S. Treasury securities.
Level 2—Inputs to the valuation methodology can include: (1) quoted prices in active markets for similar (not identical) assets or liabilities; (2) quoted prices for identical or similar assets in non-active markets; (3) inputs other than quoted prices that are observable for the asset or liability; or (4) inputs that are derived principally from or corroborated by observable market data. The Company's Level 2 assets and liabilities include commercial paper, U.S. government-sponsored debt securities, corporate debt securities and foreign exchange derivative instruments.
Level 3—Inputs to the valuation methodology are unobservable and cannot be corroborated by observable market data. The Company's Level 3 assets and liabilities included auction rate securities and the Visa Europe put option at September 30, 2015.
Trading investment securities include mutual fund equity security investments related to various employee compensation and benefit plans. Trading activity in these investments is at the direction of the Company's employees. These investments are held in a trust and are not available for the Company's operational or liquidity needs. Interest and dividend income and changes in fair value are recorded in non-operating income, and offset in personnel expense on the consolidated statements of operations.
Available-for-sale investment securities include investments in debt and equity securities. These securities are recorded at cost at the time of purchase and are carried at fair value. The Company considers these securities to be available-for-sale to meet working capital and liquidity needs. Investments with original maturities of greater than 90 days and stated maturities of less than one year from the balance sheet date, or investments that the Company intends to sell within one year, are classified as current assets, while all other securities are classified as non-current assets. These investments are generally available to meet short-term liquidity needs. Unrealized gains and losses are reported in accumulated other comprehensive income or loss on the consolidated balance sheets until realized. The specific identification method is used to calculate realized gain or loss on the sale of marketable securities, which is recorded in non-operating income on the consolidated statements of operations. Dividend and interest income are recognized when earned and are included in non-operating income on the consolidated statements of operations.
The Company evaluates its debt and equity securities for other-than-temporary impairment, or OTTI, on an ongoing basis. When there has been a decline in fair value of a debt or equity security below the amortized cost basis, the Company recognizes OTTI if: (1) it has the intent to sell the security; (2) it is more likely than not that it will be required to sell the security before recovery of the amortized cost basis; or (3) it does not expect to recover the entire amortized cost basis of the security.
The Company applies the equity method of accounting for investments in other entities when it holds between 20% and 50% ownership in the entity or when it exercises significant influence. Under the equity method, the Company’s share of each entity’s profit or loss is reflected in non-operating income on the consolidated statements of operations. The equity method of accounting is also used for flow-through entities such as limited partnerships and limited liability companies when the investment ownership percentage is equal to or greater than 5% of outstanding ownership interests, regardless of whether the Company has significant influence over the investees.
The Company applies the cost method of accounting for investments in other entities when it holds less than 20% ownership in the entity and does not exercise significant influence, or for flow-through entities when the investment ownership is less than 5% and the Company does not exercise significant influence. These investments consist of equity holdings in non-public companies and are recorded in other assets on the consolidated balance sheets.
The Company regularly reviews investments accounted for under the cost and equity methods for possible impairment, which generally involves an analysis of the facts and changes in circumstances influencing the investment, expectations of the entity’s cash flows and capital needs, and the viability of its business model.
Financial instruments. The Company considers the following to be financial instruments: cash and cash equivalents, restricted cash-U.S. litigation escrow, trading and available-for-sale investment securities, settlement receivable and payable, customer collateral, non-marketable equity investments, settlement risk guarantee, and derivative instruments. See Note 4—Fair Value Measurements and Investments.
Settlement receivable and payable. The Company operates systems for authorizing, clearing and settling payment transactions worldwide. Most U.S. dollar settlements with the Company's financial institution clients are settled within the same day and do not result in a receivable or payable balance, while settlements in currencies other than the U.S. dollar generally remain outstanding for one to two business days, resulting in amounts due from and to clients.These amounts are presented as settlement receivable and settlement payable on the consolidated balance sheets.
Customer collateral. The Company holds cash deposits and other non-cash assets from certain clients in order to ensure their performance of settlement obligations arising from Visa payment products are processed in accordance with the Company's rules. The cash collateral assets are restricted and fully offset by corresponding liabilities and both balances are presented on the consolidated balance sheets, excluding cash collateral held by Visa Europe as its clients retain beneficial ownership and the cash is only accessible to the Company in the event of default by the client on its settled obligations. Non-cash collateral assets are held on behalf of the Company by a third party and are not recorded on the consolidated balance sheets. See Note 11—Settlement Guarantee Management.
Property, equipment and technology, net. Property, equipment and technology are recorded at historical cost less accumulated depreciation and amortization, which are computed on a straight-line basis over the asset’s estimated useful life. Depreciation and amortization of technology, furniture, fixtures and equipment are computed over estimated useful lives ranging from 2 to 10 years. Capital leases are amortized over the lease term and leasehold improvements are amortized over the shorter of the useful life of the asset or lease term. Building improvements are depreciated between 3 and 40 years, and buildings are depreciated over 40 years. Improvements that increase functionality of the asset are capitalized and depreciated over the asset’s remaining useful life. Land and construction-in-progress are not depreciated. Fully depreciated assets are retained in property, equipment and technology, net, until removed from service.
Technology includes purchased and internally developed software, including technology assets obtained through acquisitions. Internally developed software represents software primarily used by the VisaNet electronic payments network. Internal and external costs incurred during the preliminary project stage are expensed as incurred. Qualifying costs incurred during the application development stage are capitalized. Once the project is substantially complete and ready for its intended use these costs are amortized on a straight-line basis over the technology's estimated useful life. Acquired technology assets are initially recorded at fair value and amortized on a straight-line basis over the estimated useful life.
The Company evaluates the recoverability of long-lived assets for impairment annually or more frequently if events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. If the sum of expected undiscounted net future cash flows is less than the carrying amount of an asset or asset group, an impairment loss is recognized to the extent that the carrying amount of the asset or asset group exceeds its fair value. See Note 6—Property, Equipment and Technology, Net.
Leases. The Company enters into operating and capital leases for the use of premises, software and equipment. Rent expense related to operating lease agreements, which may or may not contain lease incentives, is primarily recorded on a straight-line basis over the lease term.
Intangible assets, net. The Company records identifiable intangible assets at fair value on the date of acquisition and evaluates the useful life of each asset.
Finite-lived intangible assets primarily consist of customer relationships, reacquired rights, reseller relationships and trade names obtained through acquisitions. Finite-lived intangible assets are amortized on a straight-line basis and are tested for recoverability if events or changes in circumstances indicate that their carrying amounts may not be recoverable. These intangibles have useful lives ranging from 3 to 15 years. No events or changes in circumstances indicate that impairment existed as of September 30, 2016. See Note 7—Intangible Assets and Goodwill.
Indefinite-lived intangible assets consist of trade name, customer relationships and reacquired rights. Intangible assets with indefinite useful lives are not amortized but are evaluated for impairment annually or more frequently if events or changes in circumstances indicate that impairment may exist. The Company first assesses qualitative factors to determine whether it is necessary to perform a quantitative impairment test for indefinite-lived intangible assets. The Company assesses each category of indefinite-lived intangible assets for impairment on an aggregate basis, which may require the allocation of cash flows and/or an estimate of fair value to the assets or asset group. Impairment exists if the fair value of the indefinite-lived intangible asset is less than the carrying value. The Company relies on a number of factors when completing impairment assessments, including a review of discounted net future cash flows, business plans and the use of present value techniques.
The Company completed its annual impairment review of indefinite-lived intangible assets as of February 1, 2016, and concluded there was no impairment as of that date. No recent events or changes in circumstances indicate that impairment of the Company's indefinite-lived intangible assets existed as of September 30, 2016.
Goodwill. Goodwill represents the excess of the purchase price over the fair value of the net assets acquired in a business combination. Goodwill is not amortized but is evaluated for impairment at the reporting unit level annually as of February 1, or more frequently if events or changes in circumstances indicate that impairment may exist.
The Company evaluated its goodwill for impairment on February 1, 2016, and concluded there was no impairment as of that date. No recent events or changes in circumstances indicate that impairment existed as of September 30, 2016.
Accrued litigation. The Company evaluates the likelihood of an unfavorable outcome in legal or regulatory proceedings to which it is a party and records a loss contingency when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. These judgments are subjective, based on the status of such legal or regulatory proceedings, the merits of the Company's defenses and consultation with corporate and external legal counsel. Actual outcomes of these legal and regulatory proceedings may differ materially from the Company's estimates. The Company expenses legal costs as incurred in professional fees in the consolidated statements of operations. See Note 20—Legal Matters.
Revenue recognition. The Company's operating revenues are comprised principally of service revenues, data processing revenues, international transaction revenues and other revenues, reduced by costs incurred under client incentives arrangements. The Company recognizes revenue, net of sales and other similar taxes, when the price is fixed or determinable, persuasive evidence of an arrangement exists, the service is performed and collectability of the resulting receivable is reasonably assured.
Service revenues consist of revenues earned for services provided in support of client usage of Visa products. Current quarter service revenues are primarily assessed using a calculation of current pricing applied to the prior quarter's payments volume. The Company also earns revenues from assessments designed to support ongoing acceptance and volume growth initiatives, which are recognized in the same period the related volume is transacted.
Data processing revenues consist of revenues earned for authorization, clearing, settlement, network access and other maintenance and support services that facilitate transaction and information processing among the Company's clients globally. Data processing revenues are recognized in the same period the related transactions occur or services are rendered.
International transaction revenues are earned for cross-border transaction processing and currency conversion activities. Cross-border transactions arise when the country of origin of the issuer is different from that of the merchant. International transaction revenues are primarily generated by cross-border payments and cash volume.
Other revenues consist mainly of license fees for use of the Visa brand, revenues earned from Visa Europe in connection with the Visa Europe Framework Agreement (see Note 2—Acquisition of Visa Europe) prior to the acquisition of Visa Europe, fees for account holder services, licensing and certification and other activities related to the Company's acquired entities. Other revenues also include optional service or product enhancements, such as extended account holder protection and concierge services. Other revenues are recognized in the same period the related transactions occur or services are rendered.
Client incentives. The Company enters into long-term contracts with financial institution clients, merchants and strategic partners for various programs designed to build payments volume, increase Visa product acceptance, win merchant routing transactions over Visa's network and drive innovation. These incentives are primarily accounted for as reductions to operating revenues or as operating expenses if a separate identifiable benefit at fair value can be established. The Company generally capitalizes advance incentive payments under these agreements if select criteria are met. The capitalization criteria include the existence of future economic benefits to Visa, the existence of legally enforceable recoverability language (e.g., early termination clauses), management's ability and intent to enforce the recoverability language and the ability to generate future earnings from the agreement in excess of amounts deferred. Capitalized amounts are amortized over the shorter of the period of contractual recoverability or the corresponding period of economic benefit. Incentives not yet paid are accrued systematically and rationally based on management's estimate of each client's performance. These accruals are regularly reviewed and estimates of performance are adjusted, as appropriate, based on changes in performance expectations, actual client performance, amendments to existing contracts or the execution of new contracts. See Note 17—Commitments and Contingencies.
Marketing. The Company expenses costs for the production of advertising as incurred. The cost of media advertising is expensed when the advertising takes place. Sponsorship costs are recognized over the period in which the Company benefits from the sponsorship rights. Promotional items are expensed as incurred, when the related services are received, or when the related event occurs.
Income taxes. The Company's income tax expense consists of two components: current and deferred. Current income tax expense represents taxes paid or payable for the current period. Deferred tax assets and liabilities are recognized to reflect the future tax consequences attributable to temporary differences between the financial statement carrying amounts and the respective tax basis of existing assets and liabilities, and operating loss and credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. In assessing whether deferred tax assets are realizable, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. A valuation allowance is recorded for the portions that are not expected to be realized based on the level of historical taxable income, projections of future taxable income over the periods in which the temporary differences are deductible, and qualifying tax planning strategies.
Where interpretation of the tax law may be uncertain, the Company recognizes, measures and discloses income tax uncertainties. The Company accounts for interest expense and penalties related to uncertain tax positions as non-operating expense in the consolidated statements of operations. The Company files a consolidated federal income tax return and, in certain states, combined state tax returns. The Company elects to claim foreign tax credits in any given year if such election is beneficial to the Company. See Note 19—Income Taxes.
Pension and other postretirement benefit plans. The Company’s defined benefit pension and other postretirement benefit plans are actuarially evaluated, incorporating various critical assumptions including the discount rate and the expected rate of return on plan assets (for qualified pension plans). The discount rate is based on a cash flow matching analysis, with the projected benefit payments matching spot rates from a yield curve developed from high-quality corporate bonds. The expected rate of return on pension plan assets considers the current and expected asset allocation, as well as historical and expected returns on each plan asset class. Any difference between actual and expected plan experience, including asset return experience, in excess of a 10% corridor is recognized in net periodic pension cost over the expected average employee future service period, which is approximately 9 years for the U.S. plans and 12 years for the Visa Europe U.K. pension plan. Other assumptions involve demographic factors such as retirement age, mortality, attrition and the rate of compensation increases. The Company evaluates assumptions annually and modifies them as appropriate.
The Company recognizes the funded status of its benefit plans in its consolidated balance sheets as other assets, accrued liabilities and other liabilities. The Company recognizes settlement losses when it settles pension benefit obligations, including making lump-sum cash payments to plan participants in exchange for their rights to receive specified pension benefits, when certain thresholds are met. See Note 10—Pension, Postretirement and Other Benefits.
Foreign currency remeasurement and translation. The Company's functional currency is the U.S. dollar for the majority of its foreign operations except for Visa Europe whose functional currency is the euro. Transactions denominated in currencies other than the applicable functional currency are converted to the functional currency at the exchange rate on the transaction date. At period end, monetary assets and liabilities are remeasured to the functional currency using exchange rates in effect at the balance sheet date. Non-monetary assets and liabilities are remeasured at historical exchange rates. Resulting foreign currency transaction gains and losses related to conversion and remeasurement are recorded in general and administrative expense in the consolidated statements of operations and were not material for fiscal 2016, 2015 and 2014.
Where a non-U.S. currency is the functional currency, translation from that functional currency to the U.S. dollar is performed for balance sheet accounts using exchange rates in effect at the balance sheet date and for revenue and expense accounts using an average exchange rate for the period. Resulting translation adjustments are reported as a component of accumulated other comprehensive income or loss on the consolidated balance sheets.
Derivative financial instruments. The Company uses foreign exchange forward derivative contracts to reduce its exposure to foreign currency rate changes on forecasted non-functional currency denominated operational cash flows. Derivatives are carried at fair value on a gross basis in either prepaid and other current assets or accrued liabilities on the consolidated balance sheets. At September 30, 2016, derivatives outstanding mature within 18 months or less. Gains and losses resulting from changes in fair value of designated derivative instruments are accounted for either in accumulated other comprehensive income or loss on the consolidated balance sheets, or in the consolidated statements of operations in the corresponding account where revenue or expense is hedged, or to general and administrative for hedge amounts determined to be ineffective. Gains and losses resulting in changes in fair value of derivative instruments not designated for hedge accounting are recorded in general and administrative for hedges of operating activity, or non-operating income (expense) for hedges of non-operating activity. See Note 12—Derivative and Non-derivative Financial Instruments.
Non-derivative financial instrument designated as a net investment hedge. The Company designated the euro-denominated deferred cash consideration liability, a non-derivative financial instrument, as a hedge against a portion of the Company's euro-denominated net investment in Visa Europe. See Note 2—Acquisition of Visa Europe. Changes in the value of the deferred cash consideration liability, attributable to the change in exchange rates at the end of each reporting period, partially offset the foreign currency translation adjustments resulting from the euro-denominated net investment, are reported as a component of accumulated other comprehensive income or loss on the Company's consolidated balance sheet. See Note 12—Derivative and Non-derivative Financial Instruments.
Guarantees and indemnifications. The Company recognizes an obligation at inception for guarantees and indemnifications that qualify for recognition, regardless of the probability of occurrence. The Company indemnifies its financial institution clients for settlement losses suffered due to the failure of any other client to fund its settlement obligations in accordance with the Visa Rules. The estimated fair value of the liability for settlement indemnification is included in accrued liabilities on the consolidated balance sheets and is described in Note 11—Settlement Guarantee Management.
Share-based compensation. The Company recognizes share-based compensation cost using the fair value method of accounting. The Company recognizes compensation cost for awards with only service conditions on a straight-line basis over the requisite service period, which is generally the vesting period. Compensation cost for performance and market-condition-based awards is recognized on a graded-vesting basis. The amount is initially estimated based on target performance and is adjusted as appropriate based on management's best estimate throughout the performance period. See Note 16—Share-based Compensation.
Earnings per share. The Company calculates earnings per share using the two-class method to reflect the different rights of each class and series of outstanding common stock. The dilutive effect of incremental common stock equivalents is reflected in diluted earnings per share by application of the treasury stock method. See Note 15—Earnings Per Share.
Recently Issued Accounting Pronouncements
In May 2014, the Financial Accounting Standards Board ("FASB") issued ASU No. 2014-09, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of goods or services to customers. The ASU will replace existing revenue recognition guidance in U.S. GAAP when it becomes effective. In August 2015, the FASB issued ASU No. 2015-14, which defers the effective date of ASU No. 2014-09 by one year. In March 2016, the FASB issued ASU 2016-08, which clarifies the implementation guidance on principal versus agent considerations under the new revenue recognition standard. In April 2016, the FASB issued ASU 2016-10, which clarifies the implementation guidance on identifying promised goods or services and on determining whether an entity's promise to grant a license with either a right to use the entity's intellectual property (which is satisfied at a point in time) or a right to access the entity's intellectual property (which is satisfied over time). In May 2016, the FASB issued ASU 2016-11, which rescinds certain SEC staff observer comments upon adoption of ASU 2014-09, including the SEC comments related to consideration given by a vendor to a customer. In May 2016, the FASB also issued ASU 2016-12, which provides narrow scope improvements and technical expedients on assessing collectibility, presentation of sales taxes, evaluating contract modifications and completed contracts at the time of transition and the disclosure requirement for the effect of the accounting change for the period of adoption.The Company will adopt the standard effective October 1, 2018. The standard permits the use of either the retrospective or cumulative effect transition method. The Company has not yet selected a transition method and is evaluating the full effect that ASU 2014-09 and all of its related subsequent updates will have on its consolidated financial statements and related disclosures.
In June 2014, the FASB issued ASU No. 2014-12, which requires a performance target in stock compensation awards that affects vesting, and is achievable after the requisite service period, be treated as a performance condition. The Company will adopt the standard effective October 1, 2016. The adoption is not expected to have a material impact on the consolidated financial statements.
In April 2015, the FASB issued ASU No. 2015-03, which simplifies the presentation of debt issuance costs by requiring that debt issuance costs be presented in the balance sheet as a direct deduction from the carrying amount of debt liability, consistent with debt discounts and premiums. Subsequently, in August 2015, the FASB issued ASU No. 2015-15, which adds SEC staff guidance on the presentation of debt issuance costs related to line-of-credit arrangements, allowing for the deferral and presentation of debt issuance costs as an asset and subsequent amortization of the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. The Company elected to early adopt the standards effective October 1, 2015 and the carrying amount of the Company's debt liability is presented net of issuance costs on the consolidated financial statements. See Note 9—Debt.
In April 2015, the FASB issued ASU No. 2015-05, which provides guidance about a customer's accounting for fees paid in a cloud computing arrangement. The amendment will help entities evaluate whether such an arrangement includes a software license, which should be accounted for consistent with the acquisition of other software licenses; otherwise, it should be accounted for as a service contract. The Company will adopt the standard effective October 1, 2016. The adoption is not expected to have a material impact on the consolidated financial statements.
In September 2015, the FASB issued ASU No. 2015-16, which simplifies the accounting for post-acquisition adjustments by eliminating the requirement to retrospectively account for the adjustments made to provisional amounts recognized in a business combination. The Company elected to early adopt this guidance on a prospective basis effective October 1, 2015. The adoption did not have a material impact on the consolidated financial statements.
In November 2015, the FASB issued ASU 2015-17, which simplifies the presentation of deferred income taxes by requiring that deferred tax assets and liabilities be presented as non-current. The standard impacts presentation only. The Company elected to early adopt the standard on a retrospective basis effective October 1, 2015 and all deferred tax assets and liabilities are classified as non-current. Previously, current deferred tax assets had been presented separately and current deferred tax liabilities had been included in accrued liabilities on the consolidated balance sheets. All prior period amounts within the consolidated financial statements have been reclassified to conform to current period presentation. The reclassification did not affect the Company's total equity, operating revenues, net income, comprehensive income or cash flows as of and for the periods presented. The adoption did not have a material impact on the consolidated financial statements.
In January 2016, the FASB issued ASU 2016-01, which amends certain aspects of recognition, measurement, presentation and disclosure of financial instruments, including the requirement to measure certain equity investments at fair value with changes in fair value recognized in net income. The Company will adopt the standard effective October 1, 2018. The adoption is not expected to have a material impact on the consolidated financial statements.
In February 2016, the FASB issued ASU 2016-02, which requires the recognition of lease assets and lease liabilities arising from operating leases in the statement of financial position. The Company will adopt the standard effective October 1, 2019 and does not anticipate that this new accounting guidance will have a material impact on its consolidated statement of operations. The Company estimates the value of leased assets and liabilities that may be recognized could be in the hundreds of millions of dollars. The actual impact will depend on the Company's lease portfolio at the time of adoption.
In March 2016, the FASB issued ASU 2016-05, which clarifies that a change in the counterparty to a derivative instrument that has been designated as the hedging instrument under Topic 815, Derivatives and Hedging, does not, in and of itself, require dedesignation of that hedging relationship provided that all other hedge accounting criteria continue to be met. The Company will adopt the standard effective October 1, 2017. The adoption is not expected to have a material impact on the consolidated financial statements.
In March 2016, the FASB issued ASU 2016-06, which clarifies the requirements for assessing whether contingent call/put options that can accelerate the payment of principal on debt instruments are clearly and closely related to their debt hosts. An entity performing the assessment is required to assess the embedded call/put options solely in accordance with a four-step decision sequence. The Company will adopt the standard effective October 1, 2017. The adoption is not expected to have a material impact on the consolidated financial statements.
In March 2016, the FASB issued ASU 2016-07, which eliminates the requirement that an entity retroactively adopt the equity method of accounting if an investment qualifies for use of the equity method as a result of an increase in the level of ownership or degree of influence. The equity method investor is required to add the cost of acquiring the additional interest in the investee to the current basis of the investor's previously held interest and adopt the equity method of accounting as of the date the investment becomes qualified for equity method accounting. The Company will adopt the standard effective October 1, 2017. The adoption is not expected to have a material impact on the consolidated financial statements.
In March 2016, the FASB issued ASU 2016-09, which simplifies several aspects of the accounting for share-based payments, including immediate recognition of all excess tax benefits and deficiencies in the income statement, changing the threshold to qualify for equity classification up to the employees' maximum statutory tax rates, allowing an entity-wide accounting policy election to either estimate the number of awards that are expected to vest or account for forfeitures as they occur, and clarifying the classification on the statement of cash flows for the excess tax benefit and employee taxes paid when an employer withholds shares for tax-withholding purposes. The Company will early adopt the standard effective October 1, 2016. The adoption is not expected to have a material impact on the consolidated financial statements.
In May 2016, the FASB issued ASU 2016-13, which amends guidance on reporting credit losses for assets held at amortized cost basis and available-for-sale debt securities. The amendment requires a financial asset measured at amortized cost basis to be presented at the net amount expected to be collected. The amendment in this update also requires that credit losses on available-for-sale debt securities be presented as an allowance rather than as a write-down. The measurement of credit losses for newly recognized financial assets and subsequent changes in the allowance for credit losses are recorded in the statement of income. The Company is evaluating the full effect that ASU 2016-13 will have on its consolidated financial statements and will adopt the standard effective October 1, 2020.
In August 2016, the FASB issued ASU 2016-15, which provides guidance on eight specific cash flow issues, including debt prepayments or debt extinguishment costs. The Company will adopt the standard effective October 1, 2018. The adoption is not expected to have a material impact on the consolidated financial statements.
In October 2016, the FASB issued ASU 2016-16, which requires that entities recognize the income tax consequences of an intra-entity transfer of an asset, other than inventory, when the transfer occurs. The Company is evaluating the effect that ASU 2016-16 will have on its consolidated financial statements and is considering early adoption of the standard.
Visa Europe
Visa Europe
Note 2—Acquisition of Visa Europe
On June 21, 2016, the Company acquired 100% of the share capital of Visa Europe, a payments technology business. The acquisition positions Visa to create additional value through increased scale, efficiencies realized by the integration of both businesses, and benefits related to Visa Europe's transition from an association to a for-profit enterprise. At the closing of the transaction (the "Closing"), the Company:
•paid up-front cash consideration of €12.2 billion ($13.9 billion);
•
issued preferred stock of the Company convertible upon certain conditions into approximately 79 million shares of class A common stock of the Company, as described below, equivalent to a value of €5.3 billion ($6.1 billion) at the closing stock price of $77.33 on June 21, 2016; and
•
agreed to pay an additional €1.0 billion, plus 4% compound annual interest, on the third anniversary of the Closing.
Preferred stock. In connection with the transaction, three new series of preferred stock of the Company were created:
•
series A convertible participating preferred stock, par value $0.0001 per share, which is generally designed to be economically equivalent to the Company’s class A common stock (the “class A equivalent preferred stock”);
•
series B convertible participating preferred stock, par value $0.0001 per share (the “U.K.&I preferred stock”); and
•
series C convertible participating preferred stock, par value $0.0001 per share (the “Europe preferred stock”).
The Company issued 2,480,466 shares of U.K.&I preferred stock to Visa Europe’s member financial institutions in the United Kingdom and Ireland entitled to receive preferred stock at the Closing, and 3,156,823 shares of Europe preferred stock to Visa Europe’s other member financial institutions entitled to receive preferred stock at the Closing. Under certain conditions described below, the U.K.&I and Europe preferred stock is convertible into shares of class A common stock or class A equivalent preferred stock, at an initial conversion rate of 13.952 shares of class A common stock for each share of U.K.&I preferred stock and Europe preferred stock. The conversion rates may be reduced from time to time to offset certain liabilities, if any, which may be incurred by the Company, Visa Europe or their affiliates as a result of certain existing and potential litigation relating to the setting of multilateral interchange fee rates in the Visa Europe territory (the "VE territory covered litigation"), where, generally, the relevant claims (and resultant liabilities and losses) relate to the period before the Closing. Only seventy percent of such liabilities may be offset where the liability arises from a claim related to inter-regional multilateral interchange fees applied to transactions where the issuer is located outside the Visa Europe territory while the merchant outlet is located within the Visa Europe territory. A reduction in the conversion rates of the U.K.&I preferred stock and the Europe preferred stock have the same economic effect on diluted class A common stock earnings per share as repurchasing the Company's class A common stock because it reduces the as-converted class A common stock share count. Additionally, the shares of U.K.&I and Europe preferred stock are subject to restrictions on transfer and may become convertible in stages based on developments in the VE territory covered litigation. The shares of U.K.&I and Europe preferred stock will become fully convertible on the 12th anniversary of the Closing, subject only to a holdback to cover any then-pending claims. Upon any such conversion of the U.K.&I or Europe preferred stock (whether by such 12th anniversary, or thereafter with respect to claims pending on such anniversary), the holder would receive either class A common stock or class A equivalent preferred stock (for those who are not eligible to hold class A common stock pursuant to the Company's charter). The class A equivalent preferred stock will be freely transferable and each share of class A equivalent preferred stock will automatically convert into 100 shares of class A common stock upon a transfer to any holder that is eligible to hold class A common stock under the charter. See Note 3—U.S. and Europe Retrospective Responsibility Plans.
The holders of the U.K.&I and Europe preferred stock have no right to vote on any matters, except for certain defined matters, including, in specified circumstances, any consolidation, merger or combination of the Company. Holders of the class A equivalent preferred stock, upon issuance at conversion, will have similar voting rights to the rights of the holders of the U.K.&I and Europe preferred stock. With respect to those limited matters on which the holders of preferred stock may vote, approval by the holders of the preferred stock requires the affirmative vote of the outstanding voting power of each such series of preferred stock, each such series voting as a single class. Upon issuance, all three series of preferred stock will participate on an as-converted basis in regular quarterly cash dividends declared on the Company's class A common stock.
U.K. loss sharing agreement. On November 2, 2015, the Company, Visa Europe and certain of Visa Europe’s member financial institutions located in the United Kingdom (the “U.K. LSA members”) entered into a loss sharing agreement (the “U.K. loss sharing agreement”). Each of the U.K. LSA members has agreed, on a several and not joint basis, to compensate the Company for certain losses which may be incurred by the Company, Visa Europe or their affiliates as a result of certain existing and potential litigation relating to the setting and implementation of domestic multilateral interchange fee rates in the United Kingdom prior to the Closing (the "U.K. covered claims"), subject to the terms and conditions set forth therein and, with respect to each U.K. LSA member, up to a maximum amount of the up-front cash consideration received by such U.K. LSA member. The U.K. LSA members’ obligations under the U.K. loss sharing agreement are conditional upon, among other things, either (a) losses valued in excess of the sterling equivalent at the Closing of €1.0 billion having arisen in U.K covered claims (and such losses having reduced the conversion rate of the U.K.&I preferred stock accordingly), or (b) the conversion rate of the U.K.&I preferred stock having been reduced to zero pursuant to losses arising in claims relating to multilateral interchange fee rate setting in the Visa Europe territory. See Note 3—U.S. and Europe Retrospective Responsibility Plans.
Litigation management deed. On June 21, 2016, the Company and Visa Europe entered into a litigation management deed (the "litigation management deed"), which sets forth the agreed upon procedures for the management of the VE territory covered litigation, the allocation of losses resulting from the VE territory covered litigation ("VE territory covered losses") between the U.K.&I and Europe preferred stock, and any accelerated conversion or reduction in the conversion rate of the shares of U.K.&I and Europe preferred stock. The litigation management deed applies only to VE territory covered litigation (and resultant losses and liabilities). Subject to the terms and conditions set forth therein, the litigation management deed provides that the Company will generally control the conduct of the VE territory covered litigation, subject to certain obligations to report and consult with the newly established litigation management committees for VE territory covered litigation ("VE territory litigation management committees"). The VE territory litigation management committees, which are composed of representatives of certain Visa Europe members, have also been granted consent rights to approve certain material decisions in relation to the VE territory covered litigation.
Framework Agreement. In connection with the Company's October 2007 reorganization, the Company granted to Visa Europe exclusive, irrevocable and perpetual licenses to use the Visa trademarks and technology intellectual property owned by the Company and certain affiliates within the Visa Europe region for use in the field of financial services, payments, related information technology and information processing services and participation in the Visa system (the "Framework Agreement").
We recorded $191 million, $255 million and $226 million of revenue in accordance with the Framework Agreement during fiscal 2016, 2015 and 2014, respectively. As a result of the acquisition, the fee recognized in fiscal year 2016 was pro-rated for the period prior to the Closing, and no fees related to the Framework Agreement were recognized in the three months ended September 30, 2016, nor will they be recognized in future periods.
Acquisition-related costs. The Company incurred $152 million of non-recurring operating expense during fiscal 2016. This amount is comprised of $60 million of transaction expenses recorded in professional fees, and $92 million of expense related to U.K. stamp duty, which was recorded in general and administrative expenses.
Accounting treatment for the acquisition. The following table details the purchase consideration:
 
Accounting Purchase Consideration
 
(in millions)
Cash payment
$
13,882

Fair value of preferred stock(1)
5,692

Total upfront consideration
$
19,574

Fair value of deferred cash consideration(2)
1,236

Total consideration before adjustments
$
20,810

Less: Visa Europe Framework Agreement loss(3)
(1,856
)
Less: Treasury stock(4)
(170
)
Total accounting purchase consideration
$
18,784

(1) 
The fair value of preferred stock was determined based on its as-converted value of $6.1 billion on June 21, 2016, less a 6% discount for illiquidity as these shares are subject to limitations on transferability. The fair value was also adjusted to reflect $25 million of "right to recover for covered losses" related to VE territory covered losses prior to the Closing. See Note 20—Legal Matters.
(2) 
This amount reflects the fair value of deferred cash consideration of €1.0 billion, plus 4.0% compound annual interest, payable on the third anniversary of the Closing, discounted at a rate of 1.2%. At September 30, 2016, the deferred consideration of $1.2 billion reflects interest accretion recognized during the three months ended September 30, 2016, more than offset by the impact of changes in the euro to U.S. dollar exchange rate from the Closing.
Total consideration has been adjusted to account for the following items to arrive at the accounting purchase consideration:

(3) 
the loss upon consummation of the transaction resulting from the effective settlement of the Framework Agreement between Visa and Visa Europe. The Visa Europe Framework Agreement provided Visa Europe with a perpetual, exclusive right to operate the Visa business in the Visa Europe region in exchange for a license fee paid to Visa. Under the terms of the Framework Agreement, the license fee paid by Visa Europe has increased modestly since inception in 2007, while the value of the Visa Europe business has increased at a greater rate. Using an income approach, the Company assessed the contractual terms and conditions of the Framework Agreement as compared to current market conditions and the historical and expected financial performance of Visa Europe. Based on the analysis performed, the Company determined that the terms were not at fair value as determined under U.S. GAAP at the Closing. The present value of the expected differential between payments required by the Framework Agreement and those that would be required if the contract were at fair value under U.S. GAAP was calculated over the Framework Agreement's contractual perpetual term, resulting in a loss of $1.9 billion recognized within operating expense in the Company's consolidated statement of operations during the third quarter of fiscal 2016, and a reduction to the purchase accounting consideration; and
(4) 
the fair value of the Visa class C common stock held by Visa Europe as of the Closing.
Total purchase consideration has been allocated to the tangible and identifiable intangible assets acquired and liabilities assumed based on a preliminary valuation as we continue to gather additional information necessary to finalize the valuation. These preliminary values may further change in future reporting periods until finalization of the valuation, which will occur no later than the third quarter of fiscal 2017.
The following table summarizes the preliminary purchase price allocation.
 
Preliminary Purchase Price Allocation
 
(in millions)
Current assets(1)
$
4,457

Non-current assets(2)
258

Current liabilities(3)
(2,731
)
Non-current liabilities(2)
(2,605
)
Tangible assets and liabilities
$
(621
)
Intangible assets — customer relationships and reacquired rights(2)
16,137

Goodwill(4)
3,268

Fair value of net assets acquired
$
18,784

(1) 
Current assets are largely comprised of cash and cash equivalents and settlement receivable.
(2) 
Intangible assets consist of customer relationships and reacquired rights, which have been valued as a single composite intangible asset as they are inextricably linked. These intangibles are considered indefinite-lived assets as the associated customer relationships have historically not experienced significant attrition, and the reacquired rights are based on the Framework Agreement, which has a perpetual term. Non-current assets and liabilities include deferred tax assets and liabilities that result in net deferred tax liabilities of $2.4 billion, which are primarily related to these indefinite-lived intangible assets, and are not expected to be realized in the foreseeable future.
(3) 
Current liabilities assumed mainly include settlement payable, client incentives liabilities and accrued liabilities.
(4) 
The excess of purchase consideration over net assets acquired was recorded as goodwill, which represents the value that is expected from increased scale and synergies as a result of the integration of both businesses.
Actual and pro forma impact of acquisition. The Company did not include Visa Europe's financial results in the Company's consolidated statements of operations from the acquisition date, June 21, 2016, through June 30, 2016 as the impact was immaterial. Total consolidated Visa Inc. net revenue for the fiscal year ended September 30, 2016 includes $554 million from Visa Europe's operations for the three months ended September 30, 2016. Had the Company not acquired Visa Europe, approximately $65 million of revenue would have been recorded under the Framework Agreement during the fourth quarter of fiscal 2016. Therefore, the acquisition of Visa Europe resulted in a net increase of $489 million in net revenue.
Total consolidated Visa Inc. net income for the fiscal year ended September 30, 2016 includes $299 million from Visa Europe's operations for the three months ended September 30, 2016. This includes the non-cash, non-recurring $88 million tax benefit upon remeasurement of a deferred tax liability to reflect a tax rate change in the United Kingdom. In connection with the acquisition, Visa Inc. recorded several significant items that would not have been incurred had we not acquired Visa Europe. Therefore, the acquisition of Visa Europe reduced Visa Inc. fiscal year 2016 consolidated net income by approximately $872 million, as follows:
 
 
Impact of Visa Europe acquisition on fiscal 2016 consolidated net income:
(in millions)
Visa Europe net income included in consolidated net income
$
299

Less approximately $65 million of revenue that would have been recorded by Visa Inc. under the Framework Agreement, net of tax
(41
)
Less acquisition-related expense recorded by Visa Inc., net of tax, upon:
 
Effective settlement of the Framework Agreement
(1,184
)
Interest expense incurred on $16.0 billion debt, net of interest income earned
(243
)
Transaction costs incurred
(96
)
Add acquisition-related gains recorded by Visa Inc., net of tax, upon:
 
Revaluation of Visa Europe put option
255

Remeasurement of euro deposits
91

Remeasurement of currency forward contracts
47

Total impact of Visa Europe acquisition on consolidated net income
$
(872
)

The following table presents supplemental pro forma information as if the acquisition and related issuance of senior notes had occurred on October 1, 2014. The pro forma financial information is not necessarily indicative of the Company's consolidated results of operations that would have been realized had the acquisition been completed on October 1, 2014, nor does it purport to project the future results of operations of the combined company or reflect any reorganizations, or cost or other operating synergies that may occur subsequent to the Closing. The actual results of operations of the combined company may differ significantly from the pro forma results presented here due to many factors.
 
Pro Forma Consolidated Results
 
Fiscal 2016
 
Fiscal 2015
 
(in millions, except per share data)
Total operating revenues
$
16,090

 
$
15,425

Net income
$
7,072

 
$
5,210

Diluted earnings per share
$
2.93

 
$
2.06


The pro forma financial information above reflects the following material pro forma adjustments:
•
conversion of Visa Europe's historical results of operations from euro to U.S. dollar, and from International Financial Reporting Standards to U.S. GAAP;
•
elimination of transactions between Visa and Visa Europe upon consolidation, primarily related to annual license and various other fees paid by Visa Europe to Visa in accordance with the Framework Agreement;
•
an increase in non-operating expense for additional interest expense and amortization of debt issuance costs resulting from the issuance of the $16.0 billion senior notes;
•
exclusion of a $255 million gain in the twelve months ended September 30, 2016 and $110 million loss in the twelve months ended September 30, 2015 related to the revaluation of the Visa Europe put option(1); and
•
the inclusion of non-recurring amounts on October 1, 2014, the date the acquisition is presumed to have occurred for purposes of presenting pro forma results, and a corresponding reduction of these amounts in the period originally recognized, as follows:
◦
$1.9 billion Visa Europe Framework Agreement loss related to the effective settlement of the Framework Agreement recognized in the twelve months ended September 30, 2016;
◦
$152 million of acquisition-related costs for the twelve months ended September 30, 2016;
◦
$145 million of foreign exchange gains related to euros held during the twelve months ended September 30, 2016; and
◦
$74 million of gains for the twelve months ended September 30, 2016 related to currency forward contracts entered into to mitigate a portion of the foreign currency exchange rate risk associated with the upfront cash consideration.
(1) 
For purposes of preparing this pro forma financial information, the fair value of the Visa Europe put option is presumed to have been reduced to zero prior to October 1, 2014. Therefore, gains or losses associated with changes in the fair value of the Visa Europe put option liability are not included in pro forma net income for either period presented.
The pro forma results also reflect the applicable tax impact of the pro forma adjustments. The taxes associated with the adjustments reflect the statutory tax rate in effect during the respective periods.
U.S. and Europe Retrospective Responsibility Plan
U.S. and Europe Retrospective Responsibility Plan
Note 3—U.S. and Europe Retrospective Responsibility Plans
U.S. Retrospective Responsibility Plan
The Company has established several related mechanisms designed to address potential liability under certain litigation referred to as the “U.S. covered litigation." These mechanisms are included in and referred to as the U.S. retrospective responsibility plan and consist of a U.S. litigation escrow agreement, the conversion feature of the Company's shares of class B common stock, the indemnification obligations of the Visa U.S.A. members, an interchange judgment sharing agreement, a loss sharing agreement and an omnibus agreement, as amended.
U.S. covered litigation consists of a number of matters that have been settled or otherwise fully or substantially resolved, as well as the following:
•
the Interchange Multidistrict Litigation. In re Payment Card Interchange Fee and Merchant Discount Antitrust Litigation, 1:05-md-01720-JG-JO (E.D.N.Y.) or MDL 1720, including all cases currently included in MDL 1720, any other case that includes claims for damages relating to the period prior to the Company's IPO that has been or is transferred for coordinated or consolidated pre-trial proceedings at any time to MDL 1720 by the Judicial Panel on Multidistrict Litigation or otherwise included at any time in MDL 1720 by order of any court of competent jurisdiction; 
•
any claim that challenges the reorganization or the consummation thereof; provided that such claim is transferred for coordinated or consolidated pre-trial proceedings at any time to MDL 1720 by the Judicial Panel on Multidistrict Litigation or otherwise included at any time in MDL 1720 by order of any court of competent jurisdiction; and
•
any case brought after October 22, 2015, by a merchant that opted out of the Rule 23(b)(3) settlement class pursuant to the 2012 Settlement Agreement in MDL 1720 that arises out of facts or circumstances substantially similar to those alleged in MDL 1720 and that is not transferred to or otherwise included in MDL 1720. See Note 20—Legal Matters.
U.S. Litigation escrow agreement. In accordance with the U.S. litigation escrow agreement, the Company maintains an escrow account, from which settlements of, or judgments in, the U.S. covered litigation are paid. The amount of the escrow is determined by the board of directors and the Company's litigation committee, all members of which are affiliated with, or act for, certain Visa U.S.A. members. The escrow funds are held in money market investments along with the interest earned, less applicable taxes, and are classified as restricted cash on the consolidated balance sheets.
The following table sets forth the changes in the U.S. litigation escrow account:
 
Fiscal 2016
 
Fiscal 2015
 
(in millions)
Balance at October 1
$
1,072

 
$
1,498

Payments to opt-out merchants(1)
(45
)
 
(426
)
Balance at September 30
$
1,027

 
$
1,072

(1)
These payments are associated with the interchange multidistrict litigation. See Note 20—Legal Matters.
An accrual for the U.S. covered litigation and a change to the litigation provision are recorded when loss is deemed to be probable and reasonably estimable. In making this determination, the Company evaluates available information, including but not limited to recommendations made by the litigation committee. The accrual related to the U.S. covered litigation could be either higher or lower than the U.S. litigation escrow account balance. The Company did not record an additional accrual for the U.S. covered litigation during fiscal 2016. See Note 20—Legal Matters.
Conversion feature. Under the terms of the plan, when the Company funds the U.S. litigation escrow account, the shares of class B common stock are subject to dilution through an adjustment to the conversion rate of the shares of class B common stock to shares of class A common stock. This has the same economic effect on diluted class A common stock earnings per share as repurchasing the Company's class A common stock, because it reduces the class B conversion rate and consequently the as-converted class A common stock share count. See Note 14—Stockholders' Equity.
Indemnification obligations. To the extent that amounts available under the U.S. litigation escrow arrangement and other agreements in the plan are insufficient to fully resolve the U.S. covered litigation, the Company will use commercially reasonable efforts to enforce the indemnification obligations of Visa U.S.A.'s members for such excess amount, including but not limited to enforcing indemnification obligations pursuant to Visa U.S.A.'s certificate of incorporation and bylaws and in accordance with their membership agreements.
Interchange judgment sharing agreement. Visa U.S.A. and Visa International have entered into an interchange judgment sharing agreement with certain Visa U.S.A. members that have been named as defendants in the interchange multidistrict litigation, which is described in Note 20—Legal Matters. Under this judgment sharing agreement, Visa U.S.A. members that are signatories will pay their membership proportion of the amount of a final judgment not allocated to the conduct of MasterCard.
Loss sharing agreement. Visa has entered into a loss sharing agreement with Visa U.S.A., Visa International and certain Visa U.S.A. members. The loss sharing agreement provides for the indemnification of Visa U.S.A., Visa International and, in certain circumstances, Visa with respect to: (i) the amount of a final judgment paid by Visa U.S.A. or Visa International in the U.S. covered litigation after the operation of the interchange judgment sharing agreement, plus any amounts reimbursable to the interchange judgment sharing agreement signatories; or (ii) the damages portion of a settlement of a U.S. covered litigation that is approved as required under Visa U.S.A.'s certificate of incorporation by the vote of Visa U.S.A.'s specified voting members. The several obligation of each bank that is a party to the loss sharing agreement will equal the amount of any final judgment enforceable against Visa U.S.A., Visa International or any other signatory to the interchange judgment sharing agreement, or the amount of any approved settlement of a U.S. covered litigation, multiplied by such bank's then-current membership proportion as calculated in accordance with Visa U.S.A.'s certificate of incorporation.
On October 22, 2015, Visa entered into an amendment to the loss sharing agreement. The amendment includes within the scope of U.S. covered litigation any action brought after the amendment by an opt out from the Rule 23(b)(3) Settlement Class in MDL 1720 that arises out of facts or circumstances substantially similar to those alleged in MDL 1720 and that is not transferred to or otherwise included in MDL 1720. On the same date, Visa entered into amendments to the interchange judgment sharing agreement and omnibus agreement that include any such action within the scope of those agreements as well.
Omnibus agreement. Visa entered into an omnibus agreement with MasterCard and certain Visa U.S.A. members that confirmed and memorialized the signatories’ intentions with respect to the loss sharing agreement, the interchange judgment sharing agreement and other agreements relating to the interchange multidistrict litigation, see Note 20—Legal Matters. Under the omnibus agreement, the monetary portion of any settlement of the interchange multidistrict litigation covered by the omnibus agreement would be divided into a MasterCard portion at 33.3333% and a Visa portion at 66.6667%. In addition, the monetary portion of any judgment assigned to Visa-related claims in accordance with the omnibus agreement would be treated as a Visa portion. Visa would have no liability for the monetary portion of any judgment assigned to MasterCard-related claims in accordance with the omnibus agreement, and if a judgment is not assigned to Visa-related claims or MasterCard-related claims in accordance with the omnibus agreement, then any monetary liability would be divided into a MasterCard portion at 33.3333% and a Visa portion at 66.6667%. The Visa portion of a settlement or judgment covered by the omnibus agreement would be allocated in accordance with specified provisions of the Company's U.S. retrospective responsibility plan. The litigation provision on the consolidated statements of operations is not impacted by the execution of the omnibus agreement.
On August 26, 2014, Visa entered into an amendment to the omnibus agreement. The omnibus amendment makes applicable to certain settlements in opt-out cases in the interchange multidistrict litigation the settlement-sharing provisions of the omnibus agreement, pursuant to which the monetary portion of any settlement of the interchange multidistrict litigation covered by the omnibus agreement would be divided into a MasterCard portion at 33.3333% and a Visa portion at 66.6667%. The omnibus amendment also provides that in the event of termination of the class Settlement Agreement, Visa and MasterCard would make mutually acceptable arrangements so that Visa shall have received two-thirds and MasterCard shall have received one-third of the total of (i) the sums paid to defendants as a result of the termination of the Settlement Agreement and (ii) the takedown payments previously made to defendants.
Europe Retrospective Responsibility Plan
The Company obtained certain protections for VE territory covered losses through the U.K.&I and Europe preferred stock, the U.K. loss sharing agreement, and the litigation management deed, referred to as the "Europe retrospective responsibility plan." See Note 2—Acquisition of Visa Europe and Note 20—Legal Matters. The plan covers VE territory covered litigation (and resultant liabilities and losses) relating to the covered period, which generally refers to the period before the Closing. Visa's protection from the plan is further limited to seventy percent of any liabilities where the claim relates to inter-regional multilateral interchange fee rates where the issuer is located outside the Visa Europe territory, while the merchant is located within the Visa Europe territory. The plan does not protect the Company against all types of litigation in Europe, only the interchange litigation specifically covered by the plan's terms.
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 a periodic adjustment to the class A common stock conversion rates applicable to the U.K.&I and Europe preferred stock. The total amount of protection available through the preferred stock component of the Europe retrospective responsibility plan is equivalent to the as-converted value of the preferred stock, which can be calculated at any point in time as the product of: (a) the outstanding number of shares of preferred stock; (b) the current conversion rate applicable to each class of preferred stock; and (c) Visa's class A common stock price. This amount differs from the value of the preferred stock recorded within stockholders' equity on the Company's consolidated balance sheet. The book value of the preferred stock reflects its historical value recorded at the Closing less VE territory covered losses recovered through a reduction of the applicable conversion rate. The book value does not reflect changes in the underlying class A common stock price subsequent to the Closing.
Visa Inc. net income will not be impacted by VE territory covered losses as long as the as-converted value of the preferred stock is greater than the covered loss. VE territory covered losses will be recorded when the loss is deemed to be probable and reasonably estimable, or in the case of attorney's fees, when incurred. Concurrently, the Company will record a reduction to stockholders' equity and operating expenses, which represents the Company's right to recover such losses through adjustments to the conversion rate applicable to the preferred stock. The reduction to stockholders' equity is recorded in a contra-equity account referred to as "right to recover for covered losses."
VE territory covered losses may be recorded 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 will then be recorded against the book value of the preferred stock within stockholders' equity. As of September 30, 2016, the Company had recorded $34 million in the "right to recover for covered losses" related to VE territory covered losses, of which $25 million was incurred prior to the Closing. There were no adjustments to the conversion rate in fiscal 2016.
The following table sets forth the as-converted value of the preferred stock available to recover VE territory covered losses compared to the book value of preferred shares recorded in stockholders' equity within the Company's consolidated balance sheet as of September 30, 2016(1):
 
September 30, 2016
 
As-Converted Value of Preferred Stock(2)
 
Book Value of Preferred Stock
 
(in millions)
U.K.&I preferred stock
$
2,862

 
$
2,516

Europe preferred stock
3,642

 
3,201

Total
$
6,504

 
$
5,717

Less: Right to recover for covered losses
(34
)
 
(34
)
Total recovery for covered losses available
$
6,470

 
$
5,683

(1) 
Figures in the table may not recalculate exactly due to rounding. As-converted and book values are based on unrounded numbers.
(2) 
The as-converted value of preferred stock is calculated as the product of: (a) 2 million and 3 million shares of the U.K.&I and Europe preferred stock outstanding, respectively, as of September 30, 2016; (b) the 13.952 class A common stock conversion rate applicable to both the U.K.&I and Europe preferred stock as of September 30, 2016; and (c) $82.70, Visa's class A common stock closing stock price as of September 30, 2016. Figures in the table may not recalculate exactly due to rounding. Earnings per share is calculated based on unrounded numbers.
Fair Value Measurements and Investments
Fair Value Measurements and Investments
Note 4—Fair Value Measurements and Investments
Fair Value Measurements
The Company measures certain assets and liabilities at fair value. See Note 1—Summary of Significant Accounting Policies.
Assets and Liabilities Measured at Fair Value on a Recurring Basis
 
Fair Value Measurements at September 30
Using Inputs Considered as
 
Level 1
 
Level 2
 
Level 3
 
2016
 
2015
 
2016
 
2015
 
2016
 
2015
 
(in millions)
Assets
 
 
 
 
 
 
 
 
 
 
 
Cash equivalents and restricted cash:
 
 
 
 
 
 
 
 
 
 
 
Money market funds
$
4,537

 
$
3,051

 
 
 
 
 
 
 
 
U.S. government-sponsored debt securities
 
 
 
 
$
196

 
$
280

 
 
 
 
Investment securities, trading:
 
 
 
 
 
 
 
 
 
 
 
Equity securities
71

 
66

 
 
 
 
 
 
 
 
Investment securities, available-for-sale:
 
 
 
 
 
 
 
 
 
 
 
U.S. government-sponsored debt securities
 
 
 
 
4,699

 
2,615

 
 
 
 
U.S. Treasury securities
2,178

 
2,656

 
 
 
 
 
 
 
 
Equity securities
53

 
4

 
 
 
 
 
 
 
 
Corporate debt securities
 
 
 
 
249

 
533

 
 
 
 
Auction rate securities
 
 
 
 
 
 
 
 
$
—

 
$
7

Prepaid and other current assets:
 
 
 
 
 
 
 
 
 
 
 
Foreign exchange derivative instruments
 
 
 
 
50

 
76

 
 
 
 
Other Assets:
 
 
 
 
 
 
 
 
 
 
 
Foreign exchange derivative instruments
 
 
 
 
6

 
 
 
 
 
 
Total
$
6,839

 
$
5,777

 
$
5,200

 
$
3,504

 
$
—

 
$
7

Liabilities
 
 
 
 
 
 
 
 
 
 
 
Accrued liabilities:
 
 
 
 
 
 
 
 
 
 
 
Visa Europe put option
 
 
 
 
 
 
 
 
$
—

 
$
255

Foreign exchange derivative instruments
 
 
 
 
$
116

 
$
13

 
 
 
 
Other liabilities:
 
 
 
 
 
 
 
 
 
 
 
Foreign exchange derivative instruments
 
 
 
 
$
20

 
 
 
 
 
 
Total
$
—

 
$
—

 
$
136

 
$
13

 
$
—

 
$
255


There were no transfers between Level 1 and Level 2 assets during fiscal 2016.
Level 1 assets measured at fair value on a recurring basis. Money market funds, publicly-traded equity securities and U.S. Treasury securities are classified as Level 1 within the fair value hierarchy, as fair value is based on quoted prices in active markets.
Level 2 assets and liabilities measured at fair value on a recurring basis. The fair value of U.S. government-sponsored debt securities and corporate debt securities, as provided by third-party pricing vendors, is based on quoted prices in active markets for similar, not identical, assets. The pricing data obtained from outside sources is reviewed internally for reasonableness, compared against benchmark quotes from independent pricing sources, then confirmed or revised accordingly. Foreign exchange derivative instruments are valued using inputs that are observable in the market or can be derived principally from or corroborated by observable market data. There were no substantive changes to the valuation techniques and related inputs used to measure fair value during fiscal 2016.
Level 3 assets and liabilities measured at fair value on a recurring basis. Auction rate securities are classified as Level 3 due to a lack of trading in active markets and a lack of observable inputs in measuring fair value. There were no substantive changes to the valuation techniques and related inputs used to measure fair value during fiscal 2016.
Visa Europe put option agreement. On June 21, 2016, the Company acquired 100% of the share capital of Visa Europe, effected by the Visa Europe board of directors' exercise of the amended Visa Europe put option. Therefore, the Visa Europe put option was contractually terminated as a result of the transaction. During the first quarter of fiscal 2016, the Company recorded a $255 million non-cash decrease in the fair value of the put option as non-operating income in the Company's consolidated statements of operations, reducing the fair value of the liability to zero. See Note 2—Acquisition of Visa Europe. The liability was classified within Level 3 as the assumed probability that Visa Europe would elect to exercise its option in its unamended form, and the estimated P/E differential were among several unobservable inputs used to value the unamended put option.
Assets Measured at Fair Value on a Non-recurring Basis
Non-marketable equity investments and investments accounted for under the equity method. 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. When certain events or circumstances indicate that impairment may exist, the Company revalues the investments using various assumptions, including the financial metrics and ratios of comparable public companies. There were no significant impairment charges incurred during fiscal 2016, 2015 and 2014. At September 30, 2016 and 2015, these investments totaled $46 million and $45 million, respectively. These assets are classified in other assets on the consolidated balance sheets.
Non-financial assets and liabilities. Long-lived assets such as goodwill, indefinite-lived intangible assets, finite-lived intangible assets, and property, equipment and technology are considered non-financial assets. The Company does not have any non-financial liabilities measured at fair value on a non-recurring basis. Finite-lived intangible assets primarily consist of customer relationships, trade names, and reseller relationships, all of which were obtained through acquisitions. See Note 7—Intangible Assets and Goodwill.
If the Company were required to perform a quantitative assessment for impairment testing of goodwill and indefinite-lived intangible assets, the fair values would generally be estimated using an income approach. As the assumptions employed to measure these assets on a non-recurring basis are based on management's judgment using internal and external data, these fair value determinations are classified as Level 3 in the fair value hierarchy. The Company completed its annual impairment review of its indefinite-lived intangible assets and goodwill as of February 1, 2016, and concluded that there was no impairment. No recent events or changes in circumstances indicate that impairment existed at September 30, 2016. See Note 1—Summary of Significant Accounting Policies.
Other Fair Value Disclosures
Long-term debt. In December 2015, the Company issued fixed-rate senior notes in an aggregate principal amount of $16.0 billion, with maturities ranging between 2 and 30 years. See Note 9—Debt. These debt instruments are measured at amortized cost on the Company's consolidated balance sheet at September 30, 2016. The fair value of these notes, as provided by third-party pricing vendors, is based on quoted prices in active markets for similar, not identical, assets. The pricing data obtained from outside sources is reviewed internally for reasonableness, compared against benchmark quotes from independent pricing sources, then confirmed or revised accordingly. If measured at fair value in the financial statements, these instruments would be classified as Level 2 in the fair value hierarchy.
The following table presents the carrying amount and estimated fair value of the Company’s debt in order of maturity:
 
September 30, 2016
 
Carrying Amount
 
Estimated Fair Value
 
(in millions)
1.20% Senior Notes due December 2017
$
1,746

 
$
1,754

2.20% Senior Notes due December 2020
2,988

 
3,077

2.80% Senior Notes due December 2022
2,238

 
2,359

3.15% Senior Notes due December 2025
3,964

 
4,225

4.15% Senior Notes due December 2035
1,485

 
1,698

4.30% Senior Notes due December 2045
3,461

 
4,045

 
$
15,882

 
$
17,158


Other Financial Instruments not Measured at Fair Value
The following financial instruments are not measured at fair value on the Company's consolidated balance sheet at September 30, 2016, but require disclosure of their fair values: time deposits recorded in prepaid expenses and other current assets, settlement receivable and payable, and customer collateral. The estimated fair value of such instruments at September 30, 2016 approximates their carrying 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.
Investments
Trading Investment Securities
Trading investment securities include mutual fund equity security investments related to various employee compensation and benefit plans. Trading activity in these investments is at the direction of the Company's employees. These investments are held in trust and are not available for the Company's operational or liquidity needs. Interest and dividend income and changes in fair value are recorded in non-operating income, and offset in personnel expense on the consolidated statements of operations. As of September 30, 2016 and 2015, trading investment securities totaled $71 million and $66 million, respectively.
Available-for-sale Investment Securities
The amortized cost, unrealized gains and losses and fair value of available-for-sale investment securities are as follows:
 
September 30, 2016
 
September 30, 2015

 
Amortized
Cost
 
Gross Unrealized
 
Fair
Value
 
Amortized
Cost
 
Gross Unrealized
 
Fair
Value
 
Gains
 
Losses
 
Gains
 
Losses
 
 
(in millions)
U.S. government-sponsored debt securities
$
4,693

 
$
6

 
$
—

 
$
4,699

 
$
2,612

 
$
3

 
$
—

 
$
2,615

U.S. Treasury securities
2,176

 
3

 
—

 
2,179

 
2,652

 
4

 
—

 
2,656

Equity securities
7

 
46

 
—

 
53

 
4

 
—

 
—

 
4

Corporate debt securities
248

 
—

 
—

 
248

 
533

 
—

 
—

 
533

Auction rate securities
—

 
—

 
—

 
—

 
7

 
—

 
—

 
7

Total
$
7,124

 
$
55

 
$
—

 
$
7,179

 
$
5,808

 
$
7

 
$
—

 
$
5,815

Less: current portion of available-for-sale investment securities
 
 
 
 
 
 
(3,248
)
 
 
 
 
 
 
 
(2,431
)
Long-term available-for-sale investment securities
 
 
 
 
 
 
$
3,931

 
 
 
 
 
 
 
$
3,384

The available-for-sale investment securities primarily include U.S. Treasury securities, U.S. government-sponsored debt securities and corporate debt securities. Available-for-sale debt securities are presented below in accordance with their stated maturities. The majority of these investments, $3.9 billion, are classified as non-current, as they have stated maturities of more than one year from the balance sheet date. However, these investments are generally available to meet short-term liquidity needs.
 
Amortized Cost
 
Fair Value
 
(in millions)
September 30, 2016:
 
 
 
Due within one year
$
3,193

 
$
3,195

Due after 1 year through 5 years
3,925

 
3,931

Due after 5 years through 10 years
—

 
—

Due after 10 years
—

 
—

Total
$
7,118

 
$
7,126


Investment Income
Investment income is recorded as non-operating income in the Company's consolidated statements of operations and consisted of the following:
 
For the Years Ended
September 30,
 
2016
 
2015
 
2014
 
(in millions)
Interest and dividend income on cash and investments
$
75

 
$
31

 
$
25

Gain on other investments
5

 
3

 
8

Investment securities, trading:
 
 
 
 
 
Unrealized gains (losses), net
3

 
(6
)
 
(2
)
Realized gains, net
—

 
2

 
6

Investment securities, available-for-sale:
 
 
 
 
 
Realized gains, net
3

 
21

 
1

Other-than-temporary impairment on investments
(4
)
 
(5
)
 
(3
)
Investment income
$
82

 
$
46

 
$
35

Prepaid Expenses and Other Assets
Prepaid Expenses and Other Assets
Note 5—Prepaid Expenses and Other Assets
Prepaid expenses and other current assets consisted of the following:
 
September 30,
2016
 
September 30,
2015
 
(in millions)
Prepaid operating expenses and maintenance
$
151

 
$
137

Income tax receivable (See Note 19—Income Taxes)
232

 
77

Foreign exchange derivative instruments (See Note 12—Derivative Financial Instruments)
50

 
76

Other
122

 
63

Total
$
555

 
$
353


Other non-current assets consisted of the following:
 
September 30,
2016
 
September 30,
2015
 
(in millions)
Non-current income tax receivable (See Note 19—Income Taxes)
$
731

 
$
627

Pension assets (See Note 10—Pension, Postretirement and Other Benefits)
22

 
36

Other investments (See Note 4—Fair Value Measurements and Investments)
46

 
45

Long-term prepaid operating expenses and other
72

 
57

Non-current deferred tax assets (See Note 19—Income Taxes)(1)
22

 
13

Total
$
893

 
$
778

(1) 
The Company elected to early adopt ASU 2015-17 on a retrospective basis effective October 1, 2015 and all deferred tax assets and liabilities are classified as non-current. Previously, current deferred tax assets had been presented separately and current deferred tax liabilities had been included in accrued liabilities on the consolidated balance sheets. See Note 1—Summary of Significant Accounting Policies and Note 19—Income Taxes.
Property, Equipment and Technology, Net
Property, Equipment and Technology, Net
Note 6—Property, Equipment and Technology, Net
Property, equipment and technology, net, consisted of the following:
 
September 30,
2016
 
September 30,
2015
 
(in millions)
Land
$
74

 
$
71

Buildings and building improvements
839

 
803

Furniture, equipment and leasehold improvements
1,382

 
1,267

Construction-in-progress
125

 
120

Technology
2,378

 
2,022

Total property, equipment and technology
4,798

 
4,283

Accumulated depreciation and amortization
(2,648
)
 
(2,395
)
Property, equipment and technology, net
$
2,150

 
$
1,888


Technology consists of both purchased and internally developed software. Internally developed software primarily represents software utilized by the VisaNet electronic payments network. At September 30, 2016 and 2015, accumulated amortization for technology was $1.5 billion and $1.4 billion, respectively.
At September 30, 2016, estimated future amortization expense on technology was as follows:
Fiscal:
 
2017
 
2018
 
2019
 
2020
 
2021 and thereafter
 
Total
 
 
 (in millions)
Estimated future amortization expense
 
$
274

 
$
209

 
$
161

 
$
108

 
$
84

 
$
836

Depreciation and amortization expense related to property, equipment and technology was $452 million, $431 million and $369 million for fiscal 2016, 2015 and 2014, respectively. Included in those amounts was amortization expense on technology of $259 million, $251 million and $198 million for fiscal 2016, 2015 and 2014, respectively.
Intangible Assets, Net
Intangible Assets, Net
Note 7—Intangible Assets and Goodwill
Indefinite-lived and finite-lived intangible assets consisted of the following: 
 
September 30, 2016
 
September 30, 2015
 
Gross
 
Accumulated
Amortization
 
Net
 
Gross
 
Accumulated
Amortization
 
Net
 
(in millions)
Finite-lived intangible assets:
 
 
 
 
 
 
 
 
 
 
 
Customer relationships
$
351

 
$
(220
)
 
$
131

 
$
351

 
$
(196
)
 
$
155

Trade names
192

 
(80
)
 
112

 
192

 
(67
)
 
125

Reseller relationships
95

 
(70
)
 
25

 
95

 
(59
)
 
36

Other
18

 
(9
)
 
9

 
53

 
(17
)
 
36

Total finite-lived intangible assets
$
656

 
$
(379
)
 
$
277

 
$
691

 
$
(339
)
 
$
352

Indefinite-lived intangible assets:
 
 
 
 


 
 
 
 
 


Customer relationships and reacquired rights
$
22,873

 
$
—

 
$
22,873

 
$
6,925

 
$
—

 
$
6,925

Visa trade name
4,084

 
—

 
4,084

 
2,564

 
—

 
2,564

  Visa Europe franchise right
—

 
—

 
—

 
1,520

 
—

 
1,520

Total Indefinite-lived intangible assets
$
26,957

 
$
—

 
$
26,957

 
$
11,009

 
$
—

 
$
11,009

Total intangible assets, net
$
27,613

 
$
(379
)
 
$
27,234

 
$
11,700

 
$
(339
)
 
$
11,361


Amortization expense related to finite-lived intangible assets was $50 million, $63 million and $66 million for fiscal 2016, 2015 and 2014, respectively. At September 30, 2016, estimated future amortization expense on finite-lived intangible assets is as follows:
Fiscal:
 
2017
 
2018
 
2019
 
2020
 
2021 and
thereafter
 
Total
 
 
(in millions)
Estimated future amortization expense
 
$
46

 
40

 
40

 
40

 
111

 
$
277


There was no impairment related to the Company’s indefinite-lived or finite-lived intangible assets during fiscal 2016, 2015 or 2014.
The increase in total net intangible assets during 2016 was primarily related to the Company's acquisition of Visa Europe. Total purchase consideration of $18.8 billion was allocated to the tangible and identifiable intangible assets acquired and liabilities assumed based on their respective fair value on the acquisition date. Related indefinite-lived intangible assets recorded totaled $16.1 billion consisting of customer relationships and reacquired rights. Upon consummation of the acquisition, the Visa Europe franchise right of $1.5 billion, previously acquired as part of the Company's October 2007 reorganization, was reclassified as a Visa trade name intangible asset as the franchise right permitted Visa Europe's use of the Visa trade name and technology prior to acquisition. Goodwill of $3.3 billion was recorded to reflect the excess purchase consideration over net assets acquired. Intangible assets and goodwill recorded as a result of the Visa Europe acquisition are denominated in euros and translated into U.S. dollars. As such, the change in goodwill balance from the acquisition date to September 30, 2016 primarily includes the impact of $39 million resulting from changes in the euro to U.S. dollar exchange rate during the period. See Note 2—Acquisition of Visa Europe.
Accrued and Other Liabilities
Accrued and Other Liabilities
Note 8—Accrued and Other Liabilities
Accrued liabilities consisted of the following:
 
September 30,
2016
 
September 30,
2015
 
(in millions)
Accrued operating expenses(1)
$
347

 
$
257

Visa Europe put option (See Note 2—Acquisition of Visa Europe)(2)
—

 
255

Accrued interest expenses(3)
145

 
—

Accrued income taxes (See Note 19—Income Taxes)
153

 
75

Other(5)
483

 
262

Total
$
1,128

 
$
849


Other non-current liabilities consisted of the following:
 
September 30,
2016
 
September 30,
2015
 
(in millions)
Accrued income taxes (See Note 19—Income Taxes)(4)
$
911

 
$
752

Employee benefits
137

 
77

Other
114

 
68

Total
$
1,162

 
$
897

(1) 
Increase includes accrued operating expenses assumed from the Visa Europe acquisition.
(2) 
On June 21, 2016, the Company acquired 100% of the share capital of Visa Europe, effected by the Visa Europe board of directors' exercise of the amended Visa Europe put option. Therefore, the Visa Europe put option was contractually terminated as a result of the transaction. See Note 2—Acquisition of Visa Europe.
(3) 
Interest expenses accrued as at September 30, 2016 is related to the issuance of long-term debt in December 2015. See Note 9—Debt.
(4) 
The increase in non-current accrued income taxes is primarily related to the increase in liabilities for uncertain tax positions.
(5) 
Current year balance includes amounts assumed from the Visa Europe acquisition related to uncertainties around foreign non-income tax obligations. Prior year current deferred tax liabilities have been retroactively reclassed to non-current deferred tax liabilities on the consolidated balance sheets upon adoption of FASB issued ASU 2015-17. See Note 1—Summary of Significant Accounting Policies and Note 19—Income Taxes.
Debt
Debt
Note 9—Debt
The Company had outstanding debt as follows:
 
September 30, 2016
 
 
 
Principal Amount
 
Unamortized Discounts and Debt Issuance Costs
 
Carrying Amount
 
Effective Interest Rate
 
(in millions, except percentages)
1.20% Senior Notes due December 2017 (the "2017 Notes")
$
1,750

 
$
(4
)
 
$
1,746

 
1.37
%
2.20% Senior Notes due December 2020 (the "2020 Notes")
3,000

 
(12
)
 
2,988

 
2.30
%
2.80% Senior Notes due December 2022 (the "2022 Notes")
2,250

 
(12
)
 
2,238

 
2.89
%
3.15% Senior Notes due December 2025 (the "2025 Notes")
4,000

 
(36
)
 
3,964

 
3.26
%
4.15% Senior Notes due December 2035 (the "2035 Notes")
1,500

 
(15
)
 
1,485

 
4.23
%
4.30% Senior Notes due December 2045 (the "2045 Notes")
3,500

 
(39
)
 
3,461

 
4.37
%
Total long-term debt
$
16,000

 
$
(118
)
 
$
15,882

 
 

Senior Notes
In December 2015, the Company issued fixed-rate senior notes (the 2017 Notes, 2020 Notes, 2022 Notes, 2025 Notes, 2035 Notes and 2045 Notes, or collectively, the "Notes") in conjunction with the acquisition of Visa Europe, in an aggregate principal amount of $16.0 billion, with maturities ranging between 2 and 30 years. Interest on the Notes, at a rate ranging between 1.20% and 4.30%, is payable semi-annually on June 14 and December 14 of each year, commencing June 14, 2016. The Company recognized related interest expense of $399 million in fiscal 2016 as non-operating expense. The net aggregate proceeds from the issuance of the Notes, after deducting discounts and debt issuance costs, were $15.9 billion. The discounts and debt issuance costs are amortized over the respective term of each note using the effective interest method. The indenture governing the Notes contains customary event of default provisions. The Notes are senior unsecured obligations of the Company, ranking equally and ratably among themselves and with the Company's existing and future unsecured and unsubordinated debt. The Notes are not secured by any assets of the Company and are not guaranteed by any of the Company's subsidiaries. The Company was in compliance with all related covenants as of September 30, 2016.
Each series of the Notes may be redeemed as a whole or in part, at the Company’s option at any time, prior to, with respect to the 2017 Notes, their maturity date, and with respect to the 2020 Notes, the 2022 Notes, the 2025 Notes, the 2035 Notes and the 2045 Notes, the applicable par call date (as set forth in the table below), at a price equal to the greater of:
•
100% of the principal amount of such Notes; and
•
the sum of the present value of the remaining scheduled payments of principal and interest through the maturity or par call date for each of the Notes below at the treasury rate defined under the terms of the Notes, plus the applicable spread for such Notes (as set forth in the table below),
plus, in each case, accrued and unpaid interest to, but excluding, the date of redemption.
Series
 
Maturity/Par Call Date
 
Spread
2017 Notes
 
December 14, 2017
 
5 bps
2020 Notes
 
November 14, 2020
 
10 bps
2022 Notes
 
October 14, 2022
 
12.5 bps
2025 Notes
 
September 14, 2025
 
15 bps
2035 Notes
 
June 14, 2035
 
20 bps
2045 Notes
 
June 14, 2045
 
20 bps

On or after the applicable par call date, the Notes, except the 2017 Notes, may be redeemed as a whole or in part, at the Company’s option at any time, at a redemption price equal to 100% of the principal amount of the Notes being redeemed plus accrued interest.
Future principal payments on the Company's outstanding debt are as follows:
Fiscal Year
2017
 
2018
 
2019
 
2020
 
2021
 
Thereafter
 
Total
(in millions)
$
—

 
1,750

 
—

 
—

 
3,000

 
11,250

 
$
16,000


Commercial Paper Program
Visa maintains a commercial paper program to support its working capital requirements and for other general corporate purposes. Under the program, the Company is authorized to issue up to $3.0 billion in outstanding notes, with maturities up to 397 days from the date of issuance. The Company had no outstanding obligations under the program at September 30, 2016.
Credit Facility
On January 27, 2016, the Company, Visa International Service Association and Visa U.S.A. Inc., and subsequently, Visa Europe Limited and Visa Europe Services Inc. (collectively, the "Borrowers") entered into a 5-year, unsecured $4.0 billion revolving credit facility (the "Credit Facility") with Bank of America, N.A., as administrative agent and the lenders party thereto. JP Morgan Chase Bank, N.A., acted as syndication agent in connection with the Credit Facility; Bank of China, Los Angeles Branch, Barclays Bank PLC, Citibank, N.A., HSBC Bank USA, N.A., Royal Bank of Canada, Standard Chartered Bank, The Bank of Tokyo-Mitsubishi UFJ, Ltd., U.S. Bank National Association, Wells Fargo Bank National Association, Deutsche Bank Securities Inc. and Toronto Dominion (New York) LLC, acted as Documentation Agents; and J.P. Morgan Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Bank of China, Los Angeles Branch, Barclays Bank PLC, Citigroup Global Markets, Inc., HSBC Bank USA, N.A., RBC Capital Markets, Standard Chartered Bank, The Bank of Tokyo-Mitsubishi UFJ, Ltd., U.S. Bank National Association, Wells Fargo Securities, LLC, Deutsche Bank Securities Inc. and TD Securities (USA) LLC, acted as joint lead arrangers and joint book runners. The Credit Facility, which expires on January 27, 2021, replaced the Company's prior $3.0 billion credit facility, which expired on January 27, 2016.
The Credit Facility provides the Borrowers with a borrowing capacity of up to $4.0 billion. Borrowings under the Credit Facility are available for general corporate purposes. Interest on the borrowings under the Credit Facility would be charged at the London Interbank Offered Rate (LIBOR) or an alternative base rate, in each case plus applicable margins that fluctuate based on the applicable rating of senior unsecured long-term securities of the Company. The Borrowers have agreed to pay a commitment fee which will fluctuate based on such applicable rating of the Company.
Other material terms are:
•
a financial covenant which requires the Company to maintain a Consolidated Indebtedness to Consolidated EBITDA Ratio (as defined in the Credit Facility) of not greater than 3.75 to 1.00;
•
customary restrictive covenants, which limit the Borrowers' ability to, among other things, create certain liens, effect fundamental changes to their business, or merge or dispose substantially all of their assets, subject in each case to customary exceptions and amounts;
•
customary events of default, upon the occurrence of which, after any applicable grace period, the requisite lenders will have the ability to accelerate all outstanding loans thereunder and terminate the commitments; and
•
other customary and standard terms and conditions.
The Borrowers had no borrowings under the Credit Facility and the Company was in compliance with all related covenants as of and during the year ended September 30, 2016. The participating lenders in the Credit Facility include certain holders of the Company's class B and class C common stock and U.K.&I and Europe preferred stock, certain of the Borrowers' customers and their affiliates.
Pension, Postretirement and Other Benefits
Pension, Postretirement and Other Benefits
Note 10—Pension, Postretirement and Other Benefits
The Company sponsors various qualified and non-qualified defined benefit pension and other postretirement benefit plans that provide for retirement and medical benefits for substantially all employees residing in the United States. The Company also sponsors other pension benefit plans that provide benefits for internationally-based employees at certain non-U.S. locations. As a result of the acquisition of Visa Europe, the Company assumed the obligations related to Visa Europe's defined benefit plan, primarily consisting of the U.K. funded and unfunded pension plans.
Disclosures presented below include the U.S. pension plans and the non-U.S. plans, comprising only the Visa Europe plans. Disclosures relating to other non-U.S. pension benefit plans are not included as they are immaterial, individually and in aggregate. The Company uses a September 30 measurement date for its pension and other postretirement benefit plans.
Defined benefit pension plans. The U.S. pension benefits under the defined benefit pension plan are earned based on a cash balance formula. An employee’s cash balance account is credited with an amount equal to 6% of eligible compensation plus interest based on 30-year Treasury securities. In October 2015, the Company's board of directors approved an amendment of the U.S. qualified defined benefit pension plan such that the Company discontinued employer provided credits after December 31, 2015. Plan participants continue to earn interest credits on existing balances at the time of the freeze. As a result, a curtailment gain totaling $8 million was recognized in fiscal 2016 as part of the Company's net periodic benefit cost.  
The funding policy for the U.S. pension benefits is to contribute annually no less than the minimum required contribution under ERISA.
 Under the Visa Europe U.K. pension plans, presented below under "non-U.S. plans", retirement benefits are provided based on the participants' final pensionable pay and are currently closed to new entrants. However, future benefits continue to accrue for active participants. The funding policy is to contribute in accordance with the appropriate funding requirements agreed with the trustees of the U.K. pension plans. Additional amounts may be agreed with the U.K. pension plan trustees.
Postretirement benefits plan. The postretirement benefits plan provides medical benefits for retirees and dependents who meet minimum age and service requirements. Benefits are provided from retirement date until age 65. Retirees must contribute on a monthly basis for the same coverage that is generally available to active employees and their dependents. The Company’s contributions are funded on a current basis.
Summary of Plan Activities
Change in Benefit Obligation:
 
U.S. Plans
 
Non-U.S. Plans
 
Pension Benefits
 
Other
Postretirement  Benefits
 
Pension Benefits
 
September 30,
 
September 30,
 
September 30,
 
2016
 
2015
 
2016
 
2015
 
2016
 
(in millions)
Benefit obligation—beginning of fiscal year
$
1,005

 
$
983

 
$
18

 
$
20

 
$
—

Visa Europe acquisition
—

 
—

 
—

 
—

 
381

Service cost
13

 
47

 
—

 
—

 
1

Interest cost
40

 
40

 
1

 
1

 
3

Actuarial loss (gain)
86

 
40

 
(2
)
 
—

 
86

Benefit payments
(64
)
 
(105
)
 
(3
)
 
(3
)
 
(1
)
Plan amendment
(8
)
 
—

 
—

 
—

 
—

Foreign currency exchange rate changes
—

 
—

 
—

 
—

 
4

Benefit obligation—end of fiscal year
$
1,072

 
$
1,005

 
$
14

 
$
18

 
$
474

Accumulated benefit obligation
$
1,072

 
$
994

 
NA

 
NA

 
$
474

Change in Plan Assets:
 
 
 
 
 
 
 
 
 
Fair value of plan assets—beginning of fiscal year
$
1,022

 
$
1,117

 
$
—

 
$
—

 
$
—

Visa Europe acquisition
—

 
—

 
—

 
—

 
287

Actual return on plan assets
118

 
(6
)
 
—

 
—

 
25

Company contribution
1

 
16

 
3

 
3

 
102

Benefit payments
(64
)
 
(105
)
 
(3
)
 
(3
)
 
(1
)
Foreign currency exchange rate changes
—

 
—

 
—

 
—

 
2

Fair value of plan assets—end of fiscal year
$
1,077

 
$
1,022

 
$
—

 
$
—

 
$
415

Funded status at end of fiscal year
$
5

 
$
17

 
$
(14
)
 
$
(18
)
 
$
(59
)
Recognized in Consolidated Balance Sheets:
 
 
 
 
 
 
 
 
 
Non-current asset
$
22

 
$
36

 
$
—

 
$
—

 
$
—

Current liability
(9
)
 
(9
)
 
(3
)
 
(3
)
 
(6
)
Non-current liability
(8
)
 
(10
)
 
(11
)
 
(15
)
 
(53
)
Funded status at end of fiscal year
$
5

 
$
17

 
$
(14
)
 
$
(18
)
 
$
(59
)
 
 
 
 
 
 
 
 
 
 

Amounts recognized in accumulated other comprehensive income before tax: 
 
U.S. Plans
 
Non-U.S. Plans
 
Pension Benefits
 
Other
Postretirement Benefits
 
Pension Benefits
September 30,
 
September 30,
 
September 30
 
2016
 
2015
 
2016
 
2015
 
2016
 
(in millions)
Net actuarial loss (gain)
$
241

 
$
232

 
$
(5
)
 
$
(5
)
 
$
66

Prior service credit
—

 
(9
)
 
(2
)
 
(5
)
 
—

Total
$
241

 
$
223

 
$
(7
)
 
$
(10
)
 
$
66


Amounts from accumulated other comprehensive income to be amortized into net periodic benefit cost in fiscal 2017: 
 
U.S. Plans
 
Non-U.S. Plans
 
Pension Benefits
 
Other
Postretirement
 Benefits
 
Pension Benefits
 
(in millions)
Actuarial loss (gain)
$
15

 
$
(1
)
 
$
2

Prior service credit
—

 
(2
)
 
—

Total
$
15

 
$
(3
)
 
$
2


Benefit obligations in excess of plan assets related to the Company's U.S. non-qualified plan and the non-U.S. pension plans:
 
U.S. Plans
 
Non-U.S. Plans
September 30,
 
September 30,
 
2016
 
2015
 
2016
 
(in millions)
Accumulated benefit obligation in excess of plan assets
 
 
 
 
 
Accumulated benefit obligation—end of year
$
(16
)
 
$
(19
)
 
$
(474
)
Fair value of plan assets—end of year
$
—

 
$
—

 
$
415

Projected benefit obligation in excess of plan assets
 
 
 
 
 
Benefit obligation—end of year
$
(16
)
 
$
(19
)
 
$
474

Fair value of plan assets—end of year
$
—

 
$
—

 
$
415


Net periodic pension and other postretirement plan cost:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Plans
 
Non-U.S. Plans(1)
 
Pension Benefits
 
Other
Postretirement Benefits
 
Pension Benefits
 
Fiscal
 
2016
 
2015
 
2014
 
2016
 
2015
 
2014
 
2016
 
(in millions)
Service cost
$
13

 
$
47

 
$
46

 
$
—

 
$
—

 
$
—

 
$
1

Interest cost
40

 
40

 
42

 
1

 
1

 
1

 
3

Expected return on assets
(69
)
 
(72
)
 
(68
)
 
—

 
—

 
—

 
(4
)
Amortization of:
 
 
 
 
 
 
 
 
 
 
 
 
 
Prior service credit
(1
)
 
(7
)
 
(8
)
 
(3
)
 
(3
)
 
(3
)
 
—

Actuarial loss (gain)
7

 
1

 
1

 
(2
)
 
(2
)
 
(1
)
 
—

Net benefit cost
$
(10
)
 
$
9

 
$
13

 
$
(4
)
 
$
(4
)
 
$
(3
)
 
$
—

Curtailment gain
(8
)
 
—

 
(3
)
 
—

 
—

 
—

 
—

Settlement loss
13

 
7

 
3

 
—

 
—

 
—

 
—

Total net periodic benefit cost
$
(5
)
 
$
16

 
$
13

 
$
(4
)
 
$
(4
)
 
$
(3
)
 
$
—

 
(1) Represents Visa Europe's U.K. pension plans' net pension benefit cost recognized from the Closing through September 30, 2016.
Other changes in plan assets and benefit obligations recognized in other comprehensive income: 
 
U.S. Plans
 
Non-U.S. Plans
 
Pension Benefits
 
Other Postretirement Benefits
 
Pension Benefits
2016
 
2015
 
2016
 
2015
 
2016
 
(in millions)
Current year actuarial loss (gain)
$
30

 
$
119

 
$
(2
)
 
$
—

 
$
66

Amortization of actuarial (loss) gain
(20
)
 
(8
)
 
2

 
2

 
—

Current year prior service credit
—

 
—

 
—

 
—

 
—

Amortization of prior service credit
9

 
7

 
3

 
3

 
—

Total recognized in other comprehensive income
$
19

 
$
118

 
$
3

 
$
5

 
$
66

Total recognized in net periodic benefit cost and other comprehensive income
$
14

 
$
134

 
$
(1
)
 
$
1

 
$
66


Weighted Average Actuarial Assumptions:
 
U.S. Plans
 
Non-U.S. Plans
 
Fiscal
 
2016
 
2015
 
2014
 
2016
Discount rate for benefit obligation:(1)
 
 
 
 
 
 
 
Pension
3.62
%
 
4.33
%
 
4.27
%
 
2.40
%
Postretirement
1.91
%
 
2.43
%
 
2.59
%
 
NA

Discount rate for net periodic benefit cost:
 
 
 
 
 
 
 
Pension
4.33
%
 
4.27
%
 
4.81
%
 
3.10
%
Postretirement
2.43
%
 
2.59
%
 
2.76
%
 
NA

Expected long-term rate of return on plan assets(2)
7.00
%
 
7.00
%
 
7.00
%
 
3.92
%
Rate of increase in compensation levels for:(3)
 
 
 
 
 
 
 
Benefit obligation
NA

 
4.00
%
 
4.00
%
 
3.20
%
Net periodic benefit cost
NA

 
4.00
%
 
4.50
%
 
3.00
%
(1) 
Represents a single weighted-average discount rate derived based on a cash flow matching analysis, with the projected benefit payments matching spot rates from a yield curve developed from high-quality corporate bonds.
(2) 
Primarily based on the targeted allocation, and evaluated for reasonableness by considering such factors as: (i) actual return on plan assets; (ii) historical rates of return on various asset classes in the portfolio; (iii) projections of returns on various asset classes; and (iv) current and prospective capital market conditions and economic forecasts.
(3) 
This assumption is not applicable for to the U.S. plans in fiscal 2016 due to the amendment of the U.S. qualified defined benefit pension plan in October 2015, which discontinued the employer provided credits effective after December 31, 2015.
The assumed annual rate of future increases in health benefits for the other postretirement benefits plan is 8% for fiscal 2017. The rate is assumed to decrease to 5% by 2021 and remain at that level thereafter. These trend rates reflect management’s expectations of future rates. Increasing or decreasing the healthcare cost trend by 1% would change the postretirement plan benefit obligation by less than $1 million.
Pension Plan Assets
Pension plan assets are managed with a long-term perspective to ensure that there is an adequate level of assets to support benefit payments to participants over the life of the pension plan. Pension plan assets are managed by external investment managers. Investment manager performance is measured against benchmarks for each asset class on a quarterly basis. An independent consultant assists management with investment manager selections and performance evaluations.
Pension plan assets are broadly diversified to maintain a prudent level of risk and to provide adequate liquidity for benefit payments. The Company generally evaluates and rebalances the pension plan assets, as appropriate, to ensure that allocations are consistent with target allocation ranges. The weighted average targeted allocation for U.S. pension plan assets is as follows: equity securities of 50% to 80%, fixed income securities of 25% to 35% and other, primarily consisting of cash equivalents to meet near term expected benefit payments and expenses, of up to 7%. At September 30, 2016, U.S. pension plan asset allocations for these categories were 62%, 34% and 4%, respectively, which were within target allocation ranges.
The weighted average targeted allocation for non-U.S. pension plans is as follows: equity securities of 40%, fixed income securities of 20% and other of 40%, consisting of cash, multi-asset funds, and property. At September 30, 2016, non-U.S. pension plan asset allocations for these categories were 28%, 22% and 50%, respectively. The actual allocated percentage to other category exceeding the target is attributed to the $102 million cash contribution made in September 2016.
The following table sets forth by level, within the fair value hierarchy, the pension plan’s investments at fair value as of September 30, 2016 and 2015, including the impact of transactions that were not settled at the end of September:
 
U.S. Plans
 
Fair Value Measurements at September 30,
 
Level 1
 
Level 2
 
Level 3
 
Total
 
2016
 
2015
 
2016
 
2015
 
2016
 
2015
 
2016
 
2015
 
(in millions)
Cash equivalents
$
39

 
$
11

 
 
 
 
 
 
 
 
 
$
39

 
$
11

Corporate debt securities
 
 
 
 
$
185

 
$
169

 
 
 
 
 
185

 
169

U.S. government-sponsored debt securities
 
 
 
 
30

 
66

 
 
 
 
 
30

 
66

U.S. Treasury securities
100

 
74

 
 
 
 
 
 
 
 
 
100

 
74

Asset-backed securities
 
 
 
 
 
 
 
 
$
51

 
$
31

 
51

 
31

Equity securities
672

 
671

 
 
 
 
 
 
 
 
 
672

 
671

Total
$
811

 
$
756

 
$
215

 
$
235

 
$
51

 
$
31

 
$
1,077

 
$
1,022


 
Non-U.S. Plans
 
Fair Value Measurements at September 30, 2016
 
Level 1
 
Level 2
 
Level 3
 
Total
 
(in millions)
Cash equivalents
$
105

 
 
 
 
 
$
105

Corporate debt securities
 
 
$
39

 
 
 
39

U.K. Treasury securities
52

 
 
 
 
 
52

Asset-backed securities
 
 
 
 
$
29

 
29

Equity securities
116

 
 
 
 
 
116

Multi-asset securities (1)
 
 
74

 
 
 
74

Total
$
273

 
$
113

 
$
29

 
$
415

(1) 
Multi-asset securities represents pension plan assets that are invested in funds comprised of broad ranges of assets.
Level 1 assets. Cash equivalents (money market funds, time deposits and treasury bills), U.S. and U.K. Treasury securities and equity securities are classified as Level 1 within the fair value hierarchy, as fair value is based on quoted prices in active markets.
Level 2 assets. The fair values of U.S. government-sponsored, corporate debt and multi-asset securities are based on quoted prices in active markets for similar assets as provided by third-party pricing vendors. This pricing data is reviewed internally for reasonableness through comparisons with benchmark quotes from independent third-party sources. Based on this review, the valuation is confirmed or revised accordingly.
Level 3 assets. Asset-backed securities are bonds that are backed by various types of assets and primarily consist of mortgage-backed securities. Asset-backed securities are classified as Level 3 due to a lack of observable inputs in measuring fair value.
There were no transfers between Level 1 and Level 2 assets during fiscal 2016 or 2015. A separate roll-forward of Level 3 plan assets measured at fair value is not presented because activities during fiscal 2016 and 2015 were immaterial.
Cash Flows
 
U.S. Plans
 
Non-U.S. Plans
 
Pension
Benefits
 
Other
Postretirement
Benefits
 
 Pension Benefits
Actual employer contributions
(in millions)
2016
$
1

 
$
3

 
$
102

2015
$
16

 
$
3

 
$
—

Expected employer contributions
 
 
 
 
 
2017
$
9

 
$
3

 
$
6

Expected benefit payments
 
 
 
 
 
2017
$
165

 
$
3

 
$
4

2018
$
88

 
$
3

 
$
4

2019
$
85

 
$
2

 
$
5

2020
$
84

 
$
2

 
$
5

2021
$
81

 
$
2

 
$
5

2022-2026
$
350

 
$
2

 
$
27


Other Benefits
The Company sponsors a defined contribution plan, or 401(k) plan, that covers substantially all of its employees residing in the United States. Personnel costs included $55 million, $49 million and $46 million in fiscal 2016, 2015 and 2014, respectively, for expenses attributable to the Company’s employees under the 401(k) plan. The Company’s contributions to this 401(k) plan are funded on a current basis, and the related expenses are recognized in the period that the payroll expenses are incurred.
Settlement Guarantee Management
Settlement Guarantee Management
Note 11—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 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. Settlement at risk, or exposure, is estimated based on the sum of the following inputs: (1) average daily volumes during the quarter multiplied by the estimated number of days to settle plus a safety margin; (2) four months of rolling average chargebacks volume; and (3) the total balance for outstanding Visa Travelers Cheques.
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's settlement exposure is limited to the amount of unsettled Visa payment transactions at any point in time. The Company's estimated maximum settlement exposure was $67.8 billion for the period ended September 30, 2016, including Visa Europe, compared to $43.5 billion for the period ended September 30, 2015, which excludes Visa Europe. The increase in the Company's estimated maximum settlement exposure for the period ended September 30, 2016 is due to the Visa Europe acquisition. Of these amounts, $2.9 billion and $2.2 billion at September 30, 2016 and 2015, respectively, were covered by collateral. The total available collateral balances presented below were greater than the settlement exposure covered by customer collateral held due to instances in which the available collateral exceeded the total settlement exposure for certain financial institutions at each date presented.
The Company maintained collateral as follows:
 
September 30,
2016
 
September 30,
2015
 
(in millions)
Cash equivalents
$
1,295

 
$
1,023

Pledged securities at market value
170

 
154

Letters of credit
1,311

 
1,178

Guarantees
1,418

 
971

Total
$
4,194

 
$
3,326

 
The balances above included collateral held by Visa Europe as follows:
 
September 30,
2016
 
(in millions)
Cash equivalents(1)
$
294

Pledged securities at market value
—

Letters of credit
144

Guarantees
375

Total
$
813

(1) 
Cash collateral held by Visa Europe is not included on the Company's consolidated balance sheet as its clients retain beneficial ownership and the cash is only accessible to the Company in the event of default by the client on its settlement obligations.
Cash equivalents collateral, excluding cash collateral held by Visa Europe, is reflected in customer collateral on the consolidated balance sheets as it is held in escrow in the Company's name. All other collateral is excluded from the consolidated balance sheets. Pledged securities are held by third parties in trust for the Company and clients. Letters of credit are provided primarily by client financial institutions to serve as irrevocable guarantees of payment. Guarantees are provided primarily by parent financial institutions to secure the obligations of their subsidiaries. The Company routinely evaluates the financial viability of institutions providing the guarantees.
The fair value of the settlement risk guarantee is estimated using a proprietary model which considers statistically derived loss factors based on historical experience, estimated settlement exposures at period end and a standardized grading process for clients (using, where available, third-party estimates of the probability of customer failure). Historically, the Company experienced minimal losses, which has contributed to an estimated probability-weighted value of the guarantee of approximately $2 million and $1 million at September 30, 2016 and 2015, respectively. These amounts were reflected in accrued liabilities on the consolidated balance sheets.
Derivative Financial Instruments
Derivative Financial Instruments
Note 12—Derivative and Non-derivative Financial Instruments
Derivative Financial Instruments
Designated derivative financial instrument hedges. The Company maintains a rolling cash flow hedge program with the objective of reducing foreign currency exchange rate risk from forecasted net exposures of revenues and expenses derived from and payments made in non-functional currencies during the following twelve months. The aggregate notional amount of the Company's derivative contracts outstanding in its hedge program was $1.6 billion at September 30, 2016 and $1.2 billion at September 30, 2015. The increase in the aggregate notional amounts of the Company's derivative contracts includes the addition of $189 million notional of derivative contracts entered into for Visa Europe after the Closing. As of September 30, 2016, the Company’s cash flow hedges in an asset position totaled $17 million and were classified in prepaid expenses and other current assets on the consolidated balance sheet, while cash flow hedges in a liability position totaled $78 million and were classified in accrued liabilities on the consolidated balance sheet. These amounts are subject to master netting agreements, which provide the Company with a legal right to net settle multiple payable and receivable positions with the same counterparty, in a single currency through a single payment. However, the Company presents fair values on a gross basis on the consolidated balance sheets. See Note 1—Summary of Significant Accounting Policies.
To qualify for cash flow hedge accounting treatment, the Company formally documents, at inception of the hedge, all relationships between the hedging transactions and the hedged items, as well as the Company's risk management objective and strategy for undertaking various hedge transactions. The Company also formally assesses whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in the cash flows of the hedged items and whether those derivatives may be expected to remain highly effective in future periods.
The Company uses regression analysis to assess hedge effectiveness prospectively and retrospectively. The effectiveness tests are performed on the foreign exchange forward contracts based on changes in the spot rate of the derivative instrument compared to changes in the spot rate of the forecasted hedged transaction. Forward points are excluded for effectiveness testing and measurement purposes. The excluded forward points are reported in earnings. For fiscal 2016, 2015 and 2014, the amounts by which earnings were reduced relating to excluded forward points were $30 million, $29 million and $27 million, respectively.
The effective portion of changes in the fair value of derivative contracts is recorded as a component of accumulated other comprehensive income or loss on the consolidated balance sheets. When the forecasted transaction occurs and is recognized in earnings, the amount in accumulated other comprehensive income or loss related to that hedge is reclassified to operating revenue or expense. The Company expects to reclassify $58 million of pre-tax losses to earnings during fiscal 2017.
Non-designated derivative financial instrument hedges. The Company entered into currency forward contracts during the second and third quarters of fiscal 2016 to mitigate a portion of the foreign currency exchange rate risk associated with the upfront cash consideration paid in the Visa Europe acquisition with additional offsetting currency forward contracts entered into subsequently to eliminate its risk-mitigation positions. All contracts matured during the third and fourth quarters of fiscal 2016. As these contracts were not designated in hedging relationships, related gains and losses were recorded directly in earnings as part of non-operating income in the consolidated financial statements. The Company recorded net gains of $74 million related to these contracts in fiscal 2016.
Subsequent to the acquisition of Visa Europe, the Company entered into currency forward contracts to offset Visa Europe hedges outstanding at the date of the acquisition that did not qualify for cash flow hedge accounting treatment in accordance with U.S. GAAP or the Company’s accounting policy. The fair values of both the original currency forward contracts and the offsetting hedges are classified in prepaid expenses and other current assets, non-current other assets, accrued liabilities and non-current other liabilities on the consolidated balance sheet.
The Company utilizes foreign exchange derivative contracts to hedge against foreign currency exchange rate fluctuations related to certain monetary assets and liabilities denominated in foreign currency held by Visa Europe. As of September 30, 2016, the aggregate notional amount of these balance sheet hedges was $1.1 billion. The Company did not have any balance sheet hedges outstanding at September 30, 2015. Gains and losses on the derivative contracts partially offset gains and losses on the hedged monetary assets and liabilities denominated in foreign currency. These amounts are recorded in general and administrative in the Company's consolidated statement of operations as these instruments are not designated for hedge accounting.
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 except for derivative instruments entered into by Visa Europe, such agreements require each party to post collateral against its net liability position with the respective counterparty. As of September 30, 2016, the Company has received collateral of $8 million from counterparties, which is included in accrued liabilities in the consolidated balance sheet, and posted collateral of $54 million, which is included in other assets in the consolidated balance sheet. 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. Credit and market risks related to derivative instruments were not considered significant at September 30, 2016.
Additional disclosures that demonstrate how derivative instruments and related hedged items affect an entity's financial position, financial performance and cash flows have not been presented because the impact of derivative instruments is immaterial to the overall consolidated financial statements.
Non-derivative Financial Instrument Designated as a Net Investment Hedge
The Company designated the euro-denominated deferred cash consideration liability of $1.2 billion (see Note 2—Acquisition of Visa Europe), a non-derivative financial instrument, as a hedge against a portion of the foreign currency exchange rate exposure of the Company's euro-denominated net investment of $18.8 billion in Visa Europe. Changes in the value of the deferred cash consideration liability, attributable to the change in exchange rates at the end of each reporting period, partially offset the foreign currency translation of the Company's net investment recorded in accumulated other comprehensive income in the Company's consolidated balance sheet. Changes in the euro exchange rate against the U.S. dollar from the acquisition date of June 21, 2016 to the balance sheet date of September 30, 2016 resulted in net foreign currency translation adjustments of $218 million.
Enterprise-wide Disclosures and Concentration of Business
Enterprise-wide Disclosures and Concentration of Business
Note 13—Enterprise-wide Disclosures and Concentration of Business
The Company’s long-lived net property, equipment and technology assets are classified by major geographic areas as follows:
 
September 30,
2016
 
September 30,
2015
 
(in millions)
United States
$
1,827

 
$
1,806

International
323

 
82

Total
$
2,150

 
$
1,888

 
Revenue by geographic market is primarily based on the location of the issuing financial institution. Revenues earned in the United States were approximately 52% of net operating revenues in fiscal 2016, 53% in fiscal 2015 and 54% in fiscal 2014. No individual country, other than the United States, generated more than 10% of net operating revenues in these years.
A significant portion of Visa’s operating revenues is concentrated among its largest clients. Loss of business from any of these clients could have an adverse effect on the Company. The Company did not have any customer that generated greater than 10% of its net operating revenues in fiscal 2016, 2015 or 2014.
Stockholders' Equity
Stockholders' Equity
Note 14—Stockholders' Equity
Visa Europe acquisition. In connection with the Visa Europe acquisition, three new series of preferred stock of the Company were created. Upon issuance, all of the preferred stock participate on an as-converted basis in regular quarterly cash dividends declared on the Company's class A common stock. Additionally, Visa Europe holds shares of Visa Inc.'s class C common stock, which were treated as treasury stock in purchase accounting. See Note 2—Acquisition of Visa Europe.
Class A common stock split. In January 2015, Visa’s board of directors declared a four-for-one split of its class A common stock. Each class A common stockholder as of the record date received a dividend of three additional shares for every share held as of the record date. Holders of class B and C common stock did not receive a stock dividend. Instead, the conversion rate for class B common stock increased to 1.6483 shares of class A common stock per share of class B common stock, and the conversion rate for class C common stock increased to 4.0 shares of class A common stock per share of class C common stock. Immediately following the split, the class A, B and C stockholders retained the same relative ownership percentages that they had prior to the stock split. All per share amounts and number of shares outstanding in these consolidated financial statements and accompanying notes are presented on a post-split basis. As a result of the stock split, all historical per share data and number of shares outstanding presented have been retroactively adjusted.
As-converted class A common stock. The U.K.&I and Europe preferred stock, issued in the Visa Europe acquisition, is convertible upon certain conditions into shares of class A common stock or class A equivalent preferred stock, at an initial conversion rate of 13.952 shares of class A common stock for each share of U.K.&I preferred stock and Europe preferred stock. The conversion rates may be reduced from time to time to offset certain liabilities. See Note 2—Acquisition of Visa Europe and Note 3—U.S. and Europe Retrospective Responsibility Plans.
The number of shares of each series and class and the number of shares of class A common stock on an as-converted basis at September 30, 2016, are as follows:
(in millions, except conversion rate)
Shares
Outstanding
 
Conversion Rate Into Class A Common Stock
 
As-converted Class A Common Stock (1)
U.K.&I preferred stock
2

 
13.9520

 
35

Europe preferred stock
3

 
13.9520

 
44

Class A common stock (2)
1,871

 
—

 
1,871

Class B common stock
245

 
1.6483

(3) 
405

Class C common stock
17

 
4.0000

 
67

Total
 
 
 
 
2,422


(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) 
Class A common stock shares outstanding reflect repurchases settled on or before September 30, 2016. The Company repurchased an additional 1 million shares at the end of September, which did not settle until October 2016.
(3) 
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.
Common stock repurchases. The following table presents share repurchases in the open market during the following fiscal years:
(in millions, except per share data)
2016 (1)
 
2015
Shares repurchased in the open market(2)
91

 
44

Average repurchase price per share(3)
$
77.05

 
$
65.98

Total cost
$
6,987

 
$
2,910


(1) 
Shares repurchased in the open market reflect repurchases settled on or before September 30, 2016. The Company repurchased an additional 1 million shares for $120 million at the end of September, which did not settle until October 2016.
(2) 
All shares repurchased in the open market have been retired and constitute authorized but unissued shares.
(3) 
Figures in the table may not recalculate exactly due to rounding. Average repurchase price per share is calculated based on unrounded numbers.
The Company's board of directors authorized share repurchase programs in October 2015 and July 2016 at $5.0 billion each. As of September 30, 2016, the programs had remaining authorized funds of $5.8 billion. All share repurchase programs authorized prior to October 2015 have been completed.
Visa Europe held approximately 550,000 shares of the Company's class C common stock valued at $170 million at the Closing, which was recorded as treasury stock at the time of the acquisition.
Class B common stock. The class B common stock is not convertible or transferable until the date on which all of the U.S. covered litigation has been finally resolved. This transfer restriction is subject to limited exceptions, including transfers to other holders of class B common stock. After termination of the restrictions, the class B common stock will be convertible into class A common stock if transferred to a person that was not a Visa Member (as defined in the current certificate of incorporation) or similar person or an affiliate of a Visa Member or similar person. Upon such transfer, each share of class B common stock will automatically convert into a number of shares of class A common stock based upon the applicable conversion rate in effect at the time of such transfer.
Adjustment of the conversion rate occurs upon: (i) the completion of any follow-on offering of class A common stock completed to increase the size of the U.S. litigation escrow account (or any cash deposit by the Company in lieu thereof) resulting in a further corresponding decrease in the conversion rate; or (ii) the final resolution of the U.S. covered litigation and the release of funds remaining on deposit in the U.S. litigation escrow account to the Company resulting in a corresponding increase in the conversion rate. There were no deposits into the U.S. litigation escrow account in fiscal 2016 or 2015. See Note 3—U.S. and Europe Retrospective Responsibility Plans.
Class C common stock. As of September 30, 2016, all of the shares of class C common stock have been released from transfer restrictions. A total of 134 million shares have been converted from class C to class A common stock upon their sale into the public market and approximately 550,000 shares held by Visa Europe were recorded as treasury stock at the time of the acquisition.
Preferred stock. Preferred stock may be issued as redeemable or non-redeemable, and has preference over any class of common stock with respect to the payment of dividends and distribution of the Company’s assets in the event of a liquidation or dissolution. The Company had 5 million shares of U.K.&I and Europe preferred stock outstanding at the end of fiscal 2016 and no shares of preferred stock outstanding at the end of fiscal 2015. The shares of U.K.&I and Europe preferred stock are subject to restrictions on transfer and may become convertible in stages based on developments in the VE territory covered litigation. See Note 2—Acquisition of Visa Europe.
Voting rights. The holders of the U.K.&I and Europe preferred stock have no right to vote on any matters, except for certain defined matters, including, in specified circumstances, any consolidation, merger, combination or similar transaction of the Company in which the preferred stockholders would either (i) receive shares of common stock or other equity securities of the Company with preferences, rights and privileges that are not substantially identical to the preferences, rights and privileges of the applicable series of preferred stock or (ii) receive securities, cash or other property that is different from what our class A common stockholders would receive. With respect to these limited matters on which the holders of preferred stock may vote, approval by the preferred stockholders requires the affirmative vote of the outstanding voting power of each such series of preferred stock, each such series voting as a single class. In either case, the U.K.&I and Europe preferred stockholders are entitled to cast a number of votes equal to the number of shares held by each such holder.
Class A common stockholders have the right to vote on all matters on which stockholders generally are entitled to vote. Class B and C common stockholders have no right to vote on any matters, except for certain defined matters, including (i) any decision to exit the core payments business, in which case the class B and C common stockholders will vote together with the class A common stockholders in a single class, and (ii) in specified circumstances, any consolidation, merger, combination or similar transaction of the Company, in which case the class B and C common stockholders will vote together as a single class. In either case, the class B and C common stockholders are entitled to cast a number of votes equal to the number of shares of class B or C common stock held multiplied by the applicable conversion rate in effect on the record date. Holders of the Company's common stock have no right to vote on any amendment to the current certificate of incorporation that relates solely to any series of preferred stock.
Dividends declared. The Company declared and paid $1.4 billion in dividends in fiscal 2016 at a quarterly rate of $0.14 per share. In October 2016, the Company’s board of directors declared a quarterly cash dividend of $0.165 per share of class A common stock (determined in the case of class B and C common stock and U.K.&I and Europe preferred stock on an as-converted basis), which will be paid on December 6, 2016, to all holders of record of the Company’s common and preferred stock as of November 18, 2016.
Earnings Per Share
Earnings Per Share
Note 15—Earnings Per Share
Basic earnings per share is computed by dividing net income available to each class by the weighted-average number of shares of common stock outstanding and participating securities during the period. 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 of each class of common stock outstanding reflects changes in ownership over the periods presented. See Note 14—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 U.K.&I and Europe 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 Employee Stock Purchase Plan and the assumed vesting of unearned performance shares.
The following table presents earnings per share for fiscal 2016.(1) 
 
Basic Earnings Per Share
 
 
Diluted Earnings Per Share
 
(in millions, except per share data)
 
Income
Allocation
(A) (2)
 
Weighted-
Average
Shares
Outstanding (B)
 
Earnings per
Share =
(A)/(B)
 
 
Income
Allocation
(A) (2)
 
Weighted-
Average
Shares
Outstanding (B)
 
Earnings per
Share =
(A)/(B)
Class A common stock
$
4,738

 
1,906

 
$
2.49

 
 
$
5,991

 
2,414

(3) 
$
2.48

Class B common stock
1,006

 
245

 
$
4.10

 
 
$
1,004

 
245

 
$
4.09

Class C common stock
185

 
19

 
$
9.94

 
 
$
185

 
19

 
$
9.93

Participating securities(4)
62

 
Not presented

 
Not presented

 
 
$
61

 
Not presented

 
Not presented

Net income
$
5,991

 
 
 
 
 
 
 
 
 
 
 
The following table presents earnings per share for fiscal 2015.(1) 
 
Basic Earnings Per Share
 
 
Diluted Earnings Per Share
 
(in millions, except per share data)
 
Income
Allocation
(A) (2)
 
Weighted-
Average
Shares
Outstanding (B)
 
Earnings per
Share =
(A)/(B)
 
 
Income
Allocation
(A) (2)
 
Weighted-
Average
Shares
Outstanding (B)
 
Earnings per
Share =
(A)/(B)
Class A common stock
$
5,044

 
1,954

 
$
2.58

 
 
$
6,328

 
2,457

(3) 
$
2.58

Class B common stock
1,045

 
245

 
$
4.26

 
 
$
1,042

 
245

 
$
4.25

Class C common stock
224

 
22

 
$
10.33

 
 
$
223

 
22

 
$
10.30

Participating securities(4)
15

 
Not presented

 
Not presented

 
 
$
15

 
Not presented

 
Not presented

Net income
$
6,328

 
 
 
 
 
 
 
 
 
 
 
The following table presents earnings per share for fiscal 2014.(1) 
 
Basic Earnings Per Share
 
 
Diluted Earnings Per Share
 
(in millions, except per share data)
 
Income
Allocation
(A) (2)
 
Weighted-
Average
Shares
Outstanding (B)
 
Earnings per
Share =
(A)/(B)
 
 
Income
Allocation
(A) (2)
 
Weighted-
Average
Shares
Outstanding (B)
 
Earnings per
Share =
(A)/(B)
Class A common stock
$
4,307

 
1,993

 
$
2.16

 
 
$
5,438

 
2,523

(3) 
$
2.16

Class B common stock
892

 
245

 
$
3.63

 
 
$
890

 
245

 
$
3.62

Class C common stock
222

 
26

 
$
8.65

 
 
$
221

 
26

 
$
8.62

Participating securities(4)
17

 
Not presented

 
Not presented

 
 
$
16

 
Not presented

 
Not presented

Net income
$
5,438

 
 
 
 
 
 
 
 
 
 
 

(1)
Figures in the table may not recalculate exactly due to rounding. Earnings per share is calculated based on unrounded numbers. The number of shares and per share amounts for the prior periods presented have been retroactively adjusted to reflect the four-for-one stock split effected in the fiscal second quarter of 2015. See Note 14—Stockholders' Equity.
(2)
Net income attributable to Visa Inc. 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 were 405 million for fiscal 2016 and 2015 and 413 million for fiscal 2014. The weighted-average number of shares of as-converted class C common stock used in the income allocation was 75 million, 87 million and 103 million for fiscal 2016, 2015 and 2014, respectively.
(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 computation includes 5 million, 6 million and 7 million common stock equivalents for fiscal 2016, 2015 and 2014, respectively, because their effect would have been dilutive. The computation excludes 2 million of common stock equivalents for fiscal 2016, 2015 and 2014 because their effect would have been anti-dilutive.
(4) 
Participating securities include preferred stock outstanding and unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents, such as the Company's U.K.&I and Europe preferred stock, restricted stock awards, restricted stock units and earned performance-based shares. U.K.&I and Europe preferred stock were issued as part of the purchase price consideration in connection with the Visa Europe acquisition and are convertible into a number of shares of class A common stock or class A equivalent preferred stock upon certain conditions. Participating securities' income is allocated based on the weighted-average number of shares of as-converted stock. See Note 2—Acquisition of Visa Europe and Note 14—Stockholders' Equity.
Share-based Compensation
Share-based Compensation
Note 16—Share-based Compensation
2007 Equity Incentive Compensation Plan
The Company’s 2007 Equity Incentive Compensation Plan, or the EIP, authorizes the compensation committee of the board of directors to grant non-qualified stock options ("options"), restricted stock awards ("RSAs"), restricted stock units ("RSUs") and performance-based shares to its employees and non-employee directors, for up to 236 million shares of class A common stock. Shares available for award may be either authorized and unissued or previously issued shares subsequently acquired by the Company. The EIP will continue to be in effect until all of the common stock available under the EIP is delivered and all restrictions on those shares have lapsed, unless the EIP is terminated earlier by the Company’s board of directors. In January 2016, the Company's board of directors approved an amendment of the EIP effective February 3, 2016, such that awards may be granted under the plan until January 31, 2022.
Share-based compensation cost is recorded net of estimated forfeitures on a straight-line basis for awards with service conditions only, and on a graded-vesting basis for awards with service, performance and market conditions. The Company’s estimated forfeiture rate is based on an evaluation of historical, actual and trended forfeiture data. For fiscal 2016, 2015 and 2014, the Company recorded share-based compensation cost related to the EIP of $211 million, $184 million and $172 million, respectively, in personnel on its consolidated statements of operations. The related tax benefits were $62 million, $54 million and $51 million for fiscal 2016, 2015 and 2014, respectively. The amount of capitalized share-based compensation cost was immaterial during fiscal 2016, 2015 and 2014.
All per share amounts and number of shares outstanding presented below reflect the four-for-one stock split that was effected in the second quarter of fiscal 2015. See Note 14—Stockholders' Equity.
Options
Options issued under the EIP expire 10 years from the date of grant and primarily vest ratably over 3 years from the date of grant, subject to earlier vesting in full under certain conditions.
During fiscal 2016, 2015 and 2014, the fair value of each stock option was estimated on the date of grant using a Black-Scholes option pricing model with the following weighted-average assumptions:
 
 
2016
 
2015
 
2014
Expected term (in years)(1)
 
4.35

 
4.55

 
4.80

Risk-free rate of return(2)
 
1.5
%
 
1.5
%
 
1.3
%
Expected volatility(3)
 
21.7
%
 
22.0
%
 
25.2
%
Expected dividend yield(4)
 
0.7
%
 
0.8
%
 
0.8
%
Fair value per option granted
 
$
15.01

 
$
12.04

 
$
11.03


(1) 
This assumption is based on the Company's historical option exercises and those of a set of peer companies that management believes is generally comparable to Visa. The Company's data is weighted based on the number of years between the measurement date and Visa's initial public offering as a percentage of the options' contractual term. The relative weighting placed on Visa's data and peer data in fiscal 2016 was approximately 77% and 23%, respectively, 67% and 33% in fiscal 2015, respectively, and 58% and 42% in fiscal 2014, respectively.
(2) 
Based upon the zero coupon U.S. treasury bond rate over the expected term of the awards.
(3) 
Based on the Company’s implied and historical volatility. The expected volatilities ranged from 20% to 23% in fiscal 2016, 21% to 23% in fiscal 2015, and 22% to 26% in fiscal 2014.
(4) 
Based on the Company’s annual dividend rate on the date of grant.
The following table summarizes the Company’s option activity for fiscal 2016:
 
Options
 
Weighted-
Average
Exercise Price
Per Share
 
Weighted-
Average
Remaining
Contractual
Term
(in years)
 
Aggregate
Intrinsic
Value (1)
(in millions)
Outstanding at October 1, 2015
9,677,717

 
$
28.07

 
 
 
 
Granted
1,438,048

 
$
79.98

 
 
 
 
Forfeited
(463,378
)
 
$
21.76

 
 
 
 
Exercised
(1,775,903
)
 
$
20.00

 
 
 
 
Outstanding at September 30, 2016
8,876,484

 
$
38.42

 
5.2
 
$393
Options exercisable at September 30, 2016
6,204,589

 
$
24.87

 
3.8
 
$359
Options exercisable and expected to vest at September 30, 2016(2)
8,582,576

 
$
37.35

 
5.1
 
$389
(1) 
Calculated using the closing stock price on the last trading day of fiscal 2016 of $82.70, less the option exercise price, multiplied by the number of instruments.
(2) 
Applies a forfeiture rate to unvested options outstanding at September 30, 2016 to estimate the options expected to vest in the future.
For the options exercised during fiscal 2016, 2015 and 2014, the total intrinsic value was $103 million, $134 million and $187 million, respectively, and the tax benefit realized was $35 million, $86 million and $65 million, respectively. As of September 30, 2016, there was $19 million of total unrecognized compensation cost related to unvested options, which is expected to be recognized over a weighted-average period of approximately 1.4 years.
Restricted Stock Awards and Restricted Stock Units
RSAs and RSUs issued under the EIP primarily vest ratably over 3 years from the date of grant, subject to earlier vesting in full under certain conditions.
Upon vesting, the RSAs are settled in class A common stock on a one-for-one basis. During the vesting period, RSA award recipients are eligible to receive dividends and participate in the same voting rights as those granted to the holders of the underlying class A common stock. Upon vesting, RSUs can be settled in class A common stock on a one-for-one basis or in cash, or a combination thereof, at the Company’s option. The Company does not currently intend to settle any RSUs in cash. During the vesting period, RSU award recipients are eligible to receive dividend equivalents, but do not participate in the voting rights granted to the holders of the underlying class A common stock. The company discontinued granting RSAs in fiscal 2016 but will continue to grant RSUs under the EIP.
The fair value and compensation cost before estimated forfeitures for RSAs and RSUs is calculated using the closing price of class A common stock on the date of grant. The weighted-average grant-date fair value of RSAs granted during fiscal 2015 and 2014 was $63.71 and $49.98, respectively. No RSAs were granted during fiscal 2016. The weighted-average grant-date fair value of RSUs granted during fiscal 2016, 2015 and 2014 was $79.77, $62.88 and $49.44, respectively. The total grant-date fair value of RSAs and RSUs vested during fiscal 2016, 2015 and 2014 was $142 million, $132 million and $126 million, respectively.
The following table summarizes the Company's RSA and RSU activity for fiscal 2016:
 
Restricted Stock
 
Weighted-
Average
Grant Date
Fair Value
 
Weighted-
Average
Remaining
Contractual
Term
(in years)
 
Aggregate
Intrinsic
Value (1)
(in millions)
 
Awards
 
Units
 
RSA
 
RSU
 
RSA
 
RSU
 
RSA
 
RSU
Outstanding at October 1, 2015
4,064,687

 
1,442,522

 
$
54.09

 
$
53.80

 
 
 
 
 
 
 
 
Granted
—

 
2,735,115

 
$
—

 
$
79.77

 
 
 
 
 
 
 
 
Vested
(2,061,406
)
 
(789,180
)
 
$
49.06

 
$
51.58

 
 
 
 
 
 
 
 
Forfeited
(236,699
)
 
(241,503
)
 
$
59.34

 
$
73.02

 
 
 
 
 
 
 
 
Outstanding at September 30, 2016
1,766,582

 
3,146,954

 
$
59.26

 
$
75.48

 
0.8
 
1.7
 
$146
 
$260
(1) 
Calculated by multiplying the closing stock price on the last trading day of fiscal 2016 of $82.70 by the number of instruments.
At September 30, 2016, there was $54 million and $140 million of total unrecognized compensation cost related to unvested RSAs and RSUs, respectively, which is expected to be recognized over a weighted-average7 period of approximately 0.8 years for RSAs and 1.7 years for RSUs.
Performance-based Shares
The following table summarizes the maximum number of performance-based shares which could be earned and related activity for fiscal 2016:
 
Shares
 
Weighted-
Average
Grant Date
Fair Value
 
Weighted-
Average
Remaining
Contractual
Term
(in years)
 
Aggregate
Intrinsic
Value (1)
(in millions)
Outstanding at October 1, 2015
1,263,962

 
$
57.61

 
 
 
 
Granted(2)
604,219

 
$
92.71

 
 
 
 
Vested and earned
(645,320
)
 
$
54.59

 
 
 
 
Unearned
(123,387
)
 
$
54.59

 
 
 
 
Forfeited
(57,462
)
 
$
73.07

 
 
 
 
Outstanding at September 30, 2016
1,042,012

 
$
78.24

 
0.9
 
$86
(1) 
Calculated by multiplying the closing stock price on the last trading day of fiscal 2016 of $82.70 by the number of instruments.
(2) 
Represents the maximum number of performance-based shares which could be earned.
For the Company's performance-based shares, in addition to service conditions, the ultimate number of shares to be earned depends on the achievement of both performance and market conditions. The performance condition is based on the Company's earnings per share target. The market condition is based on the Company's total shareholder return ranked against that of other companies that are included in the Standard & Poor's 500 Index. The fair value of the performance-based shares, incorporating the market condition, is estimated on the grant date using a Monte Carlo simulation model. The grant-date fair value of performance-based shares granted in fiscal 2016, 2015 and 2014 was $92.71, $69.78 and $56.37 per share, respectively. Earned performance shares granted in fiscal 2016, 2015 and 2014 vest approximately 3 years from the initial grant date. All performance awards are subject to earlier vesting in full under certain conditions.
Compensation cost for performance-based shares is initially estimated based on target performance. It is recorded net of estimated forfeitures and adjusted as appropriate throughout the performance period. At September 30, 2016, there was $18 million of total unrecognized compensation cost related to unvested performance-based shares, which is expected to be recognized over a weighted-average period of approximately 0.9 years.
Employee Stock Purchase Plan
In January 2015, the Company's class A stockholders approved the Visa Inc. Employee Stock Purchase Plan (the “ESPP”), under which substantially all employees are eligible to participate. The ESPP permits eligible employees to purchase the Company’s class A common stock at a 15% discount of the stock price on the purchase date, subject to certain restrictions. A total of 20 million shares of class A common stock have been reserved for issuance under the ESPP. The first offering date was April 1, 2015. The ESPP does not have a material impact on the consolidated financial statements.
Commitments and Contingencies
Commitments and Contingencies
Note 17—Commitments and Contingencies
Commitments. The Company leases certain premises and equipment throughout the world with varying expiration dates. The Company incurred total rent expense of $134 million, $136 million and $134 million in fiscal 2016, 2015 and 2014, respectively. Future minimum payments on leases, and marketing and sponsorship agreements per fiscal year, at September 30, 2016, are as follows:
 
2017
 
2018
 
2019
 
2020
 
2021
 
Thereafter
 
Total
 
(in millions)
Operating leases
$
126

 
$
103

 
$
82

 
$
61

 
$
57

 
$
190

 
$
619

Marketing and sponsorships
126

 
128

 
120

 
110

 
38

 
33

 
555

Total
$
252

 
$
231

 
$
202

 
$
171

 
$
95

 
$
223

 
$
1,174

Select sponsorship agreements require the Company to spend certain minimum amounts for advertising and marketing promotion over the life of the contract. For commitments where the individual years of spend are not specified in the contract, the Company has estimated the timing of when these amounts will be spent. In addition to the fixed payments stated above, select sponsorship agreements require the Company to undertake marketing, promotional or other activities up to stated monetary values to support events which the Company is sponsoring. The stated monetary value of these activities typically represents the value in the marketplace, which may be significantly higher than the actual costs incurred by the Company.
Client incentives. The Company has agreements with financial institution clients and other business partners for various programs designed to build payments volume, increase Visa product acceptance and win merchant routing transactions. These agreements, with terms ranging from one year to sixteen years, can provide card issuance and/or conversion support, volume/growth targets and marketing and program support based on specific performance requirements. These agreements are designed to encourage client business and to increase overall Visa- payment and transaction volume, thereby reducing per-unit transaction processing costs and increasing brand awareness for all Visa clients.
Payments made that qualify for capitalization and obligations incurred under these programs are reflected in the consolidated balance sheet. Client incentives are recognized primarily as a reduction to operating revenue in the period the related volumes and transactions occur, based on management's estimate of the client's performance in accordance with the terms of the incentive agreement. The agreements may or may not limit the amount of client incentive payments.
The table below sets forth the expected future reduction of revenue per fiscal year for client incentive agreements in effect at September 30, 2016: 
(in millions)
2017
 
2018
 
2019
 
2020
 
2021
 
Thereafter
 
Total
Client incentives
$
4,211

 
$
3,752

 
$
3,211

 
$
2,628

 
$
2,245

 
$
4,617

 
$
20,664


The amount of client incentives recorded as a reduction of revenue in future periods under the Company's incentive arrangements, will be greater or less than the estimates above due to changes in performance expectations, actual client performance, amendments to existing contracts or the execution of new contracts. Based on these agreements, increases in incentive payments are generally driven by increased payment and transaction volume, and as a result, in the event incentive payments exceed the above estimates, such payments are not expected to have a material effect on the Company's financial condition, results of operations or cash flows.
Deferred purchase consideration. On June 21, 2016, we acquired 100% of the share capital of Visa Europe. In connection with the purchase, we will pay an additional €1.0 billion, plus 4% compound annual interest, on the third anniversary of the Closing. See Note 2—Acquisition of Visa Europe to our consolidated financial statements.
Related Parties
Related Parties
Note 18—Related Parties
Visa considers an entity to be a related party for purposes of this disclosure if that entity owns more than 10% of Visa’s total voting common stock at the end of the fiscal year, or if an officer or employee of that entity also serves on the Company's board of directors. The Company considers an investee to be a related party if the Company’s: (i) ownership interest in the investee is greater than or equal to 10% or (ii) if the investment is accounted for under the equity method of accounting. At September 30, 2016 and 2015, no entity owned more than 10% of the Company’s total voting common stock. There were no significant transactions with related parties during fiscal 2016, 2015 and 2014.
Income Taxes
Income Taxes
Note 19—Income Taxes
The Company’s income before taxes by fiscal year consisted of the following:
 
2016
 
2015
 
2014
 
(in millions)
U.S.
$
5,839

 
$
7,214

 
$
6,140

Non-U.S.
2,173

 
1,781

 
1,584

Total income before taxes
$
8,012

 
$
8,995

 
$
7,724


U.S. income before taxes included $2.5 billion, $2.4 billion and $2.3 billion of the Company's U.S. entities' income from operations outside of the U.S. for fiscal 2016, 2015 and 2014, respectively.
Income tax provision by fiscal year consisted of the following:
 
2016
 
2015
 
2014
 
(in millions)
Current:
 
 
 
 
 
U.S. federal
$
2,250

 
$
1,991

 
$
2,353

State and local
181

 
168

 
237

Non-U.S.
368

 
300

 
274

Total current taxes
2,799

 
2,459

 
2,864

Deferred:
 
 
 
 
 
U.S. federal
(508
)
 
181

 
(576
)
State and local
(63
)
 
1

 
(31
)
Non-U.S.
(207
)
 
26

 
29

Total deferred taxes
(778
)
 
208

 
(578
)
Total income tax provision
$
2,021

 
$
2,667

 
$
2,286


The tax effect of temporary differences that give rise to significant portions of deferred tax assets and liabilities at September 30, 2016 and 2015, are presented below:
 
2016
 
2015
 
(in millions)
Deferred Tax Assets:
 
 
 
Accrued compensation and benefits
$
277

 
$
141

Comprehensive (income) loss
106

 
51

Accrued litigation obligation
373

 
391

Client incentives
266

 
191

Net operating loss carryforwards
32

 
50

Federal benefit of state taxes
195

 
203

Federal benefit of foreign taxes
1,214

 
—

Other
280

 
185

Valuation allowance
(31
)
 
(40
)
Deferred tax assets
2,712

 
1,172

Deferred Tax Liabilities:
 
 
 
Property, equipment and technology, net
(278
)
 
(315
)
Intangible assets
(7,013
)
 
(3,964
)
Foreign taxes
(106
)
 
(153
)
Other
(101
)
 
—

Deferred tax liabilities
(7,498
)
 
(4,432
)
Net deferred tax liabilities
$
(4,786
)
 
$
(3,260
)

The increase in the net deferred tax liabilities primarily reflect the deferred tax impacts of the intangible assets acquired in the Visa Europe acquisition. At September 30, 2016 and 2015, net deferred tax assets of $22 million and $13 million, respectively, are reflected in other assets on the consolidated balance sheets.
In November 2015, the FASB issued Accounting Standards Update 2015-17, which simplifies the presentation of deferred income taxes by requiring that deferred tax assets and liabilities be presented as non-current. The standard impacts presentation only. The Company elected to early adopt the standard on a retrospective basis effective October 1, 2015, and all deferred tax assets and liabilities are classified as non-current on the Company’s consolidated balance sheets. All prior period amounts have been reclassified to conform with the current period presentation.
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that all or some portion of the deferred tax assets will not be realized. The ultimate realization of the deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences are deductible. The fiscal 2016 and 2015 valuation allowances relate primarily to foreign net operating losses from subsidiaries acquired in recent years. 
As of September 30, 2016, the Company had $17 million federal, $21 million state and $117 million foreign net operating loss carryforwards. The federal and state net operating loss carryforwards will expire in fiscal 2028 through 2035. The foreign net operating loss may be carried forward indefinitely. The Company expects to fully utilize the federal and state net operating loss carryforwards in future years.
As of September 30, 2016, the Company had $15 million of federal foreign tax credit carryforwards, which will expire in fiscal 2026. The Company expects to realize the benefit of the credit carryforwards in future years.
The income tax provision differs from the amount of income tax determined by applying the applicable U.S. federal statutory rate of 35% to pretax income, as a result of the following:
 
 
For the Years Ended September 30,
 
2016
 
2015
 
2014
 
Dollars
 
Percent
 
Dollars
 
Percent
 
Dollars
 
Percent
 
(in millions, except percentages)
U.S. federal income tax at statutory rate
$
2,804

 
35
 %
 
$
3,148

 
35
 %
 
$
2,704

 
35
 %
State income taxes, net of federal benefit
135

 
2
 %
 
194

 
2
 %
 
129

 
2
 %
Non-U.S. tax effect, net of federal benefit
(553
)
 
(7
)%
 
(327
)
 
(4
)%
 
(278
)
 
(4
)%
Prior years U.S. domestic production activities deduction
—

 
—
 %
 
—

 
—
 %
 
(191
)
 
(2
)%
Remeasurement of deferred tax liability
(88
)
 
(1
)%
 
—

 
—
 %
 
—

 
—
 %
Reversal of prior years tax reserves related to the resolution of uncertain tax positions
—

 
—
 %
 
(239
)
 
(2
)%
 
—

 
—
 %
Revaluation of Visa Europe put option
(89
)
 
(1
)%
 
—

 
—
 %
 
—

 
—
 %
Other, net
(188
)
 
(3
)%
 
(109
)
 
(1
)%
 
(78
)
 
(1
)%
Income tax provision
$
2,021

 
25
 %
 
$
2,667

 
30
 %
 
$
2,286

 
30
 %

The effective income tax rate was 25% in fiscal 2016 and 30% in fiscal 2015. The effective tax rate in fiscal 2016 differs from the effective tax rate in fiscal 2015 primarily due to:
•
the effect of one-time items related to the Visa Europe acquisition, the most significant of which was the $1.9 billion U.S. loss related to the effective settlement of the Framework Agreement between Visa and Visa Europe. These one-time items impacted the geographic mix of global income, resulting in a reduced effective tax rate;
•
an$88 million one-time tax benefit due to the remeasurement of deferred tax liabilities as a result of the reduction in the U.K. tax rate enacted in fiscal 2016;
•
the non-taxable $255 million revaluation of the Visa Europe put option recorded in fiscal 2016; and
•
the absence of a $296 million tax benefit recognized in fiscal 2015 resulting from the resolution of uncertain tax positions with taxing authorities. Included in the $296 million was a one-time $239 million tax benefit that related to prior fiscal years.
The effective income tax rates were 30% in fiscal 2015 and 2014. The following highlights the significant tax items recorded in each respective year:
•the aforementioned $296 million tax benefit recognized in fiscal 2015; and
•
a $264 million tax benefit recognized in fiscal 2014 related to a deduction for U.S. domestic production activities, of which $191 million was a one-time tax benefit related to prior fiscal years.
Current income taxes receivable were $232 million and $77 million at September 30, 2016 and 2015, respectively. Non-current income taxes receivable of $731 million and $627 million were included in other assets at September 30, 2016 and 2015, respectively. See Note 5—Prepaid Expenses and Other Assets. At September 30, 2016 and 2015, income taxes payable of $153 million and $75 million, respectively, were included in accrued income taxes as part of accrued liabilities, and accrued income taxes of $911 million and $752 million, respectively, were included in other long-term liabilities. See Note 8—Accrued and Other Liabilities.
Cumulative undistributed earnings of the Company’s international subsidiaries that are intended to be reinvested indefinitely outside the United States amounted to $8.3 billion at September 30, 2016. The amount of income taxes that would have resulted had such earnings been repatriated is not practicably determinable.
The Company’s largest operating hub outside the United States is located in Singapore. It operates under a tax incentive agreement which is effective through September 30, 2023, and is conditional upon meeting certain business operations and employment thresholds in Singapore. The tax incentive agreement decreased Singapore tax by $235 million, $192 million and $168 million, and the benefit of the tax incentive agreement on diluted earnings per share was $0.10, $0.08 and $0.07 in fiscal 2016, 2015 and 2014, respectively.
In accordance with Accounting Standards Codification 740—Income Taxes, the Company is required to inventory, evaluate and measure all uncertain tax positions taken or to be taken on tax returns, and to record liabilities for the amount of such positions that may not be sustained, or may only partially be sustained, upon examination by the relevant taxing authorities.
At September 30, 2016 and 2015, the Company’s total gross unrecognized tax benefits were $1.2 billion and $1.1 billion, respectively, exclusive of interest and penalties described below. Included in the $1.2 billion and $1.1 billion are $926 million and $859 million of unrecognized tax benefits, respectively, that if recognized, would reduce the effective tax rate in a future period.
A reconciliation of beginning and ending unrecognized tax benefits by fiscal year is as follows: 
 
2016
 
2015
 
(in millions)
Beginning balance at October 1
$
1,051

 
$
1,303

Increases of unrecognized tax benefits related to prior years
153

 
44

Decreases of unrecognized tax benefits related to prior years
(180
)
 
(413
)
Increases of unrecognized tax benefits related to current year
138

 
120

Reductions related to lapsing statute of limitations
(2
)
 
(3
)
Ending balance at September 30
$
1,160

 
$
1,051

It is the Company’s policy to account for interest expense and penalties related to uncertain tax positions in non-operating expense in its consolidated statements of operations. The Company recognized $15 million and $10 million of interest expense in fiscal 2016 and 2014, respectively, and reversed $6 million of interest expense in fiscal 2015, related to uncertain tax positions. The Company accrued $3 million, $1 million and $2 million of penalties in fiscal 2016, 2015 and 2014, respectively, related to uncertain tax positions. At September 30, 2016 and 2015, the Company had accrued interest of $61 million and $33 million, respectively, and accrued penalties of $17 million and $6 million, respectively, related to uncertain tax positions in its other long-term liabilities. At September 30, 2016, accrued interest and penalties balances included amounts related to the Visa Europe acquisition.
The Company's fiscal 2009 through 2012 U.S. federal income tax returns are currently under Internal Revenue Service ("IRS") examination. The Company has filed a federal refund claim for fiscal year 2008, which is also currently under IRS examination. Except for the refund claim, the federal statutes of limitations have expired for fiscal years prior to 2009. The Company's fiscal 2006, 2007 and 2008 California tax returns are currently under examination. Except for certain outstanding refund claims, the California statutes of limitations have expired for fiscal years prior to 2006.
During fiscal 2013, the Canada Revenue Agency (CRA) completed its examination of the Company's fiscal 2003 through 2009 Canadian tax returns and proposed certain assessments. Based on the findings of its examination, the CRA also proposed certain assessments to the Company's fiscal 2010 through 2015 Canadian tax returns. The Company filed notices of objection against these assessments and, in fiscal 2015, completed the appeals process without reaching a settlement with the CRA. In April 2016, the Company petitioned the Tax Court of Canada to overturn the CRA's assessments. The Company continues to believe that its income tax provision adequately reflects its obligations to the CRA.
The Company is also subject to examinations by various state and foreign tax authorities. All material state and foreign tax matters have been concluded for years through fiscal 2002. The timing and outcome of the final resolutions of the federal, state and foreign tax examinations and refund claims are uncertain. As such, it is not reasonably possible to estimate the impact that the final outcomes could have on the Company's unrecognized tax benefits in the next 12 months.
Legal Matters
Legal Matters
Note 20—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.
The following table summarizes the activity related to accrued litigation.
 
Fiscal 2016
 
Fiscal 2015
 
(in millions)
Balance at October 1
$
1,024

 
$
1,456

Provision for uncovered legal matters
2

 
14

Accrual for VE territory covered litigation
2

 
—

Payments on legal matters
(47
)
 
(446
)
Balance at September 30
$
981

 
$
1,024


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. See Note 3—U.S. and Europe Retrospective Responsibility Plans. An accrual for the U.S. covered litigation and a charge to the litigation provision are recorded when 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 litigation committee. The total accrual related to the U.S. covered litigation could be either higher or lower than the escrow account balance. The following table summarizes the activity related to U.S. covered litigation.
 
Fiscal 2016
 
Fiscal 2015
 
(in millions)
Balance at October 1
$
1,023

 
$
1,449

Payments on U.S. covered litigation
(45
)
 
(426
)
Balance at September 30
$
978

 
$
1,023


On January 14, 2014, the MDL 1720 court entered a final judgment order approving a settlement with class plaintiffs in the interchange multidistrict litigation proceedings, which is subject to the outcome of any appeals. Following the payment of approximately $4.0 billion from the U.S. litigation escrow account into settlement funds pursuant to the class settlement agreement, on January 27, 2014, Visa received and deposited into the Company's U.S. litigation escrow account "takedown payments" of approximately $1.1 billion, which Visa was entitled to receive under the class settlement agreement based on payment card sales volume attributable to merchants who opted out. The deposit into the U.S. litigation escrow account and a related increase in accrued litigation to address opt-out claims were recorded in the second quarter of fiscal 2014. An additional accrual of $450 million associated with these opt-out claims was recorded in the fourth quarter of fiscal 2014. Payments totaling $528 million were made from fiscal 2014 through 2016 from the U.S. litigation escrow account reflecting settlements with a number of individual opt-out merchants, resulting in an accrued balance of $978 million related to U.S. covered litigation as of September 30, 2016. See further discussion below under Individual Merchant Interchange Litigation and Note 3—U.S. and Europe Retrospective Responsibility Plans.
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 a periodic adjustment to the conversion rates applicable to the U.K.&I preferred stock and Europe 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 3-U.S. and Europe Retrospective Responsibility Plans. The following table summarizes the activity related to VE territory covered litigation.
 
Fiscal 2016
 
(in millions)
Balance at October 1
$
—

Accrual for VE territory covered litigation
2

Balance at September 30
$
2

Interchange Multidistrict Litigation (MDL)
Beginning in May 2005, a series of complaints (the majority of which were styled as class actions) were filed in U.S. federal district courts by merchants against Visa U.S.A., Visa International and/or MasterCard, and in some cases, certain Visa member financial institutions. The complaints challenged, among other things, Visa's and MasterCard's purported setting of interchange reimbursement fees, their "no surcharge" rules, and alleged tying and bundling of transaction fees under the federal antitrust laws, and, in some cases, certain state unfair competition laws. The Judicial Panel on Multidistrict Litigation issued an order transferring the cases to the U.S. District Court for the Eastern District of New York for coordination of pre-trial proceedings in MDL 1720. A group of purported class plaintiffs subsequently filed a Second Consolidated Amended Class Action Complaint which, together with the complaints brought by individual merchants, sought money damages alleged to range in the tens of billions of dollars (subject to trebling), as well as attorneys' fees and injunctive relief. The class plaintiffs also filed a Second Supplemental Class Action Complaint against Visa Inc. and certain member financial institutions challenging Visa's reorganization and IPO under the antitrust laws and seeking unspecified money damages and declaratory and injunctive relief, including an order that the IPO be unwound.
The Company and certain individual merchants whose claims were consolidated with the MDL signed a settlement agreement to resolve their claims against the Company for approximately $350 million. This payment was made from the U.S. litigation escrow account on October 29, 2012, and the court has dismissed those claims with prejudice.
In addition, Visa Inc., Visa U.S.A., Visa International, MasterCard Incorporated, MasterCard International Incorporated, various U.S. financial institution defendants, and the class plaintiffs signed a settlement agreement (the "2012 Settlement Agreement") to resolve the class plaintiffs' claims. The terms of the 2012 Settlement Agreement include, among other terms, (1) a comprehensive release of claims asserted in the litigation and protection against future litigation regarding default interchange and other U.S. rules; (2) settlement payments from the Company of approximately $4.0 billion and a further distribution of 10 basis points of default interchange for an eight-month period; (3) certain modifications to the Company's rules, including modifications to permit surcharging on credit transactions under certain circumstances; and (4) the Company's agreement to meet with merchant buying groups that seek to collectively negotiate interchange rates. On December 10, 2012, Visa paid approximately $4.0 billion from the U.S. litigation escrow account into a settlement fund established pursuant to the 2012 Settlement Agreement.
On January 14, 2014, the court entered a final judgment order approving the settlement, from which a number of objectors appealed. On June 30, 2016, the U.S. Court of Appeals for the Second Circuit vacated the lower court's certification of the merchant class and reversed the approval of the settlement. The Second Circuit determined that the class plaintiffs were inadequately represented, and remanded the case to the lower court for further proceedings not inconsistent with its decision. Prior to November 23, 2016, class plaintiffs may file a petition for writ of certiorari with the U.S. Supreme Court seeking review of the Second Circuit's decision. Until the appeals process is complete, it is uncertain whether the Company will be able to resolve the class plaintiffs' claims as contemplated by the 2012 Settlement Agreement. However, the case is still U.S. covered litigation for purposes of the U.S. retrospective responsibility plan. See Note 3—U.S. and Europe Retrospective Responsibility Plans.
Consumer Interchange Litigation
On December 16, 2013, a putative class action was filed on behalf of all Visa and MasterCard payment cardholders in the United States since January 1, 2000, against certain financial institutions, identifying non-defendants Visa, MasterCard and certain other financial institutions as co-conspirators. Plaintiffs allege primarily a conspiracy to fix interchange fees and seek injunctive relief, attorneys’ fees and treble damages in excess of $54.0 billion dollars annually arising from purported overcharges. Originally filed in federal court in California, the case was transferred to MDL 1720. On November 26, 2014, the MDL court dismissed plaintiffs' federal law claim and declined to exercise jurisdiction over plaintiffs' state law claim. Both sides asked the court to reconsider aspects of its decision and filed notices of appeal.
On February 24, 2016, the MDL court denied plaintiffs' motion for reconsideration of the dismissal of plaintiffs' federal claim and dismissed plaintiffs' state law claim based on defendants' cross-motion for reconsideration. On October 17, 2016, the U.S. Court of Appeals for the Second Circuit affirmed the dismissal of plaintiffs' claims, and on October 31, 2016, plaintiffs sought rehearing by the Second Circuit.
Individual Merchant Interchange Litigation
Beginning in May 2013, more than 50 cases have been filed in various federal district courts by hundreds of merchants who had opted out of the damages portion of the 2012 Settlement Agreement, generally pursuing damages claims on allegations similar to those raised in MDL 1720. A number of the cases also include allegations that Visa has monopolized, attempted to monopolize, and/or conspired to monopolize debit card-related market segments. In addition, some of the cases seek an injunction against the setting of default interchange rates; certain Visa Rules relating to merchants, including the honor-all-cards rule; and various transaction fees, including the fixed acquirer network fee. One merchant's complaint also asserts that Visa, MasterCard and their member banks conspired to prevent the adoption of chip-and-PIN authentication in the U.S. or otherwise circumvent competition in the debit market, and at least two merchant groups have requested permission from the MDL court to amend their complaints. The cases name as defendants Visa Inc., Visa U.S.A., Visa International, MasterCard Incorporated and MasterCard International Incorporated, although some also include certain U.S. financial institutions as defendants. Wal-Mart Stores Inc. and its subsidiaries filed a complaint that also adds Visa Europe Limited and Visa Europe Services Inc. as defendants.
Visa, MasterCard, and certain U.S. financial institution defendants in MDL 1720 filed a complaint in the Eastern District of New York against certain named class representative plaintiffs who had opted out or stated their intention to opt out of the damages portion of the 2012 Settlement Agreement. In addition, Visa filed three more similar complaints in the Eastern District of New York against Wal-Mart Stores Inc.; against The Home Depot, Inc. and Home Depot U.S.A.; and against Sears Holdings Corporation. All four complaints seek a declaration that, from January 1, 2004 to November 27, 2012, the time period for which opt-outs could seek damages under the 2012 Settlement Agreement, Visa's conduct in, among other things, continuing to set default interchange rates, maintaining its "honor all cards" rule, enforcing certain rules relating to merchants, and restructuring itself, did not violate federal or state antitrust laws.
All the cases filed in federal court have been either assigned to the judge presiding over MDL 1720, or have been transferred or are being considered for transfer by the Judicial Panel on Multidistrict Litigation for inclusion in MDL 1720. The court has entered an order confirming that In re Payment Card Interchange Fee and Merchant Discount Antitrust Litigation, 1:05-md-01720-JG-JO (E.D.N.Y.), includes (1) all current and future actions transferred to MDL 1720 by the Judicial Panel on Multidistrict Litigation or other order of any court for inclusion in coordinated or pretrial proceedings, and (2) all actions filed in the Eastern District of New York that arise out of operative facts as alleged in the cases subject to the transfer orders of the Judicial Panel on Multidistrict Litigation. Cases that have been transferred to or otherwise included in MDL 1720 are U.S. covered litigation for purposes of the U.S. retrospective responsibility plan. See Note 3—U.S. and Europe Retrospective Responsibility Plans.
A settlement agreement was reached with Wal-Mart Stores Inc. and its subsidiaries, which will terminate if, following all appeals, the 2012 Settlement Agreement in MDL 1720 is reversed or vacated with respect to certification of the Rule 23(b)(2) settlement class or the consideration provided to or release provided by that class. Including this settlement with Wal-Mart, as of the date of filing, Visa has reached settlement agreements with a number of merchants representing approximately 51% of the Visa-branded payment card sales volume of merchants who opted out of the 2012 Settlement Agreement. Except for the settlement with Wal-Mart, these settlement agreements remain effective despite the outcome of any appeals from the district court's order approving the 2012 Settlement Agreement in MDL 1720.
On June 13, 2016, The Home Depot, Inc. and Home Depot U.S.A., Inc. filed suit against Visa Inc., Visa U.S.A., Visa International, MasterCard Incorporated and MasterCard International Incorporated in the U.S. District Court for the Northern District of Georgia. On October 3, 2016, the Judicial Panel on Multidistrict Litigation issued an order transferring the case to MDL 1720.
While the Company believes that it has substantial defenses in these matters, the final outcome of individual legal claims is inherently unpredictable. The Company could incur judgments, enter into settlements or revise its expectations regarding the outcome of individual merchant claims, and such developments could have a material adverse effect on our financial results in the period in which the effect becomes probable and reasonably estimable.
VE Territory Covered Litigation
U.K. Merchant Litigation
Since July 2013, in excess of 100 Merchants (the capitalized term "Merchant," when used in this section, means a merchant together with subsidiary/affiliate companies) have commenced proceedings against Visa Europe, Visa Inc. and Visa International relating to interchange rates in Europe, and seek damages for alleged anti-competitive conduct primarily in relation to U.K. domestic and/or Irish domestic and/or intra-EEA interchange fees for credit and debit cards. As of the filing date, Visa Europe, Visa Inc. and Visa International have settled the claims asserted by two Merchants, and one Merchant has dropped all claims that relate to debit cards. After a successful application for summary judgment and an unsuccessful appeal by the claimants, the claims of U.K. merchants should be limited to the six-year period immediately preceding the issuance of each claim.
In November 2016, claims filed by a number of Merchants in 2013 are scheduled to go to trial to determine whether Visa has infringed U.K. competition law and is liable for having set interchange fee rates during the relevant time period. If the Merchants prevail, the amount of any loss they have suffered will be determined in a separate trial in the future.
In addition, over 30 additional Merchants have threatened to commence similar proceedings. Standstill agreements have been entered into with respect to some of those Merchants’ claims. While the amount of interchange being challenged could be substantial, these claims have not yet been filed and their full scope is not yet known. The Company has learned that several additional European entities have indicated that they may also bring similar claims and we anticipate additional claims in the future.
Although not all of the merchant claims have been served and thus the full scope of the claims is not yet known, and there are substantial defenses to these claims, the total damages sought in the claims that have been issued, served and preserved likely amounts to several billion dollars.
Other Litigation
"Indirect Purchaser" Actions
From 2000 to 2004, complaints were filed on behalf of consumers in nineteen different states and the District of Columbia against Visa and MasterCard. The complaints alleged, among other things, that Visa's "honor all cards" rule and a similar MasterCard rule violated state antitrust and consumer protection laws and common law. The claims in these class actions asserted that merchants, faced with excessive merchant discount fees, passed on some portion of those fees to consumers in the form of higher prices on goods and services sold. Plaintiffs sought money damages and injunctive relief. Visa has been successful in the majority of these cases, and has resolved the cases in all jurisdictions but California.
In California, the consolidated Credit/Debit Card Tying Cases were resolved pursuant to a revised settlement agreement that received final approval and was affirmed on appeal. Certain objectors filed petitions for rehearing and for review by the California Supreme Court that were denied on February 11, 2015, and the judgment approving the settlement agreement is now final. One objector has appealed the trial court's orders regarding the distribution of certain settlement funds, and the denial of that objector's motion for attorneys' fees and costs.
On December 1, 2015, the objector's appeal from the trial court's order regarding the distribution of certain settlement funds was dismissed. The appeal of the denial of the objector's motion for attorneys' fees and costs is pending.
European Commission Proceedings
Inter-regional Interchange Investigation. Following the issuance of a Statement of Objections in 2009 concerning, among other things, the alleged default application of Visa Inc.'s inter-regional interchange fees to intra-regional and domestic consumer debit and credit card transactions in the European Economic Area ("EEA"), the European Commission ("EC") served a Supplementary Statement of Objections ("SSO") on Visa Inc. and Visa International in 2013. The SSO concerned, in particular, the application of Visa Inc.'s inter-regional interchange fees to transactions involving a Visa credit card issued outside the EEA and a merchant located in the EEA. The EC claims that these fees violate competition law in the EEA. The SSO indicates that the EC may impose fines. The potential amount of any fine cannot be estimated at this time.
All issues relating to intra-regional or domestic consumer debit and credit card transactions acquired in the EEA have been settled by commitments offered by Visa Europe Limited in 2010 and 2014 and endorsed by the EC. Following its acquisition of Visa Europe Limited in June 2016, these commitments are now binding upon Visa Inc. The EC's case regarding Visa Inc.'s inter-regional interchange fees is still ongoing.
DCC Investigation. In 2013, the EC opened an investigation against Visa Europe, based on a complaint alleging that Visa Europe's pricing of and rules relating to Dynamic Currency Conversion (DCC) transactions infringe EU competition rules. This investigation is pending.
Canadian Competition Proceedings
Merchant Litigation. Beginning in December 2010, a number of class action lawsuits were filed in Quebec, British Columbia, Ontario, Saskatchewan and Alberta against Visa Canada, MasterCard and ten financial institutions on behalf of merchants that accept payment by Visa and/or MasterCard credit cards. A separate action was filed against Visa Canada Corporation and Visa Inc., two MasterCard entities and smaller Canadian issuing banks, but that case has been stayed. The remaining cases allege a violation of Canada's price-fixing law and various common law claims based on separate Visa and MasterCard conspiracies in respect of default interchange and certain of the networks' rules. Four of the named financial institutions, only one of which is a significant Canadian issuer, have now settled with the plaintiffs.
On March 26, 2014, the British Columbia Supreme Court, in one of the class action suits noted above, Watson v. Bank of America Corporation, et al., granted the plaintiff's application for class certification in part. On appeal from both the defendants and the plaintiff, the British Columbia Court of Appeal allowed the class proceedings to advance but limited the time period of plaintiff's main price-fixing claim to prior to March 2010. A motion by the plaintiff to amend its claim to include the post-March 2010 period was dismissed by the British Columbia Supreme Court and that ruling is under appeal. The related lawsuits in Ontario, Alberta, and Saskatchewan have effectively been stayed pending further proceedings in British Columbia. The timing of the lawsuit in Quebec is also being considered in light of the proceedings in British Columbia.
The pending lawsuits largely seek unspecified monetary damages and injunctive relief, but some allege substantial damages.
Data Pass Litigation
On November 19, 2010, a consumer filed an amended class action complaint against Webloyalty.com, Inc., Gamestop Corporation, and Visa Inc. in Connecticut federal district court, seeking damages, restitution and injunctive relief on the grounds that consumers who made online purchases at merchants were allegedly deceived into incurring charges for services from Webloyalty.com through the unauthorized passing of cardholder account information during the sales transaction ("data pass"), in violation of federal and state consumer protection statutes and common law. On October 15, 2015, the court dismissed the case in its entirety, without leave to replead. Plaintiff filed a notice of appeal on November 12, 2015.
U.S. ATM Access Fee Litigation
National ATM Council Class Action. In October 2011, the National ATM Council and thirteen non-bank ATM operators filed a purported class action lawsuit against Visa (Visa Inc., Visa International, Visa U.S.A. and Plus System, Inc.) and MasterCard in the U.S. District Court for the District of Columbia. The complaint challenges Visa's rule (and a similar MasterCard rule) that if an ATM operator chooses to charge consumers an access fee for a Visa or Plus transaction, that fee cannot be greater than the access fee charged for transactions on other networks. Plaintiffs claim that the rule violates Section 1 of the Sherman Act, and seeks damages "in an amount not presently known, but which is tens of millions of dollars, prior to trebling," injunctive relief and attorneys’ fees.
Consumer Class Actions. In October 2011, a purported consumer class action was filed against Visa and MasterCard in the same federal court challenging the same ATM access fee rules. Two other purported consumer class actions challenging the rules, later combined, were also filed in October 2011 in the same federal court naming Visa, MasterCard and three financial institutions as defendants. Plaintiffs seek treble damages, restitution, injunctive relief, and attorneys' fees where available under federal and state law, including under Section 1 of the Sherman Act and consumer protection statutes.
On February 13, 2013, the court granted the defendants’ motions to dismiss and dismissed all of these cases without prejudice. On plaintiffs' appeal, the U.S. Court of Appeals for the District of Columbia Circuit vacated the lower court's decisions and remanded for further proceedings.
On February 18, 2016, the National ATM Council moved for a preliminary injunction to prohibit Visa and MasterCard from imposing ATM access fee non-discrimination rules. On June 28, 2016, the U.S. Supreme Court granted defendants' petitions for writ of certiorari seeking review of the decisions of the U.S. Court of Appeals for the District of Columbia Circuit, and the district court issued an order on July 21, 2016, staying the cases pending that review. The U.S. Supreme Court is scheduled to hear oral argument in these cases on December 7, 2016.
U.S. Department of Justice Civil Investigative Demand
On March 13, 2012, the Antitrust Division of the United States Department of Justice (the "Division") issued a Civil Investigative Demand, or "CID," to Visa Inc. seeking documents and information regarding a potential violation of Section 1 or 2 of the Sherman Act, 15 U.S.C. §§ 1, 2. The CID focuses on PIN-Authenticated Visa Debit and Visa's competitive responses to the Dodd-Frank Act, including Visa's fixed acquirer network fee. Visa is cooperating with the Division in connection with the CID.
Federal Trade Commission
Voluntary Access Letter. The Bureau of Competition of the United States Federal Trade Commission (the "Bureau") has closed its inquiry regarding potential violations of certain regulations associated with the Dodd-Frank Act focusing on Visa's optional PIN Debit Gateway Service.
Notice Regarding EMV Chip Debit Cards. On July 28, 2016, the Bureau notified Visa that the Bureau is conducting an investigation into whether Visa's requirements for EMV chip inhibit merchant routing choice for debit card transactions. Visa is cooperating with the Bureau.
Pulse Network
On November 25, 2014, Pulse Network LLC filed suit against Visa Inc. in federal district court in Texas. Pulse alleges that Visa has monopolized and attempted to monopolize debit card network services markets. Pulse also alleges that Visa has entered into agreements in restraint of trade, engaged in unlawful exclusive dealing and tying, violated the Texas Free Enterprise and Antitrust Act and engaged in tortious interference with prospective business relationships. Pulse seeks unspecified treble damages, attorneys' fees and injunctive relief, including to enjoin the fixed acquirer network fee structure, Visa's conduct regarding PIN-Authenticated Visa Debit and Visa agreements with merchants and acquirers relating to debit acceptance. On January 23, 2015, Visa filed a motion to dismiss the complaint. On December 17, 2015, the court denied Visa's motion to dismiss the complaint, and the case remains pending.
New Mexico Attorney General
On December 23, 2014, a case similar to MDL 1720 was filed in New Mexico state court by New Mexico's attorney general on behalf of the state, state agencies and citizens of the state, generally pursuing claims on allegations similar to those raised in MDL 1720. On May 15, 2015, defendants filed a partial motion to dismiss, which the court granted in part and, among other things, narrowed the state antitrust damages claims.
EMV Chip Liability Shift
Following their initial complaint filed on March 8, 2016, B&R Supermarket, Inc., d/b/a Milam's Market, and Grove Liquors LLC filed an amended class action complaint on July 15, 2016, against Visa Inc., Visa U.S.A., MasterCard, Discover, American Express, EMVCo and certain financial institutions in the U.S. District Court for the Northern District of California. The amended complaint asserts that defendants, through EMVCo, conspired to shift liability for fraudulent, faulty or otherwise rejected consumer credit card transactions from defendants to the purported class of merchants, defined as those merchants throughout the United States who have been subject to the "Liability Shift" from October 2015 to the present. Plaintiffs claim that the so-called "Liability Shift" violates Sections 1 and 3 of the Sherman Act and certain state laws, and seek treble damages, injunctive relief and attorneys' fees. On September 30, 2016, the court granted motions to dismiss the amended complaint filed by EMVCo and the financial institution defendants, but denied motions to dismiss filed by Visa Inc., Visa U.S.A., MasterCard, American Express and Discover.
Walmart Acceptance Agreement
On May 10, 2016, Wal-Mart Stores Inc. and various affiliates ("Walmart") filed a lawsuit against Visa U.S.A. in New York County Supreme Court. Walmart seeks a declaratory judgment that certain of its practices related to the acceptance of Visa debit cards did not previously and would not in the future constitute a breach of the acceptance agreement entered into between Walmart and Visa. Walmart also seeks attorneys' fees and a declaratory judgment that certain of Visa's actions violated the same agreement. On June 29, 2016, Visa answered the complaint and filed counterclaims seeking declaratory and injunctive relief, as well as costs and other remedies. In its counterclaims, Visa alleges that certain of Walmart's conduct and practices relating to the acceptance of Visa debit cards constitute a breach of the acceptance agreement and a breach of the implied duty of good faith and fair dealing, and that Walmart fraudulently induced Visa to enter into the acceptance agreement. On August 19, 2016, Walmart moved to dismiss Visa’s counterclaim for fraudulent inducement.
Kroger
On June 27, 2016, The Kroger Co. ("Kroger") filed a lawsuit against Visa Inc. in the U.S. District Court for the Southern District of Ohio. In its complaint, Kroger seeks a declaratory judgment that certain of Visa's rules related to the acceptance of Visa debit cards are inconsistent with the Dodd-Frank Act. Kroger also seeks damages and other relief related to certain state law claims. On August 11, 2016, Visa filed a motion to dismiss the complaint. On September 15, 2016, Kroger filed its opposition to Visa’s motion to dismiss, arguing, among other things, that Kroger seeks a declaratory judgment that Kroger has not breached its contract with Visa.
Broadway Grill
On July 12, 2016, Broadway Grill, Inc. ("Broadway Grill"), on behalf of itself and a putative class of California merchants that have accepted Visa-branded cards since January 1, 2004, filed a lawsuit against Visa Inc., Visa International and Visa U.S.A. in California state court. Based on allegations similar to those advanced by plaintiffs in MDL 1720, Broadway Grill pursues claims under California state antitrust and unfair business statutes. Broadway Grill seeks damages, costs and other remedies. On July 18, 2016, the case was removed to the U.S. District Court for the Northern District of California. On September 27, 2016, the district court granted leave to amend the complaint and entered an order remanding the case to California state court. Thereafter, Broadway Grill amended its complaint and Visa sought permission from the U.S. Court of Appeals for the Ninth Circuit to appeal the district court’s decision. On October 17, 2016, the district court ordered the case remanded to California state court, and Visa's request for permission to appeal is pending.
Summary of Significant Accounting Policies (Policies)
Organization 
Organization. In a series of transactions from October 1 to October 3, 2007, Visa Inc. (Visa or the Company) undertook a reorganization in which Visa U.S.A. Inc. (Visa U.S.A.), Visa International Service Association (Visa International), Visa Canada Corporation (Visa Canada) and Inovant LLC (Inovant) became direct or indirect subsidiaries of Visa and established the U.S. retrospective responsibility plan (the October 2007 reorganization or reorganization). See Note 3—U.S. and Europe Retrospective Responsibility Plans. The reorganization was reflected as a single transaction on October 1, 2007 using the purchase method of accounting with Visa U.S.A. as the accounting acquirer. Visa Europe Limited (Visa Europe) did not become a subsidiary of Visa Inc., but rather remained owned and governed by its European member financial institutions. On June 21, 2016, the Company acquired 100% of the share capital of Visa Europe. The Company's consolidated statements of operations do not reflect the financial results of Visa Europe for the 10 days from the acquisition date through June 30, 2016 as the impact was immaterial. See Note 2—Acquisition of Visa Europe.
Visa is a global payments technology company that connects consumers, merchants, financial institutions, businesses, strategic partners and governments in more than 200 countries and territories to fast, secure and reliable electronic payments. Visa and its wholly-owned consolidated subsidiaries, including Visa U.S.A., Visa International, Visa Worldwide Pte. Limited (VWPL), Visa Europe Limited (Visa Europe), Visa Canada, Inovant and CyberSource Corporation (CyberSource), operate one of the world's largest retail electronic payments network — VisaNet — which facilitates authorization, clearing and settlement of payment transactions and enables us to provide our financial institution and merchant clients a wide range of products, platforms and value-added services. VisaNet also offers fraud protection for account holders and assured payment for merchants. Visa is not a bank and does not issue cards, extend credit or set rates and fees for account holders on Visa products. In most cases, account holder and merchant relationships belong to, and are managed by, Visa's financial institution clients.
Basis of presentation 
Consolidation and basis of presentation. The 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 consolidated financial statements as of and for the periods presented. All significant intercompany accounts and transactions are eliminated in consolidation.
On March 18, 2015, the Company completed a four-for-one split of its class A common stock effected in the form of a stock dividend. All per share amounts and number of shares outstanding in the consolidated financial statements and accompanying notes are presented on a post-split basis. See Note 14—Stockholders' Equity.
Consolidation 
The Company's activities are interrelated, and each activity is dependent upon and supportive of the other. All significant operating decisions are based on analysis of Visa as a single global business. Accordingly, the Company has one reportable segment, Payment Services.
Use of estimates 
Use of estimates. The preparation of 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 consolidated financial statements and reported amounts of revenues and expenses during the reporting period. Future actual results could differ materially from these estimates. The use of estimates in specific accounting policies is described further below as appropriate.
Cash and cash equivalents 
Cash and cash equivalents. Cash and cash equivalents include cash and certain highly liquid investments with original maturities of 90 days or less from the date of purchase. Cash equivalents are primarily recorded at cost, which approximates fair value due to their generally short maturities.
Restricted cash--U.S. litigation escrow 
Restricted cash—U.S. litigation escrow. The Company maintains an escrow account from which monetary liabilities from settlements of, or judgments in, the U.S. covered litigation are paid. See Note 3—U.S. and Europe Retrospective Responsibility Plans and Note 20—Legal Matters for a discussion of the U.S. covered litigation. The escrow funds are held in money market investments, together with the interest earned, less applicable taxes payable, and classified as restricted cash on the consolidated balance sheets. Interest earned on escrow funds is included in non-operating income on the consolidated statements of operations.
Investments 
Investments and fair value. The Company measures certain assets and liabilities at fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements are reported under a three-level valuation hierarchy. See Note 4—Fair Value Measurements and Investments. The classification of the Company’s financial assets and liabilities within the hierarchy is as follows:
Level 1—Inputs to the valuation methodology are unadjusted quoted prices in active markets for identical assets or liabilities. The Company’s Level 1 assets include money market funds, publicly-traded equity securities and U.S. Treasury securities.
Level 2—Inputs to the valuation methodology can include: (1) quoted prices in active markets for similar (not identical) assets or liabilities; (2) quoted prices for identical or similar assets in non-active markets; (3) inputs other than quoted prices that are observable for the asset or liability; or (4) inputs that are derived principally from or corroborated by observable market data. The Company's Level 2 assets and liabilities include commercial paper, U.S. government-sponsored debt securities, corporate debt securities and foreign exchange derivative instruments.
Level 3—Inputs to the valuation methodology are unobservable and cannot be corroborated by observable market data. The Company's Level 3 assets and liabilities included auction rate securities and the Visa Europe put option at September 30, 2015.
Trading investment securities include mutual fund equity security investments related to various employee compensation and benefit plans. Trading activity in these investments is at the direction of the Company's employees. These investments are held in a trust and are not available for the Company's operational or liquidity needs. Interest and dividend income and changes in fair value are recorded in non-operating income, and offset in personnel expense on the consolidated statements of operations.
Available-for-sale investment securities include investments in debt and equity securities. These securities are recorded at cost at the time of purchase and are carried at fair value. The Company considers these securities to be available-for-sale to meet working capital and liquidity needs. Investments with original maturities of greater than 90 days and stated maturities of less than one year from the balance sheet date, or investments that the Company intends to sell within one year, are classified as current assets, while all other securities are classified as non-current assets. These investments are generally available to meet short-term liquidity needs. Unrealized gains and losses are reported in accumulated other comprehensive income or loss on the consolidated balance sheets until realized. The specific identification method is used to calculate realized gain or loss on the sale of marketable securities, which is recorded in non-operating income on the consolidated statements of operations. Dividend and interest income are recognized when earned and are included in non-operating income on the consolidated statements of operations.
The Company evaluates its debt and equity securities for other-than-temporary impairment, or OTTI, on an ongoing basis. When there has been a decline in fair value of a debt or equity security below the amortized cost basis, the Company recognizes OTTI if: (1) it has the intent to sell the security; (2) it is more likely than not that it will be required to sell the security before recovery of the amortized cost basis; or (3) it does not expect to recover the entire amortized cost basis of the security.
The Company applies the equity method of accounting for investments in other entities when it holds between 20% and 50% ownership in the entity or when it exercises significant influence. Under the equity method, the Company’s share of each entity’s profit or loss is reflected in non-operating income on the consolidated statements of operations. The equity method of accounting is also used for flow-through entities such as limited partnerships and limited liability companies when the investment ownership percentage is equal to or greater than 5% of outstanding ownership interests, regardless of whether the Company has significant influence over the investees.
The Company applies the cost method of accounting for investments in other entities when it holds less than 20% ownership in the entity and does not exercise significant influence, or for flow-through entities when the investment ownership is less than 5% and the Company does not exercise significant influence. These investments consist of equity holdings in non-public companies and are recorded in other assets on the consolidated balance sheets.
The Company regularly reviews investments accounted for under the cost and equity methods for possible impairment, which generally involves an analysis of the facts and changes in circumstances influencing the investment, expectations of the entity’s cash flows and capital needs, and the viability of its business model.
Financial instruments 
Financial instruments. The Company considers the following to be financial instruments: cash and cash equivalents, restricted cash-U.S. litigation escrow, trading and available-for-sale investment securities, settlement receivable and payable, customer collateral, non-marketable equity investments, settlement risk guarantee, and derivative instruments. See Note 4—Fair Value Measurements and Investments.
Settlement receivable and payable 
Settlement receivable and payable. The Company operates systems for authorizing, clearing and settling payment transactions worldwide. Most U.S. dollar settlements with the Company's financial institution clients are settled within the same day and do not result in a receivable or payable balance, while settlements in currencies other than the U.S. dollar generally remain outstanding for one to two business days, resulting in amounts due from and to clients.These amounts are presented as settlement receivable and settlement payable on the consolidated balance sheets.
Customer collateral 
Customer collateral. The Company holds cash deposits and other non-cash assets from certain clients in order to ensure their performance of settlement obligations arising from Visa payment products are processed in accordance with the Company's rules. The cash collateral assets are restricted and fully offset by corresponding liabilities and both balances are presented on the consolidated balance sheets, excluding cash collateral held by Visa Europe as its clients retain beneficial ownership and the cash is only accessible to the Company in the event of default by the client on its settled obligations. Non-cash collateral assets are held on behalf of the Company by a third party and are not recorded on the consolidated balance sheets. See Note 11—Settlement Guarantee Management.
Property, equipment and technology, net 
Property, equipment and technology, net. Property, equipment and technology are recorded at historical cost less accumulated depreciation and amortization, which are computed on a straight-line basis over the asset’s estimated useful life. Depreciation and amortization of technology, furniture, fixtures and equipment are computed over estimated useful lives ranging from 2 to 10 years. Capital leases are amortized over the lease term and leasehold improvements are amortized over the shorter of the useful life of the asset or lease term. Building improvements are depreciated between 3 and 40 years, and buildings are depreciated over 40 years. Improvements that increase functionality of the asset are capitalized and depreciated over the asset’s remaining useful life. Land and construction-in-progress are not depreciated. Fully depreciated assets are retained in property, equipment and technology, net, until removed from service.
Technology includes purchased and internally developed software, including technology assets obtained through acquisitions. Internally developed software represents software primarily used by the VisaNet electronic payments network. Internal and external costs incurred during the preliminary project stage are expensed as incurred. Qualifying costs incurred during the application development stage are capitalized. Once the project is substantially complete and ready for its intended use these costs are amortized on a straight-line basis over the technology's estimated useful life. Acquired technology assets are initially recorded at fair value and amortized on a straight-line basis over the estimated useful life.
The Company evaluates the recoverability of long-lived assets for impairment annually or more frequently if events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable. If the sum of expected undiscounted net future cash flows is less than the carrying amount of an asset or asset group, an impairment loss is recognized to the extent that the carrying amount of the asset or asset group exceeds its fair value. See Note 6—Property, Equipment and Technology, Net.
Leases 
Leases. The Company enters into operating and capital leases for the use of premises, software and equipment. Rent expense related to operating lease agreements, which may or may not contain lease incentives, is primarily recorded on a straight-line basis over the lease term.
Intangible assets, net 
Intangible assets, net. The Company records identifiable intangible assets at fair value on the date of acquisition and evaluates the useful life of each asset.
Finite-lived intangible assets primarily consist of customer relationships, reacquired rights, reseller relationships and trade names obtained through acquisitions. Finite-lived intangible assets are amortized on a straight-line basis and are tested for recoverability if events or changes in circumstances indicate that their carrying amounts may not be recoverable. These intangibles have useful lives ranging from 3 to 15 years. No events or changes in circumstances indicate that impairment existed as of September 30, 2016. See Note 7—Intangible Assets and Goodwill.
Indefinite-lived intangible assets consist of trade name, customer relationships and reacquired rights. Intangible assets with indefinite useful lives are not amortized but are evaluated for impairment annually or more frequently if events or changes in circumstances indicate that impairment may exist. The Company first assesses qualitative factors to determine whether it is necessary to perform a quantitative impairment test for indefinite-lived intangible assets. The Company assesses each category of indefinite-lived intangible assets for impairment on an aggregate basis, which may require the allocation of cash flows and/or an estimate of fair value to the assets or asset group. Impairment exists if the fair value of the indefinite-lived intangible asset is less than the carrying value. The Company relies on a number of factors when completing impairment assessments, including a review of discounted net future cash flows, business plans and the use of present value techniques.
The Company completed its annual impairment review of indefinite-lived intangible assets as of February 1, 2016, and concluded there was no impairment as of that date. No recent events or changes in circumstances indicate that impairment of the Company's indefinite-lived intangible assets existed as of September 30, 2016.
Goodwill 
Goodwill. Goodwill represents the excess of the purchase price over the fair value of the net assets acquired in a business combination. Goodwill is not amortized but is evaluated for impairment at the reporting unit level annually as of February 1, or more frequently if events or changes in circumstances indicate that impairment may exist.
The Company evaluated its goodwill for impairment on February 1, 2016, and concluded there was no impairment as of that date. No recent events or changes in circumstances indicate that impairment existed as of September 30, 2016.
Accrued litigation 
Accrued litigation. The Company evaluates the likelihood of an unfavorable outcome in legal or regulatory proceedings to which it is a party and records a loss contingency when it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. These judgments are subjective, based on the status of such legal or regulatory proceedings, the merits of the Company's defenses and consultation with corporate and external legal counsel. Actual outcomes of these legal and regulatory proceedings may differ materially from the Company's estimates. The Company expenses legal costs as incurred in professional fees in the consolidated statements of operations. See Note 20—Legal Matters.
Revenue recognition 
Revenue recognition. The Company's operating revenues are comprised principally of service revenues, data processing revenues, international transaction revenues and other revenues, reduced by costs incurred under client incentives arrangements. The Company recognizes revenue, net of sales and other similar taxes, when the price is fixed or determinable, persuasive evidence of an arrangement exists, the service is performed and collectability of the resulting receivable is reasonably assured.
Service revenues consist of revenues earned for services provided in support of client usage of Visa products. Current quarter service revenues are primarily assessed using a calculation of current pricing applied to the prior quarter's payments volume. The Company also earns revenues from assessments designed to support ongoing acceptance and volume growth initiatives, which are recognized in the same period the related volume is transacted.
Data processing revenues consist of revenues earned for authorization, clearing, settlement, network access and other maintenance and support services that facilitate transaction and information processing among the Company's clients globally. Data processing revenues are recognized in the same period the related transactions occur or services are rendered.
International transaction revenues are earned for cross-border transaction processing and currency conversion activities. Cross-border transactions arise when the country of origin of the issuer is different from that of the merchant. International transaction revenues are primarily generated by cross-border payments and cash volume.
Other revenues consist mainly of license fees for use of the Visa brand, revenues earned from Visa Europe in connection with the Visa Europe Framework Agreement (see Note 2—Acquisition of Visa Europe) prior to the acquisition of Visa Europe, fees for account holder services, licensing and certification and other activities related to the Company's acquired entities. Other revenues also include optional service or product enhancements, such as extended account holder protection and concierge services. Other revenues are recognized in the same period the related transactions occur or services are rendered.
Client incentives 
Client incentives. The Company enters into long-term contracts with financial institution clients, merchants and strategic partners for various programs designed to build payments volume, increase Visa product acceptance, win merchant routing transactions over Visa's network and drive innovation. These incentives are primarily accounted for as reductions to operating revenues or as operating expenses if a separate identifiable benefit at fair value can be established. The Company generally capitalizes advance incentive payments under these agreements if select criteria are met. The capitalization criteria include the existence of future economic benefits to Visa, the existence of legally enforceable recoverability language (e.g., early termination clauses), management's ability and intent to enforce the recoverability language and the ability to generate future earnings from the agreement in excess of amounts deferred. Capitalized amounts are amortized over the shorter of the period of contractual recoverability or the corresponding period of economic benefit. Incentives not yet paid are accrued systematically and rationally based on management's estimate of each client's performance. These accruals are regularly reviewed and estimates of performance are adjusted, as appropriate, based on changes in performance expectations, actual client performance, amendments to existing contracts or the execution of new contracts. See Note 17—Commitments and Contingencies.
Marketing 
Marketing. The Company expenses costs for the production of advertising as incurred. The cost of media advertising is expensed when the advertising takes place. Sponsorship costs are recognized over the period in which the Company benefits from the sponsorship rights. Promotional items are expensed as incurred, when the related services are received, or when the related event occurs.
Income taxes 
Income taxes. The Company's income tax expense consists of two components: current and deferred. Current income tax expense represents taxes paid or payable for the current period. Deferred tax assets and liabilities are recognized to reflect the future tax consequences attributable to temporary differences between the financial statement carrying amounts and the respective tax basis of existing assets and liabilities, and operating loss and credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. In assessing whether deferred tax assets are realizable, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. A valuation allowance is recorded for the portions that are not expected to be realized based on the level of historical taxable income, projections of future taxable income over the periods in which the temporary differences are deductible, and qualifying tax planning strategies.
Where interpretation of the tax law may be uncertain, the Company recognizes, measures and discloses income tax uncertainties. The Company accounts for interest expense and penalties related to uncertain tax positions as non-operating expense in the consolidated statements of operations. The Company files a consolidated federal income tax return and, in certain states, combined state tax returns. The Company elects to claim foreign tax credits in any given year if such election is beneficial to the Company. See Note 19—Income Taxes.
Pension and other postretirement benefit plans 
Pension and other postretirement benefit plans. The Company’s defined benefit pension and other postretirement benefit plans are actuarially evaluated, incorporating various critical assumptions including the discount rate and the expected rate of return on plan assets (for qualified pension plans). The discount rate is based on a cash flow matching analysis, with the projected benefit payments matching spot rates from a yield curve developed from high-quality corporate bonds. The expected rate of return on pension plan assets considers the current and expected asset allocation, as well as historical and expected returns on each plan asset class. Any difference between actual and expected plan experience, including asset return experience, in excess of a 10% corridor is recognized in net periodic pension cost over the expected average employee future service period, which is approximately 9 years for the U.S. plans and 12 years for the Visa Europe U.K. pension plan. Other assumptions involve demographic factors such as retirement age, mortality, attrition and the rate of compensation increases. The Company evaluates assumptions annually and modifies them as appropriate.
The Company recognizes the funded status of its benefit plans in its consolidated balance sheets as other assets, accrued liabilities and other liabilities. The Company recognizes settlement losses when it settles pension benefit obligations, including making lump-sum cash payments to plan participants in exchange for their rights to receive specified pension benefits, when certain thresholds are met. See Note 10—Pension, Postretirement and Other Benefits.
Foreign currency remeasurement and translation 
Foreign currency remeasurement and translation. The Company's functional currency is the U.S. dollar for the majority of its foreign operations except for Visa Europe whose functional currency is the euro. Transactions denominated in currencies other than the applicable functional currency are converted to the functional currency at the exchange rate on the transaction date. At period end, monetary assets and liabilities are remeasured to the functional currency using exchange rates in effect at the balance sheet date. Non-monetary assets and liabilities are remeasured at historical exchange rates. Resulting foreign currency transaction gains and losses related to conversion and remeasurement are recorded in general and administrative expense in the consolidated statements of operations and were not material for fiscal 2016, 2015 and 2014.
Where a non-U.S. currency is the functional currency, translation from that functional currency to the U.S. dollar is performed for balance sheet accounts using exchange rates in effect at the balance sheet date and for revenue and expense accounts using an average exchange rate for the period. Resulting translation adjustments are reported as a component of accumulated other comprehensive income or loss on the consolidated balance sheets.
Derivative financial instruments 
Derivative financial instruments. The Company uses foreign exchange forward derivative contracts to reduce its exposure to foreign currency rate changes on forecasted non-functional currency denominated operational cash flows. Derivatives are carried at fair value on a gross basis in either prepaid and other current assets or accrued liabilities on the consolidated balance sheets. At September 30, 2016, derivatives outstanding mature within 18 months or less. Gains and losses resulting from changes in fair value of designated derivative instruments are accounted for either in accumulated other comprehensive income or loss on the consolidated balance sheets, or in the consolidated statements of operations in the corresponding account where revenue or expense is hedged, or to general and administrative for hedge amounts determined to be ineffective. Gains and losses resulting in changes in fair value of derivative instruments not designated for hedge accounting are recorded in general and administrative for hedges of operating activity, or non-operating income (expense) for hedges of non-operating activity. See Note 12—Derivative and Non-derivative Financial Instruments.
Non-derivative Financial Instrument Designated as a Net Investment Hedge 
Non-derivative financial instrument designated as a net investment hedge. The Company designated the euro-denominated deferred cash consideration liability, a non-derivative financial instrument, as a hedge against a portion of the Company's euro-denominated net investment in Visa Europe. See Note 2—Acquisition of Visa Europe. Changes in the value of the deferred cash consideration liability, attributable to the change in exchange rates at the end of each reporting period, partially offset the foreign currency translation adjustments resulting from the euro-denominated net investment, are reported as a component of accumulated other comprehensive income or loss on the Company's consolidated balance sheet. See Note 12—Derivative and Non-derivative Financial Instruments.
Guarantees and indemnifications 
Guarantees and indemnifications. The Company recognizes an obligation at inception for guarantees and indemnifications that qualify for recognition, regardless of the probability of occurrence. The Company indemnifies its financial institution clients for settlement losses suffered due to the failure of any other client to fund its settlement obligations in accordance with the Visa Rules. The estimated fair value of the liability for settlement indemnification is included in accrued liabilities on the consolidated balance sheets and is described in Note 11—Settlement Guarantee Management.
Share-based compensation 
Share-based compensation. The Company recognizes share-based compensation cost using the fair value method of accounting. The Company recognizes compensation cost for awards with only service conditions on a straight-line basis over the requisite service period, which is generally the vesting period. Compensation cost for performance and market-condition-based awards is recognized on a graded-vesting basis. The amount is initially estimated based on target performance and is adjusted as appropriate based on management's best estimate throughout the performance period. See Note 16—Share-based Compensation.
Earnings per share 
Earnings per share. The Company calculates earnings per share using the two-class method to reflect the different rights of each class and series of outstanding common stock. The dilutive effect of incremental common stock equivalents is reflected in diluted earnings per share by application of the treasury stock method. See Note 15—Earnings Per Share.
Recently Issued Accounting Pronouncements 
Recently Issued Accounting Pronouncements
In May 2014, the Financial Accounting Standards Board ("FASB") issued ASU No. 2014-09, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of goods or services to customers. The ASU will replace existing revenue recognition guidance in U.S. GAAP when it becomes effective. In August 2015, the FASB issued ASU No. 2015-14, which defers the effective date of ASU No. 2014-09 by one year. In March 2016, the FASB issued ASU 2016-08, which clarifies the implementation guidance on principal versus agent considerations under the new revenue recognition standard. In April 2016, the FASB issued ASU 2016-10, which clarifies the implementation guidance on identifying promised goods or services and on determining whether an entity's promise to grant a license with either a right to use the entity's intellectual property (which is satisfied at a point in time) or a right to access the entity's intellectual property (which is satisfied over time). In May 2016, the FASB issued ASU 2016-11, which rescinds certain SEC staff observer comments upon adoption of ASU 2014-09, including the SEC comments related to consideration given by a vendor to a customer. In May 2016, the FASB also issued ASU 2016-12, which provides narrow scope improvements and technical expedients on assessing collectibility, presentation of sales taxes, evaluating contract modifications and completed contracts at the time of transition and the disclosure requirement for the effect of the accounting change for the period of adoption.The Company will adopt the standard effective October 1, 2018. The standard permits the use of either the retrospective or cumulative effect transition method. The Company has not yet selected a transition method and is evaluating the full effect that ASU 2014-09 and all of its related subsequent updates will have on its consolidated financial statements and related disclosures.
In June 2014, the FASB issued ASU No. 2014-12, which requires a performance target in stock compensation awards that affects vesting, and is achievable after the requisite service period, be treated as a performance condition. The Company will adopt the standard effective October 1, 2016. The adoption is not expected to have a material impact on the consolidated financial statements.
In April 2015, the FASB issued ASU No. 2015-03, which simplifies the presentation of debt issuance costs by requiring that debt issuance costs be presented in the balance sheet as a direct deduction from the carrying amount of debt liability, consistent with debt discounts and premiums. Subsequently, in August 2015, the FASB issued ASU No. 2015-15, which adds SEC staff guidance on the presentation of debt issuance costs related to line-of-credit arrangements, allowing for the deferral and presentation of debt issuance costs as an asset and subsequent amortization of the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. The Company elected to early adopt the standards effective October 1, 2015 and the carrying amount of the Company's debt liability is presented net of issuance costs on the consolidated financial statements. See Note 9—Debt.
In April 2015, the FASB issued ASU No. 2015-05, which provides guidance about a customer's accounting for fees paid in a cloud computing arrangement. The amendment will help entities evaluate whether such an arrangement includes a software license, which should be accounted for consistent with the acquisition of other software licenses; otherwise, it should be accounted for as a service contract. The Company will adopt the standard effective October 1, 2016. The adoption is not expected to have a material impact on the consolidated financial statements.
In September 2015, the FASB issued ASU No. 2015-16, which simplifies the accounting for post-acquisition adjustments by eliminating the requirement to retrospectively account for the adjustments made to provisional amounts recognized in a business combination. The Company elected to early adopt this guidance on a prospective basis effective October 1, 2015. The adoption did not have a material impact on the consolidated financial statements.
In November 2015, the FASB issued ASU 2015-17, which simplifies the presentation of deferred income taxes by requiring that deferred tax assets and liabilities be presented as non-current. The standard impacts presentation only. The Company elected to early adopt the standard on a retrospective basis effective October 1, 2015 and all deferred tax assets and liabilities are classified as non-current. Previously, current deferred tax assets had been presented separately and current deferred tax liabilities had been included in accrued liabilities on the consolidated balance sheets. All prior period amounts within the consolidated financial statements have been reclassified to conform to current period presentation. The reclassification did not affect the Company's total equity, operating revenues, net income, comprehensive income or cash flows as of and for the periods presented. The adoption did not have a material impact on the consolidated financial statements.
In January 2016, the FASB issued ASU 2016-01, which amends certain aspects of recognition, measurement, presentation and disclosure of financial instruments, including the requirement to measure certain equity investments at fair value with changes in fair value recognized in net income. The Company will adopt the standard effective October 1, 2018. The adoption is not expected to have a material impact on the consolidated financial statements.
In February 2016, the FASB issued ASU 2016-02, which requires the recognition of lease assets and lease liabilities arising from operating leases in the statement of financial position. The Company will adopt the standard effective October 1, 2019 and does not anticipate that this new accounting guidance will have a material impact on its consolidated statement of operations. The Company estimates the value of leased assets and liabilities that may be recognized could be in the hundreds of millions of dollars. The actual impact will depend on the Company's lease portfolio at the time of adoption.
In March 2016, the FASB issued ASU 2016-05, which clarifies that a change in the counterparty to a derivative instrument that has been designated as the hedging instrument under Topic 815, Derivatives and Hedging, does not, in and of itself, require dedesignation of that hedging relationship provided that all other hedge accounting criteria continue to be met. The Company will adopt the standard effective October 1, 2017. The adoption is not expected to have a material impact on the consolidated financial statements.
In March 2016, the FASB issued ASU 2016-06, which clarifies the requirements for assessing whether contingent call/put options that can accelerate the payment of principal on debt instruments are clearly and closely related to their debt hosts. An entity performing the assessment is required to assess the embedded call/put options solely in accordance with a four-step decision sequence. The Company will adopt the standard effective October 1, 2017. The adoption is not expected to have a material impact on the consolidated financial statements.
In March 2016, the FASB issued ASU 2016-07, which eliminates the requirement that an entity retroactively adopt the equity method of accounting if an investment qualifies for use of the equity method as a result of an increase in the level of ownership or degree of influence. The equity method investor is required to add the cost of acquiring the additional interest in the investee to the current basis of the investor's previously held interest and adopt the equity method of accounting as of the date the investment becomes qualified for equity method accounting. The Company will adopt the standard effective October 1, 2017. The adoption is not expected to have a material impact on the consolidated financial statements.
In March 2016, the FASB issued ASU 2016-09, which simplifies several aspects of the accounting for share-based payments, including immediate recognition of all excess tax benefits and deficiencies in the income statement, changing the threshold to qualify for equity classification up to the employees' maximum statutory tax rates, allowing an entity-wide accounting policy election to either estimate the number of awards that are expected to vest or account for forfeitures as they occur, and clarifying the classification on the statement of cash flows for the excess tax benefit and employee taxes paid when an employer withholds shares for tax-withholding purposes. The Company will early adopt the standard effective October 1, 2016. The adoption is not expected to have a material impact on the consolidated financial statements.
In May 2016, the FASB issued ASU 2016-13, which amends guidance on reporting credit losses for assets held at amortized cost basis and available-for-sale debt securities. The amendment requires a financial asset measured at amortized cost basis to be presented at the net amount expected to be collected. The amendment in this update also requires that credit losses on available-for-sale debt securities be presented as an allowance rather than as a write-down. The measurement of credit losses for newly recognized financial assets and subsequent changes in the allowance for credit losses are recorded in the statement of income. The Company is evaluating the full effect that ASU 2016-13 will have on its consolidated financial statements and will adopt the standard effective October 1, 2020.
In August 2016, the FASB issued ASU 2016-15, which provides guidance on eight specific cash flow issues, including debt prepayments or debt extinguishment costs. The Company will adopt the standard effective October 1, 2018. The adoption is not expected to have a material impact on the consolidated financial statements.
In October 2016, the FASB issued ASU 2016-16, which requires that entities recognize the income tax consequences of an intra-entity transfer of an asset, other than inventory, when the transfer occurs. The Company is evaluating the effect that ASU 2016-16 will have on its consolidated financial statements and is considering early adoption of the standard.
Visa Europe (Tables)
Schedule of Purchase Consideration 
The following table details the purchase consideration:
 
Accounting Purchase Consideration
 
(in millions)
Cash payment
$
13,882

Fair value of preferred stock(1)
5,692

Total upfront consideration
$
19,574

Fair value of deferred cash consideration(2)
1,236

Total consideration before adjustments
$
20,810

Less: Visa Europe Framework Agreement loss(3)
(1,856
)
Less: Treasury stock(4)
(170
)
Total accounting purchase consideration
$
18,784

(1) 
The fair value of preferred stock was determined based on its as-converted value of $6.1 billion on June 21, 2016, less a 6% discount for illiquidity as these shares are subject to limitations on transferability. The fair value was also adjusted to reflect $25 million of "right to recover for covered losses" related to VE territory covered losses prior to the Closing. See Note 20—Legal Matters.
(2) 
This amount reflects the fair value of deferred cash consideration of €1.0 billion, plus 4.0% compound annual interest, payable on the third anniversary of the Closing, discounted at a rate of 1.2%. At September 30, 2016, the deferred consideration of $1.2 billion reflects interest accretion recognized during the three months ended September 30, 2016, more than offset by the impact of changes in the euro to U.S. dollar exchange rate from the Closing.
Total consideration has been adjusted to account for the following items to arrive at the accounting purchase consideration:

(3) 
the loss upon consummation of the transaction resulting from the effective settlement of the Framework Agreement between Visa and Visa Europe. The Visa Europe Framework Agreement provided Visa Europe with a perpetual, exclusive right to operate the Visa business in the Visa Europe region in exchange for a license fee paid to Visa. Under the terms of the Framework Agreement, the license fee paid by Visa Europe has increased modestly since inception in 2007, while the value of the Visa Europe business has increased at a greater rate. Using an income approach, the Company assessed the contractual terms and conditions of the Framework Agreement as compared to current market conditions and the historical and expected financial performance of Visa Europe. Based on the analysis performed, the Company determined that the terms were not at fair value as determined under U.S. GAAP at the Closing. The present value of the expected differential between payments required by the Framework Agreement and those that would be required if the contract were at fair value under U.S. GAAP was calculated over the Framework Agreement's contractual perpetual term, resulting in a loss of $1.9 billion recognized within operating expense in the Company's consolidated statement of operations during the third quarter of fiscal 2016, and a reduction to the purchase accounting consideration; and
(4) 
the fair value of the Visa class C common stock held by Visa Europe as of the Closing.
Schedule of Purchase Price Allocation 
The following table summarizes the preliminary purchase price allocation.
 
Preliminary Purchase Price Allocation
 
(in millions)
Current assets(1)
$
4,457

Non-current assets(2)
258

Current liabilities(3)
(2,731
)
Non-current liabilities(2)
(2,605
)
Tangible assets and liabilities
$
(621
)
Intangible assets — customer relationships and reacquired rights(2)
16,137

Goodwill(4)
3,268

Fair value of net assets acquired
$
18,784

(1) 
Current assets are largely comprised of cash and cash equivalents and settlement receivable.
(2) 
Intangible assets consist of customer relationships and reacquired rights, which have been valued as a single composite intangible asset as they are inextricably linked. These intangibles are considered indefinite-lived assets as the associated customer relationships have historically not experienced significant attrition, and the reacquired rights are based on the Framework Agreement, which has a perpetual term. Non-current assets and liabilities include deferred tax assets and liabilities that result in net deferred tax liabilities of $2.4 billion, which are primarily related to these indefinite-lived intangible assets, and are not expected to be realized in the foreseeable future.
(3) 
Current liabilities assumed mainly include settlement payable, client incentives liabilities and accrued liabilities.
(4) 
The excess of purchase consideration over net assets acquired was recorded as goodwill, which represents the value that is expected from increased scale and synergies as a result of the integration of both businesses.
Schedule of Acquisition Impact on Net Income 
Therefore, the acquisition of Visa Europe reduced Visa Inc. fiscal year 2016 consolidated net income by approximately $872 million, as follows:
 
 
Impact of Visa Europe acquisition on fiscal 2016 consolidated net income:
(in millions)
Visa Europe net income included in consolidated net income
$
299

Less approximately $65 million of revenue that would have been recorded by Visa Inc. under the Framework Agreement, net of tax
(41
)
Less acquisition-related expense recorded by Visa Inc., net of tax, upon:
 
Effective settlement of the Framework Agreement
(1,184
)
Interest expense incurred on $16.0 billion debt, net of interest income earned
(243
)
Transaction costs incurred
(96
)
Add acquisition-related gains recorded by Visa Inc., net of tax, upon:
 
Revaluation of Visa Europe put option
255

Remeasurement of euro deposits
91

Remeasurement of currency forward contracts
47

Total impact of Visa Europe acquisition on consolidated net income
$
(872
)
Schedule of Pro Forma Information 
 
Pro Forma Consolidated Results
 
Fiscal 2016
 
Fiscal 2015
 
(in millions, except per share data)
Total operating revenues
$
16,090

 
$
15,425

Net income
$
7,072

 
$
5,210

Diluted earnings per share
$
2.93

 
$
2.06

U.S. and Europe Retrospective Responsibility Plan (Tables)
Schedule of Restricted Cash and Cash Equivalents
The following table sets forth the changes in the U.S. litigation escrow account:
 
Fiscal 2016
 
Fiscal 2015
 
(in millions)
Balance at October 1
$
1,072

 
$
1,498

Payments to opt-out merchants(1)
(45
)
 
(426
)
Balance at September 30
$
1,027

 
$
1,072

(1)
These payments are associated with the interchange multidistrict litigation. See Note 20—Legal Matters.
Fair Value Measurements and Investments (Tables)
Fair Value, Assets and Liabilities Measured on Recurring Basis 
Assets and Liabilities Measured at Fair Value on a Recurring Basis
 
Fair Value Measurements at September 30
Using Inputs Considered as
 
Level 1
 
Level 2
 
Level 3
 
2016
 
2015
 
2016
 
2015
 
2016
 
2015
 
(in millions)
Assets
 
 
 
 
 
 
 
 
 
 
 
Cash equivalents and restricted cash:
 
 
 
 
 
 
 
 
 
 
 
Money market funds
$
4,537

 
$
3,051

 
 
 
 
 
 
 
 
U.S. government-sponsored debt securities
 
 
 
 
$
196

 
$
280

 
 
 
 
Investment securities, trading:
 
 
 
 
 
 
 
 
 
 
 
Equity securities
71

 
66

 
 
 
 
 
 
 
 
Investment securities, available-for-sale:
 
 
 
 
 
 
 
 
 
 
 
U.S. government-sponsored debt securities
 
 
 
 
4,699

 
2,615

 
 
 
 
U.S. Treasury securities
2,178

 
2,656

 
 
 
 
 
 
 
 
Equity securities
53

 
4

 
 
 
 
 
 
 
 
Corporate debt securities
 
 
 
 
249

 
533

 
 
 
 
Auction rate securities
 
 
 
 
 
 
 
 
$
—

 
$
7

Prepaid and other current assets:
 
 
 
 
 
 
 
 
 
 
 
Foreign exchange derivative instruments
 
 
 
 
50

 
76

 
 
 
 
Other Assets:
 
 
 
 
 
 
 
 
 
 
 
Foreign exchange derivative instruments
 
 
 
 
6

 
 
 
 
 
 
Total
$
6,839

 
$
5,777

 
$
5,200

 
$
3,504

 
$
—

 
$
7

Liabilities
 
 
 
 
 
 
 
 
 
 
 
Accrued liabilities:
 
 
 
 
 
 
 
 
 
 
 
Visa Europe put option
 
 
 
 
 
 
 
 
$
—

 
$
255

Foreign exchange derivative instruments
 
 
 
 
$
116

 
$
13

 
 
 
 
Other liabilities:
 
 
 
 
 
 
 
 
 
 
 
Foreign exchange derivative instruments
 
 
 
 
$
20

 
 
 
 
 
 
Total
$
—

 
$
—

 
$
136

 
$
13

 
$
—

 
$
255

Schedule of Carrying Values and Estimated Fair Values of Debt Instruments 
The following table presents the carrying amount and estimated fair value of the Company’s debt in order of maturity:
 
September 30, 2016
 
Carrying Amount
 
Estimated Fair Value
 
(in millions)
1.20% Senior Notes due December 2017
$
1,746

 
$
1,754

2.20% Senior Notes due December 2020
2,988

 
3,077

2.80% Senior Notes due December 2022
2,238

 
2,359

3.15% Senior Notes due December 2025
3,964

 
4,225

4.15% Senior Notes due December 2035
1,485

 
1,698

4.30% Senior Notes due December 2045
3,461

 
4,045

 
$
15,882

 
$
17,158

Available-for-sale Securities 
The amortized cost, unrealized gains and losses and fair value of available-for-sale investment securities are as follows:
 
September 30, 2016
 
September 30, 2015

 
Amortized
Cost
 
Gross Unrealized
 
Fair
Value
 
Amortized
Cost
 
Gross Unrealized
 
Fair
Value
 
Gains
 
Losses
 
Gains
 
Losses
 
 
(in millions)
U.S. government-sponsored debt securities
$
4,693

 
$
6

 
$
—

 
$
4,699

 
$
2,612

 
$
3

 
$
—

 
$
2,615

U.S. Treasury securities
2,176

 
3

 
—

 
2,179

 
2,652

 
4

 
—

 
2,656

Equity securities
7

 
46

 
—

 
53

 
4

 
—

 
—

 
4

Corporate debt securities
248

 
—

 
—

 
248

 
533

 
—

 
—

 
533

Auction rate securities
—

 
—

 
—

 
—

 
7

 
—

 
—

 
7

Total
$
7,124

 
$
55

 
$
—

 
$
7,179

 
$
5,808

 
$
7

 
$
—

 
$
5,815

Less: current portion of available-for-sale investment securities
 
 
 
 
 
 
(3,248
)
 
 
 
 
 
 
 
(2,431
)
Long-term available-for-sale investment securities
 
 
 
 
 
 
$
3,931

 
 
 
 
 
 
 
$
3,384

Available for Sale Investments Classified by Contractual Maturity Date 
 
Amortized Cost
 
Fair Value
 
(in millions)
September 30, 2016:
 
 
 
Due within one year
$
3,193

 
$
3,195

Due after 1 year through 5 years
3,925

 
3,931

Due after 5 years through 10 years
—

 
—

Due after 10 years
—

 
—

Total
$
7,118

 
$
7,126


Investment Income 
Investment income is recorded as non-operating income in the Company's consolidated statements of operations and consisted of the following:
 
For the Years Ended
September 30,
 
2016
 
2015
 
2014
 
(in millions)
Interest and dividend income on cash and investments
$
75

 
$
31

 
$
25

Gain on other investments
5

 
3

 
8

Investment securities, trading:
 
 
 
 
 
Unrealized gains (losses), net
3

 
(6
)
 
(2
)
Realized gains, net
—

 
2

 
6

Investment securities, available-for-sale:
 
 
 
 
 
Realized gains, net
3

 
21

 
1

Other-than-temporary impairment on investments
(4
)
 
(5
)
 
(3
)
Investment income
$
82

 
$
46

 
$
35

Prepaid Expenses and Other Assets (Tables)
Prepaid Expenses and Other Current Assets Disclosure 
Prepaid expenses and other current assets consisted of the following:
 
September 30,
2016
 
September 30,
2015
 
(in millions)
Prepaid operating expenses and maintenance
$
151

 
$
137

Income tax receivable (See Note 19—Income Taxes)
232

 
77

Foreign exchange derivative instruments (See Note 12—Derivative Financial Instruments)
50

 
76

Other
122

 
63

Total
$
555

 
$
353

Schedule of Other Assets, Noncurrent 
Other non-current assets consisted of the following:
 
September 30,
2016
 
September 30,
2015
 
(in millions)
Non-current income tax receivable (See Note 19—Income Taxes)
$
731

 
$
627

Pension assets (See Note 10—Pension, Postretirement and Other Benefits)
22

 
36

Other investments (See Note 4—Fair Value Measurements and Investments)
46

 
45

Long-term prepaid operating expenses and other
72

 
57

Non-current deferred tax assets (See Note 19—Income Taxes)(1)
22

 
13

Total
$
893

 
$
778

(1) 
The Company elected to early adopt ASU 2015-17 on a retrospective basis effective October 1, 2015 and all deferred tax assets and liabilities are classified as non-current. Previously, current deferred tax assets had been presented separately and current deferred tax liabilities had been included in accrued liabilities on the consolidated balance sheets. See Note 1—Summary of Significant Accounting Policies and Note 19—Income Taxes.
Property, Equipment and Technology, Net (Tables)
Property, Plant and Equipment 
Property, equipment and technology, net, consisted of the following:
 
September 30,
2016
 
September 30,
2015
 
(in millions)
Land
$
74

 
$
71

Buildings and building improvements
839

 
803

Furniture, equipment and leasehold improvements
1,382

 
1,267

Construction-in-progress
125

 
120

Technology
2,378

 
2,022

Total property, equipment and technology
4,798

 
4,283

Accumulated depreciation and amortization
(2,648
)
 
(2,395
)
Property, equipment and technology, net
$
2,150

 
$
1,888

Expected amortization expense 
At September 30, 2016, estimated future amortization expense on technology was as follows:
Fiscal:
 
2017
 
2018
 
2019
 
2020
 
2021 and thereafter
 
Total
 
 
 (in millions)
Estimated future amortization expense
 
$
274

 
$
209

 
$
161

 
$
108

 
$
84

 
$
836

Intangible Assets, Net (Tables)
Schedule of Intangible Assets by Major Class 
Indefinite-lived and finite-lived intangible assets consisted of the following: 
 
September 30, 2016
 
September 30, 2015
 
Gross
 
Accumulated
Amortization
 
Net
 
Gross
 
Accumulated
Amortization
 
Net
 
(in millions)
Finite-lived intangible assets:
 
 
 
 
 
 
 
 
 
 
 
Customer relationships
$
351

 
$
(220
)
 
$
131

 
$
351

 
$
(196
)
 
$
155

Trade names
192

 
(80
)
 
112

 
192

 
(67
)
 
125

Reseller relationships
95

 
(70
)
 
25

 
95

 
(59
)
 
36

Other
18

 
(9
)
 
9

 
53

 
(17
)
 
36

Total finite-lived intangible assets
$
656

 
$
(379
)
 
$
277

 
$
691

 
$
(339
)
 
$
352

Indefinite-lived intangible assets:
 
 
 
 


 
 
 
 
 


Customer relationships and reacquired rights
$
22,873

 
$
—

 
$
22,873

 
$
6,925

 
$
—

 
$
6,925

Visa trade name
4,084

 
—

 
4,084

 
2,564

 
—

 
2,564

  Visa Europe franchise right
—

 
—

 
—

 
1,520

 
—

 
1,520

Total Indefinite-lived intangible assets
$
26,957

 
$
—

 
$
26,957

 
$
11,009

 
$
—

 
$
11,009

Total intangible assets, net
$
27,613

 
$
(379
)
 
$
27,234

 
$
11,700

 
$
(339
)
 
$
11,361

Schedule of Estimated Future Amortization Expense 
At September 30, 2016, estimated future amortization expense on finite-lived intangible assets is as follows:
Fiscal:
 
2017
 
2018
 
2019
 
2020
 
2021 and
thereafter
 
Total
 
 
(in millions)
Estimated future amortization expense
 
$
46

 
40

 
40

 
40

 
111

 
$
277

Accrued and Other Liabilities (Tables)
Accrued Liabilities Table 
Accrued liabilities consisted of the following:
 
September 30,
2016
 
September 30,
2015
 
(in millions)
Accrued operating expenses(1)
$
347

 
$
257

Visa Europe put option (See Note 2—Acquisition of Visa Europe)(2)
—

 
255

Accrued interest expenses(3)
145

 
—

Accrued income taxes (See Note 19—Income Taxes)
153

 
75

Other(5)
483

 
262

Total
$
1,128

 
$
849


Other Noncurrent Liabilities, Table 
Other non-current liabilities consisted of the following:
 
September 30,
2016
 
September 30,
2015
 
(in millions)
Accrued income taxes (See Note 19—Income Taxes)(4)
$
911

 
$
752

Employee benefits
137

 
77

Other
114

 
68

Total
$
1,162

 
$
897

(1) 
Increase includes accrued operating expenses assumed from the Visa Europe acquisition.
(2) 
On June 21, 2016, the Company acquired 100% of the share capital of Visa Europe, effected by the Visa Europe board of directors' exercise of the amended Visa Europe put option. Therefore, the Visa Europe put option was contractually terminated as a result of the transaction. See Note 2—Acquisition of Visa Europe.
(3) 
Interest expenses accrued as at September 30, 2016 is related to the issuance of long-term debt in December 2015. See Note 9—Debt.
(4) 
The increase in non-current accrued income taxes is primarily related to the increase in liabilities for uncertain tax positions.
(5) 
Debt (Tables)
Schedule of Debt 
The Company had outstanding debt as follows:
 
September 30, 2016
 
 
 
Principal Amount
 
Unamortized Discounts and Debt Issuance Costs
 
Carrying Amount
 
Effective Interest Rate
 
(in millions, except percentages)
1.20% Senior Notes due December 2017 (the "2017 Notes")
$
1,750

 
$
(4
)
 
$
1,746

 
1.37
%
2.20% Senior Notes due December 2020 (the "2020 Notes")
3,000

 
(12
)
 
2,988

 
2.30
%
2.80% Senior Notes due December 2022 (the "2022 Notes")
2,250

 
(12
)
 
2,238

 
2.89
%
3.15% Senior Notes due December 2025 (the "2025 Notes")
4,000

 
(36
)
 
3,964

 
3.26
%
4.15% Senior Notes due December 2035 (the "2035 Notes")
1,500

 
(15
)
 
1,485

 
4.23
%
4.30% Senior Notes due December 2045 (the "2045 Notes")
3,500

 
(39
)
 
3,461

 
4.37
%
Total long-term debt
$
16,000

 
$
(118
)
 
$
15,882

 
 
Debt Instrument Redemption 
Series
 
Maturity/Par Call Date
 
Spread
2017 Notes
 
December 14, 2017
 
5 bps
2020 Notes
 
November 14, 2020
 
10 bps
2022 Notes
 
October 14, 2022
 
12.5 bps
2025 Notes
 
September 14, 2025
 
15 bps
2035 Notes
 
June 14, 2035
 
20 bps
2045 Notes
 
June 14, 2045
 
20 bps
Schedule of Future Principal Payments on Outstanding Debt 
Future principal payments on the Company's outstanding debt are as follows:
Fiscal Year
2017
 
2018
 
2019
 
2020
 
2021
 
Thereafter
 
Total
(in millions)
$
—

 
1,750

 
—

 
—

 
3,000

 
11,250

 
$
16,000

Pension, Postretirement and Other Benefits (Tables)
Schedule of Changes in Projected Benefit Obligations 
Change in Benefit Obligation:
 
U.S. Plans
 
Non-U.S. Plans
 
Pension Benefits
 
Other
Postretirement  Benefits
 
Pension Benefits
 
September 30,
 
September 30,
 
September 30,
 
2016
 
2015
 
2016
 
2015
 
2016
 
(in millions)
Benefit obligation—beginning of fiscal year
$
1,005

 
$
983

 
$
18

 
$
20

 
$
—

Visa Europe acquisition
—

 
—

 
—

 
—

 
381

Service cost
13

 
47

 
—

 
—

 
1

Interest cost
40

 
40

 
1

 
1

 
3

Actuarial loss (gain)
86

 
40

 
(2
)
 
—

 
86

Benefit payments
(64
)
 
(105
)
 
(3
)
 
(3
)
 
(1
)
Plan amendment
(8
)
 
—

 
—

 
—

 
—

Foreign currency exchange rate changes
—

 
—

 
—

 
—

 
4

Benefit obligation—end of fiscal year
$
1,072

 
$
1,005

 
$
14

 
$
18

 
$
474

Accumulated benefit obligation
$
1,072

 
$
994

 
NA

 
NA

 
$
474

Change in Plan Assets:
 
 
 
 
 
 
 
 
 
Fair value of plan assets—beginning of fiscal year
$
1,022

 
$
1,117

 
$
—

 
$
—

 
$
—

Visa Europe acquisition
—

 
—

 
—

 
—

 
287

Actual return on plan assets
118

 
(6
)
 
—

 
—

 
25

Company contribution
1

 
16

 
3

 
3

 
102

Benefit payments
(64
)
 
(105
)
 
(3
)
 
(3
)
 
(1
)
Foreign currency exchange rate changes
—

 
—

 
—

 
—

 
2

Fair value of plan assets—end of fiscal year
$
1,077

 
$
1,022

 
$
—

 
$
—

 
$
415

Funded status at end of fiscal year
$
5

 
$
17

 
$
(14
)
 
$
(18
)
 
$
(59
)
Recognized in Consolidated Balance Sheets:
 
 
 
 
 
 
 
 
 
Non-current asset
$
22

 
$
36

 
$
—

 
$
—

 
$
—

Current liability
(9
)
 
(9
)
 
(3
)
 
(3
)
 
(6
)
Non-current liability
(8
)
 
(10
)
 
(11
)
 
(15
)
 
(53
)
Funded status at end of fiscal year
$
5

 
$
17

 
$
(14
)
 
$
(18
)
 
$
(59
)
 
 
 
 
 
 
 
 
 
 
Pension and Other Postretirement Benefits, Recognized in Accumulated Comprehensive Income (Loss) Disclosure 
Amounts recognized in accumulated other comprehensive income before tax: 
 
U.S. Plans
 
Non-U.S. Plans
 
Pension Benefits
 
Other
Postretirement Benefits
 
Pension Benefits
September 30,
 
September 30,
 
September 30
 
2016
 
2015
 
2016
 
2015
 
2016
 
(in millions)
Net actuarial loss (gain)
$
241

 
$
232

 
$
(5
)
 
$
(5
)
 
$
66

Prior service credit
—

 
(9
)
 
(2
)
 
(5
)
 
—

Total
$
241

 
$
223

 
$
(7
)
 
$
(10
)
 
$
66

Pension And Other Postretirement Benefits, Expected Amortization Of Accumulated Other Comprehensive Income, Disclosure 
Amounts from accumulated other comprehensive income to be amortized into net periodic benefit cost in fiscal 2017: 
 
U.S. Plans
 
Non-U.S. Plans
 
Pension Benefits
 
Other
Postretirement
 Benefits
 
Pension Benefits
 
(in millions)
Actuarial loss (gain)
$
15

 
$
(1
)
 
$
2

Prior service credit
—

 
(2
)
 
—

Total
$
15

 
$
(3
)
 
$
2

Plans With Accumulated And Projected Benefit Obligations In Excess Of The Fair Value Of Plan Assets, Disclosure 
Benefit obligations in excess of plan assets related to the Company's U.S. non-qualified plan and the non-U.S. pension plans:
 
U.S. Plans
 
Non-U.S. Plans
September 30,
 
September 30,
 
2016
 
2015
 
2016
 
(in millions)
Accumulated benefit obligation in excess of plan assets
 
 
 
 
 
Accumulated benefit obligation—end of year
$
(16
)
 
$
(19
)
 
$
(474
)
Fair value of plan assets—end of year
$
—

 
$
—

 
$
415

Projected benefit obligation in excess of plan assets
 
 
 
 
 
Benefit obligation—end of year
$
(16
)
 
$
(19
)
 
$
474

Fair value of plan assets—end of year
$
—

 
$
—

 
$
415

Schedule of Defined Benefit Plans Disclosures 
Net periodic pension and other postretirement plan cost:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Plans
 
Non-U.S. Plans(1)
 
Pension Benefits
 
Other
Postretirement Benefits
 
Pension Benefits
 
Fiscal
 
2016
 
2015
 
2014
 
2016
 
2015
 
2014
 
2016
 
(in millions)
Service cost
$
13

 
$
47

 
$
46

 
$
—

 
$
—

 
$
—

 
$
1

Interest cost
40

 
40

 
42

 
1

 
1

 
1

 
3

Expected return on assets
(69
)
 
(72
)
 
(68
)
 
—

 
—

 
—

 
(4
)
Amortization of:
 
 
 
 
 
 
 
 
 
 
 
 
 
Prior service credit
(1
)
 
(7
)
 
(8
)
 
(3
)
 
(3
)
 
(3
)
 
—

Actuarial loss (gain)
7

 
1

 
1

 
(2
)
 
(2
)
 
(1
)
 
—

Net benefit cost
$
(10
)
 
$
9

 
$
13

 
$
(4
)
 
$
(4
)
 
$
(3
)
 
$
—

Curtailment gain
(8
)
 
—

 
(3
)
 
—

 
—

 
—

 
—

Settlement loss
13

 
7

 
3

 
—

 
—

 
—

 
—

Total net periodic benefit cost
$
(5
)
 
$
16

 
$
13

 
$
(4
)
 
$
(4
)
 
$
(3
)
 
$
—

 
(1) Represents Visa Europe's U.K. pension plans' net pension benefit cost recognized from the Closing through September 30, 2016.
Pension and Other Postretirement Benefits, Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Loss (Income) Disclosure 
Other changes in plan assets and benefit obligations recognized in other comprehensive income: 
 
U.S. Plans
 
Non-U.S. Plans
 
Pension Benefits
 
Other Postretirement Benefits
 
Pension Benefits
2016
 
2015
 
2016
 
2015
 
2016
 
(in millions)
Current year actuarial loss (gain)
$
30

 
$
119

 
$
(2
)
 
$
—

 
$
66

Amortization of actuarial (loss) gain
(20
)
 
(8
)
 
2

 
2

 
—

Current year prior service credit
—

 
—

 
—

 
—

 
—

Amortization of prior service credit
9

 
7

 
3

 
3

 
—

Total recognized in other comprehensive income
$
19

 
$
118

 
$
3

 
$
5

 
$
66

Total recognized in net periodic benefit cost and other comprehensive income
$
14

 
$
134

 
$
(1
)
 
$
1

 
$
66

Pension and Other Postretirement Benefits, Net Periodic Benefit Costs Weighted Average Assumptions Disclosure 
Weighted Average Actuarial Assumptions:
 
U.S. Plans
 
Non-U.S. Plans
 
Fiscal
 
2016
 
2015
 
2014
 
2016
Discount rate for benefit obligation:(1)
 
 
 
 
 
 
 
Pension
3.62
%
 
4.33
%
 
4.27
%
 
2.40
%
Postretirement
1.91
%
 
2.43
%
 
2.59
%
 
NA

Discount rate for net periodic benefit cost:
 
 
 
 
 
 
 
Pension
4.33
%
 
4.27
%
 
4.81
%
 
3.10
%
Postretirement
2.43
%
 
2.59
%
 
2.76
%
 
NA

Expected long-term rate of return on plan assets(2)
7.00
%
 
7.00
%
 
7.00
%
 
3.92
%
Rate of increase in compensation levels for:(3)
 
 
 
 
 
 
 
Benefit obligation
NA

 
4.00
%
 
4.00
%
 
3.20
%
Net periodic benefit cost
NA

 
4.00
%
 
4.50
%
 
3.00
%
(1) 
Represents a single weighted-average discount rate derived based on a cash flow matching analysis, with the projected benefit payments matching spot rates from a yield curve developed from high-quality corporate bonds.
(2) 
Primarily based on the targeted allocation, and evaluated for reasonableness by considering such factors as: (i) actual return on plan assets; (ii) historical rates of return on various asset classes in the portfolio; (iii) projections of returns on various asset classes; and (iv) current and prospective capital market conditions and economic forecasts.
(3) 
This assumption is not applicable for to the U.S. plans in fiscal 2016 due to the amendment of the U.S. qualified defined benefit pension plan in October 2015, which discontinued the employer provided credits effective after December 31, 2015.
Pension and Other Postretirement Benefits, Employer Contributions and Expected Benefit Payments Disclosure 
 
U.S. Plans
 
Non-U.S. Plans
 
Pension
Benefits
 
Other
Postretirement
Benefits
 
 Pension Benefits
Actual employer contributions
(in millions)
2016
$
1

 
$
3

 
$
102

2015
$
16

 
$
3

 
$
—

Expected employer contributions
 
 
 
 
 
2017
$
9

 
$
3

 
$
6

Expected benefit payments
 
 
 
 
 
2017
$
165

 
$
3

 
$
4

2018
$
88

 
$
3

 
$
4

2019
$
85

 
$
2

 
$
5

2020
$
84

 
$
2

 
$
5

2021
$
81

 
$
2

 
$
5

2022-2026
$
350

 
$
2

 
$
27

Fair Value of Net Pension Plan Assets Disclosure 
The following table sets forth by level, within the fair value hierarchy, the pension plan’s investments at fair value as of September 30, 2016 and 2015, including the impact of transactions that were not settled at the end of September:
 
U.S. Plans
 
Fair Value Measurements at September 30,
 
Level 1
 
Level 2
 
Level 3
 
Total
 
2016
 
2015
 
2016
 
2015
 
2016
 
2015
 
2016
 
2015
 
(in millions)
Cash equivalents
$
39

 
$
11

 
 
 
 
 
 
 
 
 
$
39

 
$
11

Corporate debt securities
 
 
 
 
$
185

 
$
169

 
 
 
 
 
185

 
169

U.S. government-sponsored debt securities
 
 
 
 
30

 
66

 
 
 
 
 
30

 
66

U.S. Treasury securities
100

 
74

 
 
 
 
 
 
 
 
 
100

 
74

Asset-backed securities
 
 
 
 
 
 
 
 
$
51

 
$
31

 
51

 
31

Equity securities
672

 
671

 
 
 
 
 
 
 
 
 
672

 
671

Total
$
811

 
$
756

 
$
215

 
$
235

 
$
51

 
$
31

 
$
1,077

 
$
1,022

Fair Value of Net Pension Plan Assets Disclosure 
 
Non-U.S. Plans
 
Fair Value Measurements at September 30, 2016
 
Level 1
 
Level 2
 
Level 3
 
Total
 
(in millions)
Cash equivalents
$
105

 
 
 
 
 
$
105

Corporate debt securities
 
 
$
39

 
 
 
39

U.K. Treasury securities
52

 
 
 
 
 
52

Asset-backed securities
 
 
 
 
$
29

 
29

Equity securities
116

 
 
 
 
 
116

Multi-asset securities (1)
 
 
74

 
 
 
74

Total
$
273

 
$
113

 
$
29

 
$
415

(1) 
Multi-asset securities represents pension plan assets that are invested in funds comprised of broad ranges of assets.
Settlement Guarantee Management (Tables)
Schedule of Customer Collateral
The Company maintained collateral as follows:
 
September 30,
2016
 
September 30,
2015
 
(in millions)
Cash equivalents
$
1,295

 
$
1,023

Pledged securities at market value
170

 
154

Letters of credit
1,311

 
1,178

Guarantees
1,418

 
971

Total
$
4,194

 
$
3,326

 
The balances above included collateral held by Visa Europe as follows:
 
September 30,
2016
 
(in millions)
Cash equivalents(1)
$
294

Pledged securities at market value
—

Letters of credit
144

Guarantees
375

Total
$
813

(1) 
Cash collateral held by Visa Europe is not included on the Company's consolidated balance sheet as its clients retain beneficial ownership and the cash is only accessible to the Company in the event of default by the client on its settlement obligations.
Enterprise-wide Disclosures and Concentration of Business (Tables)
Schedule of long-lived net property, equipment and technology assets by major geographic area
The Company’s long-lived net property, equipment and technology assets are classified by major geographic areas as follows:
 
September 30,
2016
 
September 30,
2015
 
(in millions)
United States
$
1,827

 
$
1,806

International
323

 
82

Total
$
2,150

 
$
1,888

Stockholders' Equity (Tables)
Schedule of Common Stock as Converted 
The number of shares of each series and class and the number of shares of class A common stock on an as-converted basis at September 30, 2016, are as follows:
(in millions, except conversion rate)
Shares
Outstanding
 
Conversion Rate Into Class A Common Stock
 
As-converted Class A Common Stock (1)
U.K.&I preferred stock
2

 
13.9520

 
35

Europe preferred stock
3

 
13.9520

 
44

Class A common stock (2)
1,871

 
—

 
1,871

Class B common stock
245

 
1.6483

(3) 
405

Class C common stock
17

 
4.0000

 
67

Total
 
 
 
 
2,422


(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) 
Class A common stock shares outstanding reflect repurchases settled on or before September 30, 2016. The Company repurchased an additional 1 million shares at the end of September, which did not settle until October 2016.
(3) 
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.
Schedule of Share Repurchases in the Open Market 
The following table presents share repurchases in the open market during the following fiscal years:
(in millions, except per share data)
2016 (1)
 
2015
Shares repurchased in the open market(2)
91

 
44

Average repurchase price per share(3)
$
77.05

 
$
65.98

Total cost
$
6,987

 
$
2,910


(1) 
Shares repurchased in the open market reflect repurchases settled on or before September 30, 2016. The Company repurchased an additional 1 million shares for $120 million at the end of September, which did not settle until October 2016.
(2) 
All shares repurchased in the open market have been retired and constitute authorized but unissued shares.
(3) 
Figures in the table may not recalculate exactly due to rounding. Average repurchase price per share is calculated based on unrounded numbers.
Earnings Per Share (Tables)
Schedule of Earnings Per Share
The following table presents earnings per share for fiscal 2016.(1) 
 
Basic Earnings Per Share
 
 
Diluted Earnings Per Share
 
(in millions, except per share data)
 
Income
Allocation
(A) (2)
 
Weighted-
Average
Shares
Outstanding (B)
 
Earnings per
Share =
(A)/(B)
 
 
Income
Allocation
(A) (2)
 
Weighted-
Average
Shares
Outstanding (B)
 
Earnings per
Share =
(A)/(B)
Class A common stock
$
4,738

 
1,906

 
$
2.49

 
 
$
5,991

 
2,414

(3) 
$
2.48

Class B common stock
1,006

 
245

 
$
4.10

 
 
$
1,004

 
245

 
$
4.09

Class C common stock
185

 
19

 
$
9.94

 
 
$
185

 
19

 
$
9.93

Participating securities(4)
62

 
Not presented

 
Not presented

 
 
$
61

 
Not presented

 
Not presented

Net income
$
5,991

 
 
 
 
 
 
 
 
 
 
 
The following table presents earnings per share for fiscal 2015.(1) 
 
Basic Earnings Per Share
 
 
Diluted Earnings Per Share
 
(in millions, except per share data)
 
Income
Allocation
(A) (2)
 
Weighted-
Average
Shares
Outstanding (B)
 
Earnings per
Share =
(A)/(B)
 
 
Income
Allocation
(A) (2)
 
Weighted-
Average
Shares
Outstanding (B)
 
Earnings per
Share =
(A)/(B)
Class A common stock
$
5,044

 
1,954

 
$
2.58

 
 
$
6,328

 
2,457

(3) 
$
2.58

Class B common stock
1,045

 
245

 
$
4.26

 
 
$
1,042

 
245

 
$
4.25

Class C common stock
224

 
22

 
$
10.33

 
 
$
223

 
22

 
$
10.30

Participating securities(4)
15

 
Not presented

 
Not presented

 
 
$
15

 
Not presented

 
Not presented

Net income
$
6,328

 
 
 
 
 
 
 
 
 
 
 
The following table presents earnings per share for fiscal 2014.(1) 
 
Basic Earnings Per Share
 
 
Diluted Earnings Per Share
 
(in millions, except per share data)
 
Income
Allocation
(A) (2)
 
Weighted-
Average
Shares
Outstanding (B)
 
Earnings per
Share =
(A)/(B)
 
 
Income
Allocation
(A) (2)
 
Weighted-
Average
Shares
Outstanding (B)
 
Earnings per
Share =
(A)/(B)
Class A common stock
$
4,307

 
1,993

 
$
2.16

 
 
$
5,438

 
2,523

(3) 
$
2.16

Class B common stock
892

 
245

 
$
3.63

 
 
$
890

 
245

 
$
3.62

Class C common stock
222

 
26

 
$
8.65

 
 
$
221

 
26

 
$
8.62

Participating securities(4)
17

 
Not presented

 
Not presented

 
 
$
16

 
Not presented

 
Not presented

Net income
$
5,438

 
 
 
 
 
 
 
 
 
 
 

(1)
Figures in the table may not recalculate exactly due to rounding. Earnings per share is calculated based on unrounded numbers. The number of shares and per share amounts for the prior periods presented have been retroactively adjusted to reflect the four-for-one stock split effected in the fiscal second quarter of 2015. See Note 14—Stockholders' Equity.
(2)
Net income attributable to Visa Inc. 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 were 405 million for fiscal 2016 and 2015 and 413 million for fiscal 2014. The weighted-average number of shares of as-converted class C common stock used in the income allocation was 75 million, 87 million and 103 million for fiscal 2016, 2015 and 2014, respectively.
(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 computation includes 5 million, 6 million and 7 million common stock equivalents for fiscal 2016, 2015 and 2014, respectively, because their effect would have been dilutive. The computation excludes 2 million of common stock equivalents for fiscal 2016, 2015 and 2014 because their effect would have been anti-dilutive.
(4) 
Participating securities include preferred stock outstanding and unvested share-based payment awards that contain non-forfeitable rights to dividends or dividend equivalents, such as the Company's U.K.&I and Europe preferred stock, restricted stock awards, restricted stock units and earned performance-based shares. U.K.&I and Europe preferred stock were issued as part of the purchase price consideration in connection with the Visa Europe acquisition and are convertible into a number of shares of class A common stock or class A equivalent preferred stock upon certain conditions. Participating securities' income is allocated based on the weighted-average number of shares of as-converted stock. See Note 2—Acquisition of Visa Europe and Note 14—Stockholders' Equity.
Share-based Compensation (Tables)
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Method Used 
During fiscal 2016, 2015 and 2014, the fair value of each stock option was estimated on the date of grant using a Black-Scholes option pricing model with the following weighted-average assumptions:
 
 
2016
 
2015
 
2014
Expected term (in years)(1)
 
4.35

 
4.55

 
4.80

Risk-free rate of return(2)
 
1.5
%
 
1.5
%
 
1.3
%
Expected volatility(3)
 
21.7
%
 
22.0
%
 
25.2
%
Expected dividend yield(4)
 
0.7
%
 
0.8
%
 
0.8
%
Fair value per option granted
 
$
15.01

 
$
12.04

 
$
11.03


(1) 
This assumption is based on the Company's historical option exercises and those of a set of peer companies that management believes is generally comparable to Visa. The Company's data is weighted based on the number of years between the measurement date and Visa's initial public offering as a percentage of the options' contractual term. The relative weighting placed on Visa's data and peer data in fiscal 2016 was approximately 77% and 23%, respectively, 67% and 33% in fiscal 2015, respectively, and 58% and 42% in fiscal 2014, respectively.
(2) 
Based upon the zero coupon U.S. treasury bond rate over the expected term of the awards.
(3) 
Based on the Company’s implied and historical volatility. The expected volatilities ranged from 20% to 23% in fiscal 2016, 21% to 23% in fiscal 2015, and 22% to 26% in fiscal 2014.
(4) 
Based on the Company’s annual dividend rate on the date of grant.
Schedule of Share-based Compensation, Options Activity 
The following table summarizes the Company’s option activity for fiscal 2016:
 
Options
 
Weighted-
Average
Exercise Price
Per Share
 
Weighted-
Average
Remaining
Contractual
Term
(in years)
 
Aggregate
Intrinsic
Value (1)
(in millions)
Outstanding at October 1, 2015
9,677,717

 
$
28.07

 
 
 
 
Granted
1,438,048

 
$
79.98

 
 
 
 
Forfeited
(463,378
)
 
$
21.76

 
 
 
 
Exercised
(1,775,903
)
 
$
20.00

 
 
 
 
Outstanding at September 30, 2016
8,876,484

 
$
38.42

 
5.2
 
$393
Options exercisable at September 30, 2016
6,204,589

 
$
24.87

 
3.8
 
$359
Options exercisable and expected to vest at September 30, 2016(2)
8,582,576

 
$
37.35

 
5.1
 
$389
(1) 
Calculated using the closing stock price on the last trading day of fiscal 2016 of $82.70, less the option exercise price, multiplied by the number of instruments.
(2) 
Applies a forfeiture rate to unvested options outstanding at September 30, 2016 to estimate the options expected to vest in the future.
Restricted Share Activity Disclosure 
The following table summarizes the Company's RSA and RSU activity for fiscal 2016:
 
Restricted Stock
 
Weighted-
Average
Grant Date
Fair Value
 
Weighted-
Average
Remaining
Contractual
Term
(in years)
 
Aggregate
Intrinsic
Value (1)
(in millions)
 
Awards
 
Units
 
RSA
 
RSU
 
RSA
 
RSU
 
RSA
 
RSU
Outstanding at October 1, 2015
4,064,687

 
1,442,522

 
$
54.09

 
$
53.80

 
 
 
 
 
 
 
 
Granted
—

 
2,735,115

 
$
—

 
$
79.77

 
 
 
 
 
 
 
 
Vested
(2,061,406
)
 
(789,180
)
 
$
49.06

 
$
51.58

 
 
 
 
 
 
 
 
Forfeited
(236,699
)
 
(241,503
)
 
$
59.34

 
$
73.02

 
 
 
 
 
 
 
 
Outstanding at September 30, 2016
1,766,582

 
3,146,954

 
$
59.26

 
$
75.48

 
0.8
 
1.7
 
$146
 
$260
(1) 
Calculated by multiplying the closing stock price on the last trading day of fiscal 2016 of $82.70 by the number of instruments.
Disclosure of Share-based Compensation Arrangements by Share-based Payment Award 
The following table summarizes the maximum number of performance-based shares which could be earned and related activity for fiscal 2016:
 
Shares
 
Weighted-
Average
Grant Date
Fair Value
 
Weighted-
Average
Remaining
Contractual
Term
(in years)
 
Aggregate
Intrinsic
Value (1)
(in millions)
Outstanding at October 1, 2015
1,263,962

 
$
57.61

 
 
 
 
Granted(2)
604,219

 
$
92.71

 
 
 
 
Vested and earned
(645,320
)
 
$
54.59

 
 
 
 
Unearned
(123,387
)
 
$
54.59

 
 
 
 
Forfeited
(57,462
)
 
$
73.07

 
 
 
 
Outstanding at September 30, 2016
1,042,012

 
$
78.24

 
0.9
 
$86
(1) 
Calculated by multiplying the closing stock price on the last trading day of fiscal 2016 of $82.70 by the number of instruments.
(2) 
Represents the maximum number of performance-based shares which could be earned.
Commitments and Contingencies (Tables)
Commitments Disclosure 
Future minimum payments on leases, and marketing and sponsorship agreements per fiscal year, at September 30, 2016, are as follows:
 
2017
 
2018
 
2019
 
2020
 
2021
 
Thereafter
 
Total
 
(in millions)
Operating leases
$
126

 
$
103

 
$
82

 
$
61

 
$
57

 
$
190

 
$
619

Marketing and sponsorships
126

 
128

 
120

 
110

 
38

 
33

 
555

Total
$
252

 
$
231

 
$
202

 
$
171

 
$
95

 
$
223

 
$
1,174

Expected Reduction of Revenue for Volumn and Support Incentive Agreements 
The table below sets forth the expected future reduction of revenue per fiscal year for client incentive agreements in effect at September 30, 2016: 
(in millions)
2017
 
2018
 
2019
 
2020
 
2021
 
Thereafter
 
Total
Client incentives
$
4,211

 
$
3,752

 
$
3,211

 
$
2,628

 
$
2,245

 
$
4,617

 
$
20,664

Income Taxes (Tables)
Schedule of U.S. and non-U.S. components of income before income tax expense/(benefit) 
The Company’s income before taxes by fiscal year consisted of the following:
 
2016
 
2015
 
2014
 
(in millions)
U.S.
$
5,839

 
$
7,214

 
$
6,140

Non-U.S.
2,173

 
1,781

 
1,584

Total income before taxes
$
8,012

 
$
8,995

 
$
7,724

Comprehensive Income Tax (Expense) Benefit Components Table 
Income tax provision by fiscal year consisted of the following:
 
2016
 
2015
 
2014
 
(in millions)
Current:
 
 
 
 
 
U.S. federal
$
2,250

 
$
1,991

 
$
2,353

State and local
181

 
168

 
237

Non-U.S.
368

 
300

 
274

Total current taxes
2,799

 
2,459

 
2,864

Deferred:
 
 
 
 
 
U.S. federal
(508
)
 
181

 
(576
)
State and local
(63
)
 
1

 
(31
)
Non-U.S.
(207
)
 
26

 
29

Total deferred taxes
(778
)
 
208

 
(578
)
Total income tax provision
$
2,021

 
$
2,667

 
$
2,286

Components of Deferred Tax Assets and Liabilities 
The tax effect of temporary differences that give rise to significant portions of deferred tax assets and liabilities at September 30, 2016 and 2015, are presented below:
 
2016
 
2015
 
(in millions)
Deferred Tax Assets:
 
 
 
Accrued compensation and benefits
$
277

 
$
141

Comprehensive (income) loss
106

 
51

Accrued litigation obligation
373

 
391

Client incentives
266

 
191

Net operating loss carryforwards
32

 
50

Federal benefit of state taxes
195

 
203

Federal benefit of foreign taxes
1,214

 
—

Other
280

 
185

Valuation allowance
(31
)
 
(40
)
Deferred tax assets
2,712

 
1,172

Deferred Tax Liabilities:
 
 
 
Property, equipment and technology, net
(278
)
 
(315
)
Intangible assets
(7,013
)
 
(3,964
)
Foreign taxes
(106
)
 
(153
)
Other
(101
)
 
—

Deferred tax liabilities
(7,498
)
 
(4,432
)
Net deferred tax liabilities
$
(4,786
)
 
$
(3,260
)
Reconciliation of the US Statutory Federal Tax Rate 
The income tax provision differs from the amount of income tax determined by applying the applicable U.S. federal statutory rate of 35% to pretax income, as a result of the following:
 
 
For the Years Ended September 30,
 
2016
 
2015
 
2014
 
Dollars
 
Percent
 
Dollars
 
Percent
 
Dollars
 
Percent
 
(in millions, except percentages)
U.S. federal income tax at statutory rate
$
2,804

 
35
 %
 
$
3,148

 
35
 %
 
$
2,704

 
35
 %
State income taxes, net of federal benefit
135

 
2
 %
 
194

 
2
 %
 
129

 
2
 %
Non-U.S. tax effect, net of federal benefit
(553
)
 
(7
)%
 
(327
)
 
(4
)%
 
(278
)
 
(4
)%
Prior years U.S. domestic production activities deduction
—

 
—
 %
 
—

 
—
 %
 
(191
)
 
(2
)%
Remeasurement of deferred tax liability
(88
)
 
(1
)%
 
—

 
—
 %
 
—

 
—
 %
Reversal of prior years tax reserves related to the resolution of uncertain tax positions
—

 
—
 %
 
(239
)
 
(2
)%
 
—

 
—
 %
Revaluation of Visa Europe put option
(89
)
 
(1
)%
 
—

 
—
 %
 
—

 
—
 %
Other, net
(188
)
 
(3
)%
 
(109
)
 
(1
)%
 
(78
)
 
(1
)%
Income tax provision
$
2,021

 
25
 %
 
$
2,667

 
30
 %
 
$
2,286

 
30
 %
Unrecognized Tax Benefits Reconciliation, Table 
A reconciliation of beginning and ending unrecognized tax benefits by fiscal year is as follows: 
 
2016
 
2015
 
(in millions)
Beginning balance at October 1
$
1,051

 
$
1,303

Increases of unrecognized tax benefits related to prior years
153

 
44

Decreases of unrecognized tax benefits related to prior years
(180
)
 
(413
)
Increases of unrecognized tax benefits related to current year
138

 
120

Reductions related to lapsing statute of limitations
(2
)
 
(3
)
Ending balance at September 30
$
1,160

 
$
1,051

Legal Matters (Tables)
Schedule of Loss Contingencies by Contingency 
The following table summarizes the activity related to accrued litigation.
 
Fiscal 2016
 
Fiscal 2015
 
(in millions)
Balance at October 1
$
1,024

 
$
1,456

Provision for uncovered legal matters
2

 
14

Accrual for VE territory covered litigation
2

 
—

Payments on legal matters
(47
)
 
(446
)
Balance at September 30
$
981

 
$
1,024


Schedule of Loss Contingencies by Contingency 
The following table summarizes the activity related to U.S. covered litigation.
 
Fiscal 2016
 
Fiscal 2015
 
(in millions)
Balance at October 1
$
1,023

 
$
1,449

Payments on U.S. covered litigation
(45
)
 
(426
)
Balance at September 30
$
978

 
$
1,023

Summary of Significant Accounting Policies - Additional Information (Detail) (USD $)
0 Months Ended 12 Months Ended 0 Months Ended 12 Months Ended
Feb. 1, 2015
Sep. 30, 2016
Sep. 30, 2016
Minimum
Sep. 30, 2016
Maximum
Sep. 30, 2016
Furniture and Fixtures
Minimum
Sep. 30, 2016
Furniture and Fixtures
Maximum
Sep. 30, 2016
Building Improvements
Minimum
Sep. 30, 2016
Building Improvements
Maximum
Sep. 30, 2016
Building
Mar. 19, 2015
Class A common stock
Sep. 30, 2016
U.S. Pension Plans
Sep. 30, 2016
Non-U.S. Pension Plans
Jun. 21, 2016
Visa Europe
Significant Accounting Policies [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
Share capital of Visa Europe acquired (percent)
 
 
 
 
 
 
 
 
 
 
 
 
100.00% 
Number of Countries in which Entity Operates (more than)
 
200 
 
 
 
 
 
 
 
 
 
 
 
Common stock split, conversion ratio
 
 
 
 
 
 
 
 
 
4 
 
 
 
Number of Reportable Segments
 
1 
 
 
 
 
 
 
 
 
 
 
 
Estimated useful life
 
 
 
 
2 years 
10 years 
3 years 
40 years 
40 years 
 
 
 
 
Acquired long-lived intangible assets useful life
 
 
3 years 
15 years 
 
 
 
 
 
 
 
 
 
Impairment of Intangible Assets, Indefinite-lived (Excluding Goodwill)
 
$ 0 
 
 
 
 
 
 
 
 
 
 
 
Goodwill, Impairment Loss
$ 0 
 
 
 
 
 
 
 
 
 
 
 
 
Expected average employee future service period for United States plans (in years)
 
 
 
 
 
 
 
 
 
 
9 years 
12 years 
 
Visa Europe - Additional Information (Detail)
0 Months Ended 12 Months Ended 0 Months Ended 3 Months Ended 12 Months Ended 12 Months Ended 0 Months Ended 0 Months Ended 0 Months Ended 0 Months Ended 12 Months Ended 3 Months Ended 12 Months Ended 3 Months Ended 12 Months Ended
Jun. 21, 2016
USD ($)
Sep. 30, 2016
USD ($)
Sep. 30, 2015
USD ($)
Sep. 30, 2014
USD ($)
Jun. 21, 2016
USD ($)
Jun. 21, 2016
Visa Europe
USD ($)
Jun. 21, 2016
Visa Europe
EUR (€)
Sep. 30, 2016
Visa Europe
USD ($)
Sep. 30, 2016
Visa Europe
USD ($)
Sep. 30, 2016
Visa Europe
USD ($)
Jun. 21, 2016
Visa Europe
EUR (€)
Sep. 30, 2016
Visa Europe
Class A equivalent preferred stock
Jun. 21, 2016
Visa Europe
Class A equivalent preferred stock
USD ($)
Jun. 21, 2016
Visa Europe
U.K.&I preferred stock
Jun. 21, 2016
Visa Europe
U.K.&I preferred stock
USD ($)
Jun. 21, 2016
Visa Europe
Europe preferred stock
Jun. 21, 2016
Visa Europe
Europe preferred stock
USD ($)
Jun. 21, 2016
Loss Sharing Agreement
Visa Europe
Jun. 21, 2016
Loss Sharing Agreement
Visa Europe
USD ($)
Sep. 30, 2016
Preferred Stock
USD ($)
Sep. 30, 2015
Preferred Stock
USD ($)
Jun. 21, 2016
Preferred Stock
Visa Europe
Sep. 30, 2016
Operating Expense
USD ($)
Sep. 30, 2016
Professional Fees
USD ($)
Sep. 30, 2016
General and Administrative Expenses
USD ($)
Sep. 30, 2016
Visa Europe
Framework Agreement
USD ($)
Sep. 30, 2016
Visa Europe
Framework Agreement
USD ($)
Sep. 30, 2015
Visa Europe
Framework Agreement
USD ($)
Sep. 30, 2014
Visa Europe
Framework Agreement
USD ($)
Sep. 30, 2016
United Kingdom
Visa Europe
USD ($)
Sep. 30, 2016
United Kingdom
Visa Europe
USD ($)
Class of Stock [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Share capital of Visa Europe acquired (percent)
 
 
 
 
 
 
 
 
 
 
100.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Up-front cash consideration
 
 
 
 
 
$ 13,900,000,000 
€ 12,200,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Shares issued at closing (shares)
 
 
 
 
 
 
 
 
 
 
 
 
 
2,480,466 
 
3,156,823 
 
 
 
 
 
79,000,000 
 
 
 
 
 
 
 
 
 
Convertible participating preferred stock issued in Visa Europe acquisition
 
5,717,000,000 
0 
0 
 
6,100,000,000 
5,300,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Average price of common stock (USD per share)
 
 
 
 
$ 77.33 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Contingent consideration
 
 
 
 
 
 
 
 
 
 
1,000,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Accrued interest on contingent consideration
 
 
 
 
 
 
 
 
 
 
0 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Preferred stock, par value
 
 
 
 
 
 
 
 
 
 
 
 
$ 0.0001 
 
$ 0.0001 
 
$ 0.0001 
 
 
$ 0.0001 
$ 0.0001 
 
 
 
 
 
 
 
 
 
 
Initial conversion rate of UK&I and Europe preferred stock into class A common or class A equivalent preferred stock
 
 
 
 
13.952 
 
 
 
 
 
13.952 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Conversion rate of U.K.&I preferred stock
 
 
 
 
 
 
 
 
 
 
 
100 
 
 
 
 
 
0 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loss sharing agreement
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,000,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues
 
15,082,000,000 1
13,880,000,000 
12,702,000,000 
 
 
 
554,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
65,000,000 
191,000,000 
255,000,000 
226,000,000 
 
 
Acquisition related costs
 
 
 
 
 
 
 
 
 
96,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
152,000,000 
60,000,000 
92,000,000 
 
 
 
 
 
 
Revenue since acquisition
 
 
 
 
 
 
 
 
489,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Visa Europe net income included in consolidated net income
 
 
 
 
 
 
 
 
 
299,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Tax benefit upon remeasurement of deferred tax liability to reflect tax rate change
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(88,000,000)
(88,000,000)
Impact of acquisition on consolidated net income
 
 
 
 
 
 
 
 
 
(872,000,000)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Visa Europe Framework Agreement loss
(1,900,000,000)
(1,877,000,000)
0 
0 
 
(1,856,000,000)2
 
 
 
(1,184,000,000)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt Instrument, Face Amount
 
16,000,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Increase (Decrease) Liabilities Related to Investment Contracts, Fair Value Disclosure
 
255,000,000 
110,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Foreign exchange gains related to euros
 
145,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gains related to currency forward contracts
 
$ 74,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
[2] the loss upon consummation of the transaction resulting from the effective settlement of the Framework Agreement between Visa and Visa Europe. The Visa Europe Framework Agreement provided Visa Europe with a perpetual, exclusive right to operate the Visa business in the Visa Europe region in exchange for a license fee paid to Visa. Under the terms of the Framework Agreement, the license fee paid by Visa Europe has increased modestly since inception in 2007, while the value of the Visa Europe business has increased at a greater rate. Using an income approach, the Company assessed the contractual terms and conditions of the Framework Agreement as compared to current market conditions and the historical and expected financial performance of Visa Europe. Based on the analysis performed, the Company determined that the terms were not at fair value as determined under U.S. GAAP at the Closing. The present value of the expected differential between payments required by the Framework Agreement and those that would be required if the contract were at fair value under U.S. GAAP was calculated over the Framework Agreement's contractual perpetual term, resulting in a loss of $1.9 billion recognized within operating expense in the Company's consolidated statement of operations during the third quarter of fiscal 2016, and a reduction to the purchase accounting consideration; and
Visa Europe - Accounting Treatment (Details)
0 Months Ended 12 Months Ended 0 Months Ended 12 Months Ended
Jun. 21, 2016
USD ($)
Sep. 30, 2016
USD ($)
Sep. 30, 2015
USD ($)
Sep. 30, 2014
USD ($)
Jun. 21, 2016
USD ($)
Jun. 21, 2016
Visa Europe
USD ($)
Jun. 21, 2016
Visa Europe
EUR (€)
Sep. 30, 2016
Visa Europe
USD ($)
Jun. 21, 2016
Visa Europe
USD ($)
Jun. 21, 2016
Visa Europe
EUR (€)
Sep. 30, 2016
Class C common stock
USD ($)
Jun. 21, 2016
Class C common stock
USD ($)
Sep. 30, 2015
Class C common stock
USD ($)
Business Acquisition [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash payment
 
 
 
 
 
$ 13,900,000,000 
€ 12,200,000,000 
 
 
 
 
 
 
Fair value of preferred stock
 
 
 
 
 
 
 
 
5,692,000,000 1
 
 
 
 
Total upfront consideration
 
 
 
 
 
19,574,000,000 
 
 
 
 
 
 
 
Fair value of deferred cash consideration
 
 
 
 
 
 
 
 
1,236,000,000 2
 
 
 
 
Total consideration before adjustments
 
 
 
 
 
20,810,000,000 
 
 
 
 
 
 
 
Less: Visa Europe Framework Agreement loss
(1,900,000,000)
(1,877,000,000)
0 
0 
 
(1,856,000,000)3
 
(1,184,000,000)
 
 
 
 
 
Less: Treasury stock
 
 
 
 
 
 
 
 
 
 
0 
(170,000,000)4
0 
Total accounting purchase consideration
 
 
 
 
 
18,784,000,000 
 
 
 
 
 
 
 
Preferred stock, as-is converted basis
 
5,717,000,000 
0 
0 
 
6,100,000,000 
5,300,000,000 
 
 
 
 
 
 
Preferred Stock, discount for illiquidity (percent)
 
 
 
 
6.00% 
 
 
 
 
 
 
 
 
Right to recover for covered losses
 
(34,000,000)
0 
0 
25,000,000 
 
 
 
 
 
 
 
 
Contingent consideration
 
 
 
 
 
 
 
 
 
1,000,000,000 
 
 
 
Accrued interest on contingent consideration
 
 
 
 
 
 
 
 
 
€ 0 
 
 
 
Interest payable on third anniversary of closing (percent)
 
 
 
 
1.20% 
 
 
 
 
 
 
 
 
[3] the loss upon consummation of the transaction resulting from the effective settlement of the Framework Agreement between Visa and Visa Europe. The Visa Europe Framework Agreement provided Visa Europe with a perpetual, exclusive right to operate the Visa business in the Visa Europe region in exchange for a license fee paid to Visa. Under the terms of the Framework Agreement, the license fee paid by Visa Europe has increased modestly since inception in 2007, while the value of the Visa Europe business has increased at a greater rate. Using an income approach, the Company assessed the contractual terms and conditions of the Framework Agreement as compared to current market conditions and the historical and expected financial performance of Visa Europe. Based on the analysis performed, the Company determined that the terms were not at fair value as determined under U.S. GAAP at the Closing. The present value of the expected differential between payments required by the Framework Agreement and those that would be required if the contract were at fair value under U.S. GAAP was calculated over the Framework Agreement's contractual perpetual term, resulting in a loss of $1.9 billion recognized within operating expense in the Company's consolidated statement of operations during the third quarter of fiscal 2016, and a reduction to the purchase accounting consideration; and
Visa Europe - Purchase Price Allocation (Details) (USD $)
0 Months Ended
Jun. 21, 2016
Sep. 30, 2016
Jun. 21, 2016
Sep. 30, 2015
Business Combinations [Abstract]
 
 
 
 
Current assets
 
 
$ 4,457,000,000 1
 
Non-current assets
 
 
258,000,000 2
 
Current liabilities
 
 
(2,731,000,000)3
 
Non-current liabilities
 
 
(2,605,000,000)2
 
Tangible assets and liabilities
 
 
(621,000,000)
 
Intangible assets - customer relationships and reacquired rights
16,137,000,000 2
 
 
 
Goodwill
 
15,066,000,000 
3,268,000,000 4
11,825,000,000 
Fair value of net assets acquired
 
 
18,784,000,000 
 
Net deferred tax liabilities
 
 
$ 2,400,000,000 
 
Visa Europe - Pro Forma Information (Details) (USD $)
In Millions, except Per Share data, unless otherwise specified
12 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Business Combinations [Abstract]
 
 
Total operating revenues
$ 16,090 
$ 15,425 
Net income
$ 7,072 
$ 5,210 
Pro forma diluted earnings per share (in USD per share)
$ 2.93 
$ 2.06 
Visa Europe - Impact of Acquisition on Net Income (Details) (USD $)
In Millions, unless otherwise specified
0 Months Ended 12 Months Ended 0 Months Ended 3 Months Ended 12 Months Ended 3 Months Ended 12 Months Ended
Jun. 21, 2016
Sep. 30, 2016
Sep. 30, 2015
Sep. 30, 2014
Dec. 31, 2015
Jun. 21, 2016
Visa Europe
Sep. 30, 2016
Visa Europe
Sep. 30, 2016
Visa Europe
Sep. 30, 2016
Senior Notes
Sep. 30, 2016
Framework Agreement
Visa Europe
Sep. 30, 2016
Framework Agreement
Visa Europe
Sep. 30, 2015
Framework Agreement
Visa Europe
Sep. 30, 2014
Framework Agreement
Visa Europe
Business Acquisition [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
Visa Europe net income included in consolidated net income
 
 
 
 
 
 
 
$ 299 
 
 
 
 
 
Less approximately $65 million of revenue that would have been recorded by Visa Inc. under the Framework Agreement, net of tax
 
 
 
 
 
 
 
(41)
 
 
 
 
 
Effective settlement of the Framework Agreement
(1,900)
(1,877)
0 
0 
 
(1,856)1
 
(1,184)
 
 
 
 
 
Interest expense incurred on $16.0 billion debt, net of interest income earned
 
 
 
 
 
 
 
(243)
(399)
 
 
 
 
Transaction costs incurred
 
 
 
 
 
 
 
(96)
 
 
 
 
 
Revaluation of Visa Europe put option
 
(255)
110 
0 
 
 
 
(255)
 
 
 
 
 
Remeasurement of euro deposits
 
 
 
 
 
 
 
91 
 
 
 
 
 
Remeasurement of currency forward contracts
 
 
 
 
 
 
 
47 
 
 
 
 
 
Total impact of Visa Europe acquisition on consolidated net income
 
 
 
 
 
 
 
(872)
 
 
 
 
 
Debt amount
 
16,000 
 
 
16,000 
 
 
 
16,000 
 
 
 
 
Revenues
 
$ 15,082 2
$ 13,880 
$ 12,702 
 
 
$ 554 
 
 
$ 65 
$ 191 
$ 255 
$ 226 
[1] the loss upon consummation of the transaction resulting from the effective settlement of the Framework Agreement between Visa and Visa Europe. The Visa Europe Framework Agreement provided Visa Europe with a perpetual, exclusive right to operate the Visa business in the Visa Europe region in exchange for a license fee paid to Visa. Under the terms of the Framework Agreement, the license fee paid by Visa Europe has increased modestly since inception in 2007, while the value of the Visa Europe business has increased at a greater rate. Using an income approach, the Company assessed the contractual terms and conditions of the Framework Agreement as compared to current market conditions and the historical and expected financial performance of Visa Europe. Based on the analysis performed, the Company determined that the terms were not at fair value as determined under U.S. GAAP at the Closing. The present value of the expected differential between payments required by the Framework Agreement and those that would be required if the contract were at fair value under U.S. GAAP was calculated over the Framework Agreement's contractual perpetual term, resulting in a loss of $1.9 billion recognized within operating expense in the Company's consolidated statement of operations during the third quarter of fiscal 2016, and a reduction to the purchase accounting consideration; and
Changes in the Escrow Account (Detail) (USD $)
In Millions, except Share data, unless otherwise specified
12 Months Ended 12 Months Ended
Sep. 30, 2016
Jun. 21, 2016
Sep. 30, 2015
Sep. 30, 2014
Sep. 30, 2016
Opt-out Merchants
Sep. 30, 2015
Opt-out Merchants
Sep. 30, 2016
MasterCard [Member]
Sep. 30, 2016
Visa
Sep. 30, 2016
Class A common stock
Sep. 30, 2016
Series B Preferred Stock
Sep. 30, 2015
Series B Preferred Stock
Sep. 30, 2016
Series C Preferred Stock
Sep. 30, 2015
Series C Preferred Stock
Restricted Cash and Cash Equivalents Items [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
Preferred Stock Available to Recover Covered Losses, Value, As-converted
$ 6,504 
 
 
 
 
 
 
 
 
$ 2,862 
 
$ 3,642 
 
Preferred Stock Available to Recover Covered Losses, Value
5,717 
 
 
 
 
 
 
 
 
2,516 
 
3,201 
 
Escrow Account [Roll Forward]
 
 
 
 
 
 
 
 
 
 
 
 
 
Litigation Escrow Account Balance, Beginning of Period
1,072 
 
 
1,498 
 
 
 
 
 
 
 
 
 
Payments to Settlement Funds
 
 
 
 
(45)1
(426)1
 
 
 
 
 
 
 
Litigation Escrow Account Balance, End of Period
1,027 
 
 
1,498 
 
 
 
 
 
 
 
 
 
Omnibus Loss Sharing Agreement Percentage
 
 
 
 
 
 
33.3333% 
66.6667% 
 
 
 
 
 
VE Covered Loss, Maximum Amount of Loss to Allow Adjustment of Conversion Rate during Six-month Period
20 
 
 
 
 
 
 
 
 
 
 
 
 
Right to recover for covered losses (Note 3)
(34)
25 
0 
0 
 
 
 
 
 
 
 
 
 
Preferred stock, shares outstanding
 
 
 
 
 
 
 
 
 
2,000,000 
0 
3,000,000 
0 
Initial conversion rate of UK&I and Europe preferred stock into class A common or class A equivalent preferred stock
 
13.952 
 
 
 
 
 
 
 
 
 
 
 
Preferred Stock Available to Recover Covered Losses, Value, As-converted, Net
6,470 
 
 
 
 
 
 
 
 
 
 
 
 
Preferred Stock Available to Recover Covered Losses, Value, Net
$ 5,683 
 
 
 
 
 
 
 
 
 
 
 
 
Closing Stock Price
$ 82.7 
 
 
 
 
 
 
 
$ 82.70 
 
 
 
 
Fair Value Measurements and Investments - Additional Information (Detail) (USD $)
In Millions, unless otherwise specified
0 Months Ended
Feb. 1, 2015
Sep. 30, 2016
Dec. 31, 2015
Sep. 30, 2015
Jun. 21, 2016
Visa Europe
Sep. 30, 2016
Fair Value, Measurements, Recurring
Level 3
Visa Europe put option
Sep. 30, 2015
Fair Value, Measurements, Recurring
Level 3
Visa Europe put option
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
 
 
 
 
 
 
 
Fair Value, Assets, Level 1 to Level 2 Transfers, Amount
 
$ 0 
 
 
 
 
 
Share capital of Visa Europe acquired (percent)
 
 
 
 
100.00% 
 
 
Put option, fair value
 
0 1
 
255 1
 
0 
255 
Non-marketable equity investments
 
46 
 
45 
 
 
 
Goodwill and intangible asset impairment
0 
 
 
 
 
 
 
Principal amount
 
16,000 
16,000 
 
 
 
 
Trading assets, mutual fund investments related to various employee compensation plans
 
$ 71 
 
$ 66 
 
 
 
Assets and Liabilities Measured at Fair Value on a Recurring Basis (Detail) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2016
Sep. 30, 2015
Investment securities
 
 
Trading
$ 71 
$ 66 
Available-for-sale securities
7,179 
5,815 
Accrued liabilities
 
 
Visa Europe put option
0 1
255 1
Fair Value, Measurements, Recurring |
Level 1
 
 
Investment securities
 
 
Fair value, total assets
6,839 
5,777 
Accrued liabilities
 
 
Fair value, total liabilities
0 
0 
Fair Value, Measurements, Recurring |
Level 1 |
Money market funds
 
 
Cash equivalents and restricted cash
 
 
Cash equivalents and restricted cash
4,537 
3,051 
Fair Value, Measurements, Recurring |
Level 1 |
Equity securities
 
 
Investment securities
 
 
Trading
71 
66 
Available-for-sale securities
53 
4 
Fair Value, Measurements, Recurring |
Level 1 |
U.S. treasury securities
 
 
Investment securities
 
 
Available-for-sale securities
2,178 
2,656 
Fair Value, Measurements, Recurring |
Level 2
 
 
Investment securities
 
 
Fair value, total assets
5,200 
3,504 
Accrued liabilities
 
 
Fair value, total liabilities
136 
13 
Fair Value, Measurements, Recurring |
Level 2 |
U.S. government-sponsored agency debt securities
 
 
Cash equivalents and restricted cash
 
 
Cash equivalents and restricted cash
196 
280 
Investment securities
 
 
Available-for-sale securities
4,699 
2,615 
Fair Value, Measurements, Recurring |
Level 2 |
Corporate debt securities
 
 
Investment securities
 
 
Available-for-sale securities
249 
533 
Fair Value, Measurements, Recurring |
Level 3
 
 
Investment securities
 
 
Fair value, total assets
0 
7 
Accrued liabilities
 
 
Fair value, total liabilities
0 
255 
Fair Value, Measurements, Recurring |
Level 3 |
Visa Europe put option
 
 
Accrued liabilities
 
 
Visa Europe put option
0 
255 
Fair Value, Measurements, Recurring |
Level 3 |
Auction Rate Securities
 
 
Investment securities
 
 
Available-for-sale securities
0 
7 
Prepaid Expenses and Other Current Assets [Member] |
Fair Value, Measurements, Recurring |
Level 2 |
Foreign exchange derivative instruments
 
 
Investment securities
 
 
Foreign exchange derivative instruments
50 
76 
Other Assets |
Fair Value, Measurements, Recurring |
Level 2 |
Foreign exchange derivative instruments
 
 
Investment securities
 
 
Foreign exchange derivative instruments
6 
 
Accrued Liabilities |
Fair Value, Measurements, Recurring |
Level 2 |
Foreign exchange derivative instruments
 
 
Accrued liabilities
 
 
Foreign exchange derivative instruments
116 
13 
Other Liabilities |
Fair Value, Measurements, Recurring |
Level 2 |
Foreign exchange derivative instruments
 
 
Accrued liabilities
 
 
Foreign exchange derivative instruments
$ 20 
 
Fair Value Measurements and Investments Carrying amount and estimated fair value of debt (Details) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2016
Sep. 30, 2015
Sep. 30, 2016
Senior Notes
Dec. 31, 2015
Senior Notes
Sep. 30, 2016
2017 Notes
Senior Notes
Sep. 30, 2016
2020 Notes
Senior Notes
Sep. 30, 2016
2022 Notes
Senior Notes
Sep. 30, 2016
2025 Notes
Senior Notes
Sep. 30, 2016
2035 Notes
Senior Notes
Sep. 30, 2016
2045 Notes
Senior Notes
Debt Instrument [Line Items]
 
 
 
 
 
 
 
 
 
 
Carrying Amount
$ 15,882 
$ 0 
$ 15,882 
$ 15,900 
$ 1,746 
$ 2,988 
$ 2,238 
$ 3,964 
$ 1,485 
$ 3,461 
Estimated Fair Value
 
 
$ 17,158 
 
$ 1,754 
$ 3,077 
$ 2,359 
$ 4,225 
$ 1,698 
$ 4,045 
Amortized Cost, Unrealized Gains and Losses, and Fair Value of Available-for-sale Securities (Detail) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2016
Sep. 30, 2015
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-For-Sale Amortized Cost
$ 7,124 
$ 5,808 
Available-for-sale, Gross Unrealized Gains
55 
7 
Available-for-sale, Gross Unrealized Losses
0 
0 
Available-for-sale securities
7,179 
5,815 
Less: current portion of available-for-sale investment securities
(3,248)
(2,431)
Long-term available-for-sale investment securities
3,931 
3,384 
US Government-sponsored agency debt securities |
Debt and Equity Securities
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-For-Sale Amortized Cost
4,693 
2,612 
Available-for-sale, Gross Unrealized Gains
6 
3 
Available-for-sale securities
4,699 
2,615 
U.S. treasury securities |
Debt and Equity Securities
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-For-Sale Amortized Cost
2,176 
2,652 
Available-for-sale, Gross Unrealized Gains
3 
4 
Available-for-sale securities
2,179 
2,656 
Equity securities |
Debt and Equity Securities
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-For-Sale Amortized Cost
7 
4 
Available-for-sale, Gross Unrealized Gains
46 
 
Available-for-sale securities
53 
4 
Corporate debt securities |
Debt and Equity Securities
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-For-Sale Amortized Cost
248 
533 
Available-for-sale securities
248 
533 
Auction rate securities |
Debt and Equity Securities
 
 
Schedule of Available-for-sale Securities [Line Items]
 
 
Available-For-Sale Amortized Cost
 
7 
Available-for-sale securities
 
$ 7 
Contractual Maturity of Available-for-sale Debt Securities (Detail) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2016
Amortized Cost
 
Due within one year
$ 3,193 
Due after 1 year through 5 years
3,925 
Due after 5 years through 10 years
0 
Due after 10 years
0 
Total
7,118 
Fair Value
 
Due within one year
3,195 
Due after 1 year through 5 years
3,931 
Due after 5 years through 10 years
0 
Due after 10 years
0 
Total
$ 7,126 
Investment Income, Net (Detail) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Sep. 30, 2014
Fair Value Measurements and Investments [Abstract]
 
 
 
Interest and dividend income on cash and investments
$ 75 
$ 31 
$ 25 
Gain on other investments
5 
3 
8 
Investment securities, trading:
 
 
 
Unrealized gains (losses), net
3 
(6)
(2)
Realized gains (losses), net
 
2 
6 
Investment securities, available-for-sale:
 
 
 
Realized gains, net
3 
21 
1 
Other-than-temporary impairment on investments
(4)
(5)
(3)
Investment income
$ 82 
$ 46 
$ 35 
Prepaid Expenses and Other Current Assets (Detail) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2016
Sep. 30, 2015
Prepaid Expenses and Other Assets [Abstract]
 
 
Prepaid operating expenses and maintenance
$ 151 
$ 137 
Income tax receivable (See Note 19—Income Taxes)
232 
77 
Foreign exchange derivative instruments (See Note 12—Derivative Financial Instruments)
50 
76 
Other
122 
63 
Total
$ 555 
$ 353 
Other Non-Current Assets (Detail) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2016
Sep. 30, 2015
Prepaid Expenses and Other Assets [Line Items]
 
 
Non-current income tax receivable (See Note 19—Income Taxes)
 
$ 627 
Pension assets (See Note 10—Pension, Postretirement and Other Benefits)
22 
36 
Other investments (See Note 4—Fair Value Measurements and Investments)
46 
45 
Long-term prepaid operating expenses and other
72 
57 
Non-current deferred tax assets (See Note 19—Income Taxes)(1)
22 
13 
Total
893 
778 
Other Assets
 
 
Prepaid Expenses and Other Assets [Line Items]
 
 
Non-current income tax receivable (See Note 19—Income Taxes)
$ 731 
$ 627 
Property, Equipment and Technology, Net (Detail) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2016
Sep. 30, 2015
Property, Plant and Equipment [Line Items]
 
 
Total property, equipment and technology
$ 4,798 
$ 4,283 
Accumulated depreciation and amortization
(2,648)
(2,395)
Property, equipment and technology, net
2,150 
1,888 
Land
 
 
Property, Plant and Equipment [Line Items]
 
 
Total property, equipment and technology
74 
71 
Buildings and building improvements
 
 
Property, Plant and Equipment [Line Items]
 
 
Total property, equipment and technology
839 
803 
Furniture, equipment and leasehold improvements
 
 
Property, Plant and Equipment [Line Items]
 
 
Total property, equipment and technology
1,382 
1,267 
Construction-in-progress
 
 
Property, Plant and Equipment [Line Items]
 
 
Total property, equipment and technology
125 
120 
Technology
 
 
Property, Plant and Equipment [Line Items]
 
 
Total property, equipment and technology
$ 2,378 
$ 2,022 
Property, Equipment and Technology, Net - Additional Information (Detail) (USD $)
12 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Sep. 30, 2014
Finite-Lived Intangible Assets [Line Items]
 
 
 
Technology, accumulated amortization
$ 1,500,000,000 
$ 1,400,000,000 
 
Depreciation and amortization
502,000,000 1
494,000,000 
435,000,000 
Depreciation and amortization, amortization expense on technology
50,000,000 
63,000,000 
66,000,000 
Property, Equipment and Technology
 
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
 
Depreciation and amortization
452,000,000 
431,000,000 
369,000,000 
Technology and Software
 
 
 
Finite-Lived Intangible Assets [Line Items]
 
 
 
Depreciation and amortization, amortization expense on technology
$ 259,000,000 
$ 251,000,000 
$ 198,000,000 
Estimated Future Amortization Expense on Technology Placed in Service (Detail) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2016
Finite-Lived Intangible Assets [Line Items]
 
2017
$ 46 
2018
40 
2019
40 
2020
40 
2021 and thereafter
111 
Total
277 
Technology and Software
 
Finite-Lived Intangible Assets [Line Items]
 
2017
274 
2018
209 
2019
161 
2020
108 
2021 and thereafter
84 
Total
$ 836 
Intangible Assets, Net - Additional Information (Detail) (USD $)
In Millions, unless otherwise specified
0 Months Ended 12 Months Ended
Jun. 21, 2016
Sep. 30, 2016
Sep. 30, 2015
Sep. 30, 2014
Jun. 21, 2016
Intangible Assets, Net (Excluding Goodwill) [Abstract]
 
 
 
 
 
Amortization expense related to finite-lived intangible assets
 
$ 50 
$ 63 
$ 66 
 
Impairment of indefinite-lived or finite-lived intangible assets
 
0 
0 
0 
 
Acquired Indefinite-lived Intangible Assets [Line Items]
 
 
 
 
 
Goodwill
 
15,066 
11,825 
 
3,268 1
Indefinite-lived Intangible Assets Acquired
16,137 2
 
 
 
 
Indefinite-lived Intangible Assets
 
26,957 
11,009 
 
 
Goodwill, Foreign Currency Translation Gain (Loss)
 
39 
 
 
 
Franchise Rights [Member]
 
 
 
 
 
Acquired Indefinite-lived Intangible Assets [Line Items]
 
 
 
 
 
Indefinite-lived Intangible Assets
1,500 
0 
1,520 
 
1,500 
Visa Europe
 
 
 
 
 
Acquired Indefinite-lived Intangible Assets [Line Items]
 
 
 
 
 
Total purchase consideration
$ 18,784 
 
 
 
 
Estimated Future Amortization Expense on Finite-Lived Intangible Assets (Detail) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2016
Intangible Assets, Net (Excluding Goodwill) [Abstract]
 
2017
$ 46 
2018
40 
2019
40 
2020
40 
2021 and thereafter
111 
Total
$ 277 
Accrued Liabilities (Detail) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Sep. 30, 2014
Sep. 30, 2016
Visa Europe
Jun. 21, 2016
Visa Europe
Accrued Liabilities [Line Items]
 
 
 
 
 
Accrued operating expenses
$ 347 1
$ 257 1
 
 
 
Visa Europe put option-(See Note 2-Visa Europe)
0 2
255 2
 
 
 
Interest Payable
145 3
0 3
 
 
 
Accrued income taxes-(See Note 19-Income Taxes)
153 
75 
 
 
 
Other
483 4
262 4
 
 
 
Total
1,128 
849 
 
 
 
Fair value adjustment for the Visa Europe put option
$ 255 
$ (110)
$ 0 
$ 255 
 
Share capital of Visa Europe acquired (percent)
 
 
 
 
100.00% 
Other Long-term Liabilities (Detail) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2016
Sep. 30, 2015
Accrued and Other Liabilities [Abstract]
 
 
Accrued income taxes-(See Note 19-Income Taxes)
$ 911 1
$ 752 1
Employee benefits
137 
77 
Other
114 
68 
Total
$ 1,162 
$ 897 
Debt - Senior Notes (Details) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2016
Dec. 31, 2015
Sep. 30, 2015
Debt Instrument [Line Items]
 
 
 
Principal amount
$ 16,000 
$ 16,000 
 
Carrying amount
15,882 
 
0 
Senior Notes
 
 
 
Debt Instrument [Line Items]
 
 
 
Principal amount
16,000 
 
 
Unamortized discounts and debt issuance costs
(118)
 
 
Carrying amount
15,882 
15,900 
 
Senior Notes |
2017 Notes
 
 
 
Debt Instrument [Line Items]
 
 
 
Principal amount
1,750 
 
 
Unamortized discounts and debt issuance costs
(4)
 
 
Carrying amount
1,746 
 
 
Effective interest rate (percent)
1.37% 
 
 
Stated interest rate (percent)
1.20% 
 
 
Senior Notes |
2020 Notes
 
 
 
Debt Instrument [Line Items]
 
 
 
Principal amount
3,000 
 
 
Unamortized discounts and debt issuance costs
(12)
 
 
Carrying amount
2,988 
 
 
Effective interest rate (percent)
2.30% 
 
 
Stated interest rate (percent)
2.20% 
 
 
Senior Notes |
2022 Notes
 
 
 
Debt Instrument [Line Items]
 
 
 
Principal amount
2,250 
 
 
Unamortized discounts and debt issuance costs
(12)
 
 
Carrying amount
2,238 
 
 
Effective interest rate (percent)
2.89% 
 
 
Stated interest rate (percent)
2.80% 
 
 
Senior Notes |
2025 Notes
 
 
 
Debt Instrument [Line Items]
 
 
 
Principal amount
4,000 
 
 
Unamortized discounts and debt issuance costs
(36)
 
 
Carrying amount
3,964 
 
 
Effective interest rate (percent)
3.26% 
 
 
Stated interest rate (percent)
3.15% 
 
 
Senior Notes |
2035 Notes
 
 
 
Debt Instrument [Line Items]
 
 
 
Principal amount
1,500 
 
 
Unamortized discounts and debt issuance costs
(15)
 
 
Carrying amount
1,485 
 
 
Effective interest rate (percent)
4.23% 
 
 
Stated interest rate (percent)
4.15% 
 
 
Senior Notes |
2045 Notes
 
 
 
Debt Instrument [Line Items]
 
 
 
Principal amount
3,500 
 
 
Unamortized discounts and debt issuance costs
(39)
 
 
Carrying amount
$ 3,461 
 
 
Effective interest rate (percent)
4.37% 
 
 
Stated interest rate (percent)
4.30% 
 
 
Debt - Additional Information (Detail) (USD $)
0 Months Ended 12 Months Ended 1 Months Ended 1 Months Ended 12 Months Ended
Sep. 30, 2016
Dec. 31, 2015
Sep. 30, 2015
Jan. 27, 2016
Revolving Credit Facility
Sep. 30, 2016
Revolving Credit Facility
Jan. 27, 2016
Revolving Credit Facility
Sep. 30, 2015
Revolving Credit Facility
Sep. 30, 2016
Commercial Paper
Sep. 30, 2016
Senior Notes
Dec. 31, 2015
Senior Notes
Dec. 31, 2015
Senior Notes
Minimum
Sep. 30, 2016
Senior Notes
Minimum
Dec. 31, 2015
Senior Notes
Maximum
Sep. 30, 2016
Senior Notes
Maximum
Sep. 30, 2016
If Redeemed Prior to Maturity Date or Par Call Date, As Applicable
Senior Notes
Sep. 30, 2016
If Redeemed on or after Par Call Date, except for 2017 Notes
Senior Notes
Debt Instrument [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Principal amount
$ 16,000,000,000 
$ 16,000,000,000 
 
 
 
 
 
 
$ 16,000,000,000 
 
 
 
 
 
 
 
Maturity period for senior notes
 
 
 
 
 
 
 
 
 
 
2 years 
 
30 years 
 
 
 
Stated interest rate (percent)
 
 
 
 
 
 
 
 
 
 
 
1.20% 
 
4.30% 
 
 
Interest expense
 
 
 
 
 
 
 
 
399,000,000 
 
 
 
 
 
 
 
Net aggregate proceeds
15,882,000,000 
 
0 
 
 
 
 
 
15,882,000,000 
15,900,000,000 
 
 
 
 
 
 
Redemption price, as percentage of principal amount (percent)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
100.00% 
100.00% 
Commercial Paper Program, Amount Available
 
 
 
 
 
 
 
3,000,000,000 
 
 
 
 
 
 
 
 
Commercial Paper Program, Maturity Period
 
 
 
 
 
 
 
P397D 
 
 
 
 
 
 
 
 
Commercial Paper Program, Amount Outstanding
 
 
 
 
 
 
 
0 
 
 
 
 
 
 
 
 
Credit Facility Maximum Borrowing Capacity
 
 
 
 
 
4,000,000,000 
3,000,000,000 
 
 
 
 
 
 
 
 
 
Consolidated indebtedness to consolidated EBITDA ratio (not greater than)
 
 
 
3.75 
 
 
 
 
 
 
 
 
 
 
 
 
Credit Facility Amount Outanding
 
 
 
 
$ 0 
 
 
 
 
 
 
 
 
 
 
 
Debt - Debt Redemption (Details) (Senior Notes)
12 Months Ended
Sep. 30, 2016
2017 Notes
 
Debt Instrument [Line Items]
 
Redemption price, additional basis spread (percent)
0.05% 
2020 Notes
 
Debt Instrument [Line Items]
 
Redemption price, additional basis spread (percent)
0.10% 
2022 Notes
 
Debt Instrument [Line Items]
 
Redemption price, additional basis spread (percent)
0.125% 
2025 Notes
 
Debt Instrument [Line Items]
 
Redemption price, additional basis spread (percent)
0.15% 
2035 Notes
 
Debt Instrument [Line Items]
 
Redemption price, additional basis spread (percent)
0.20% 
2045 Notes
 
Debt Instrument [Line Items]
 
Redemption price, additional basis spread (percent)
0.20% 
Debt - Debt Maturities (Details) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2016
Dec. 31, 2015
Debt Disclosure [Abstract]
 
 
2017
$ 0 
 
2018
1,750 
 
2019
0 
 
2020
0 
 
2021
3,000 
 
Thereafter
11,250 
 
Total
$ 16,000 
$ 16,000 
Pension, Postretirement and Other Benefits - Additional Information (Detail) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Sep. 30, 2014
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
 
 
 
Postretirement benefit plan, age when benefits terminate
65 years 
 
 
Assumed annual rate of future increases in health benefits for the other postretirement benefits plan for fiscal 2011
8.00% 
 
 
Assumed annual rate of future decreases in health benefits for the other postretirement benefits plan by 2017
5.00% 
 
 
Schedule of Effect of One-Percentage-Point Change in Assumed Health Care Cost Trend Rates [Table Text Block]
0.01 
 
 
Increasing or decreasing the healthcare cost trend by one per cent would increase decrease the postretirement accumulated plan benefit obligation by less than
$ 1 
 
 
Defined contribution plan, personnel costs
55 
49 
46 
U.S. Plans
 
 
 
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
 
 
 
Cash balance formula contributions, rate of eligible compensation
6.00% 
 
 
Curtailment gain recognized
8 
 
 
Company contribution
1 
16 
 
U.S. Plans |
Equity securities
 
 
 
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
 
 
 
Target allocation for plan assets, equity securities, minimum
50.00% 
 
 
Target allocation for plan assets, equity securities, maximum
80.00% 
 
 
Plan asset allocation, equity securities
62.00% 
 
 
U.S. Plans |
Fixed income securities
 
 
 
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
 
 
 
Target allocation for plan assets, equity securities, minimum
25.00% 
 
 
Target allocation for plan assets, equity securities, maximum
35.00% 
 
 
Plan asset allocation, equity securities
34.00% 
 
 
U.S. Plans |
Other Security Investments [Member]
 
 
 
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
 
 
 
Target allocation for plan assets, equity securities, maximum
7.00% 
 
 
Plan asset allocation, equity securities
4.00% 
 
 
Non-U.S. Plans
 
 
 
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
 
 
 
Company contribution
$ 102 
$ 0 
 
Non-U.S. Plans |
Equity securities
 
 
 
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
 
 
 
Target allocation for plan assets, equity securities, maximum
40.00% 
 
 
Plan asset allocation, equity securities
28.00% 
 
 
Non-U.S. Plans |
Fixed income securities
 
 
 
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
 
 
 
Target allocation for plan assets, equity securities, maximum
20.00% 
 
 
Plan asset allocation, equity securities
22.00% 
 
 
Non-U.S. Plans |
Other Security Investments [Member]
 
 
 
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
 
 
 
Target allocation for plan assets, equity securities, maximum
40.00% 
 
 
Plan asset allocation, equity securities
50.00% 
 
 
Change in Projected Benefit Obligation/Accumulated Postretirement Benefit Obligation (Detail) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Sep. 30, 2014
Recognized in Consolidated Balance Sheets:
 
 
 
Noncurrent asset
$ (22)
$ (36)
 
U.S. Pension Plans
 
 
 
Defined Benefit Plan, Change in Benefit Obligation [Roll Forward]
 
 
 
Benefit obligation-beginning of fiscal year
1,005 
983 
 
Visa Europe acquisition
0 
0 
 
Service cost
13 
47 
46 
Interest cost
40 
40 
42 
Actuarial loss (gain)
86 
40 
 
Benefit payments
(64)
(105)
 
Plan amendment
(8)
0 
 
Foreign currency exchange rate changes
0 
0 
 
Benefit obligation-end of fiscal year
1,072 
1,005 
983 
Accumulated benefit obligation
1,072 
994 
 
Change in Plan Assets:
 
 
 
Fair value of plan assets-beginning of fiscal year
1,022 
1,117 
 
Visa Europe acquisition
0 
0 
 
Actual return on plan assets
118 
(6)
 
Company contribution
1 
16 
 
Benefit payments
(64)
(105)
 
Foreign currency exchange rate changes
0 
0 
 
Fair value of plan assets-end of fiscal year
1,077 
1,022 
1,117 
Funded status at end of fiscal year
5 
17 
 
Recognized in Consolidated Balance Sheets:
 
 
 
Noncurrent asset
(22)
(36)
 
Current liability
(9)
(9)
 
Noncurrent liability
(8)
(10)
 
Funded status at end of fiscal year
5 
17 
 
U.S. Other Postretirement Benefits
 
 
 
Defined Benefit Plan, Change in Benefit Obligation [Roll Forward]
 
 
 
Benefit obligation-beginning of fiscal year
18 
20 
 
Service cost
0 
0 
0 
Interest cost
1 
1 
1 
Actuarial loss (gain)
(2)
0 
 
Benefit payments
(3)
(3)
 
Plan amendment
0 
0 
 
Benefit obligation-end of fiscal year
14 
18 
20 
Change in Plan Assets:
 
 
 
Fair value of plan assets-beginning of fiscal year
0 
0 
 
Actual return on plan assets
0 
0 
 
Company contribution
3 
3 
 
Benefit payments
(3)
(3)
 
Fair value of plan assets-end of fiscal year
0 
0 
0 
Funded status at end of fiscal year
(14)
(18)
 
Recognized in Consolidated Balance Sheets:
 
 
 
Noncurrent asset
0 
0 
 
Current liability
(3)
(3)
 
Noncurrent liability
(11)
(15)
 
Funded status at end of fiscal year
(14)
(18)
 
Non-U.S. Pension Plans
 
 
 
Defined Benefit Plan, Change in Benefit Obligation [Roll Forward]
 
 
 
Benefit obligation-beginning of fiscal year
0 
 
 
Visa Europe acquisition
381 
 
 
Service cost
1 1
 
 
Interest cost
3 1
 
 
Actuarial loss (gain)
86 
 
 
Benefit payments
(1)
 
 
Plan amendment
0 
 
 
Foreign currency exchange rate changes
4 
 
 
Benefit obligation-end of fiscal year
474 
0 
 
Accumulated benefit obligation
474 
 
 
Change in Plan Assets:
 
 
 
Fair value of plan assets-beginning of fiscal year
0 
 
 
Visa Europe acquisition
287 
 
 
Actual return on plan assets
25 
 
 
Company contribution
102 
0 
 
Benefit payments
(1)
 
 
Foreign currency exchange rate changes
2 
 
 
Fair value of plan assets-end of fiscal year
415 
0 
 
Funded status at end of fiscal year
(59)
 
 
Recognized in Consolidated Balance Sheets:
 
 
 
Noncurrent asset
0 
 
 
Current liability
(6)
 
 
Noncurrent liability
(53)
 
 
Funded status at end of fiscal year
$ (59)
 
 
Amounts Recognized in Accumulated Comprehensive Income Before Tax (Detail) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2016
Sep. 30, 2015
U.S. Pension Plans
 
 
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
 
 
Net actuarial loss (gain)
$ 241 
$ 232 
Prior service credit
0 
(9)
Total
241 
223 
U.S. Other Postretirement Benefits
 
 
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
 
 
Net actuarial loss (gain)
(5)
(5)
Prior service credit
(2)
(5)
Total
(7)
(10)
Non-U.S. Pension Plans
 
 
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
 
 
Net actuarial loss (gain)
66 
 
Prior service credit
0 
 
Total
$ 66 
 
Amounts from Accumulated Other Comprehensive Income to be Amortized into Net Periodic Benefit Cost (Detail) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Sep. 30, 2016
U.S. Pension Plans
 
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
 
Actuarial loss (gain)
$ 15 
Prior service credit
0 
Total
15 
U.S. Other Postretirement Benefits
 
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
 
Actuarial loss (gain)
(1)
Prior service credit
(2)
Total
(3)
Non-U.S. Pension Plans
 
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
 
Actuarial loss (gain)
2 
Prior service credit
0 
Total
$ 2 
Benefit Obligation and Fair Value of Plan Assets with Obligations in Excess of Plan Assets (Detail) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2016
Sep. 30, 2015
U.S. Plans
 
 
Accumulated benefit obligation in excess of plan assets
 
 
Accumulated benefit obligation, end of year
$ (16)
$ (19)
Fair value of plan assets, end of year
0 
0 
Projected benefit obligation in excess of plan assets
 
 
Benefit obligation, end of year
(16)
(19)
Fair value of plan assets, end of year
0 
0 
Non-U.S. Plans
 
 
Accumulated benefit obligation in excess of plan assets
 
 
Accumulated benefit obligation, end of year
(474)
 
Fair value of plan assets, end of year
415 
 
Projected benefit obligation in excess of plan assets
 
 
Benefit obligation, end of year
(474)
 
Fair value of plan assets, end of year
$ 415 
 
Components of Net Periodic Benefit Cost (Detail) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Sep. 30, 2014
U.S. Pension Plans
 
 
 
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
 
 
 
Service cost
$ 13 
$ 47 
$ 46 
Interest cost
40 
40 
42 
Expected return on assets
(69)
(72)
(68)
Prior service credit
(1)
(7)
(8)
Actuarial loss (gain)
7 
1 
1 
Net benefit cost
(10)
9 
13 
Curtailment gain
(8)
0 
(3)
Settlement loss
13 
7 
3 
Total net periodic benefit cost
(5)
16 
13 
U.S. Other Postretirement Benefits
 
 
 
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
 
 
 
Service cost
0 
0 
0 
Interest cost
1 
1 
1 
Expected return on assets
0 
0 
0 
Prior service credit
(3)
(3)
(3)
Actuarial loss (gain)
(2)
(2)
(1)
Net benefit cost
(4)
(4)
(3)
Curtailment gain
0 
0 
0 
Settlement loss
0 
0 
0 
Total net periodic benefit cost
(4)
(4)
(3)
Non-U.S. Pension Plans
 
 
 
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
 
 
 
Service cost
1 1
 
 
Interest cost
3 1
 
 
Expected return on assets
(4)1
 
 
Prior service credit
0 1
 
 
Actuarial loss (gain)
0 1
 
 
Net benefit cost
0 1
 
 
Curtailment gain
0 1
 
 
Settlement loss
0 1
 
 
Total net periodic benefit cost
$ 0 1
 
 
Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive Income (Detail) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Sep. 30, 2014
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
 
 
 
Current year actuarial loss (gain)
$ 106 
$ 122 
$ 27 
Amortization of prior service credit/(cost)
(10)
1 
8 
U.S. Pension Plans
 
 
 
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
 
 
 
Current year actuarial loss (gain)
30 
119 
 
Amortization of actuarial (loss) gain
(20)
(8)
 
Current year prior service credit
0 
0 
 
Amortization of prior service credit/(cost)
9 
7 
 
Total recognized in other comprehensive income
19 
118 
 
Total recognized in net periodic benefit cost and other comprehensive income
14 
134 
 
U.S. Other Postretirement Benefits
 
 
 
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
 
 
 
Current year actuarial loss (gain)
(2)
0 
 
Amortization of actuarial (loss) gain
2 
2 
 
Current year prior service credit
0 
0 
 
Amortization of prior service credit/(cost)
3 
3 
 
Total recognized in other comprehensive income
3 
5 
 
Total recognized in net periodic benefit cost and other comprehensive income
(1)
1 
 
Non-U.S. Pension Plans
 
 
 
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
 
 
 
Current year actuarial loss (gain)
66 
 
 
Amortization of actuarial (loss) gain
0 
 
 
Current year prior service credit
0 
 
 
Amortization of prior service credit/(cost)
0 
 
 
Total recognized in other comprehensive income
66 
 
 
Total recognized in net periodic benefit cost and other comprehensive income
$ 66 
 
 
Weighted Average Actuarial Assumptions (Detail)
12 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Sep. 30, 2014
U.S. Pension Plans
 
 
 
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
 
 
 
Discount rate for benefit obligation
3.62% 1
4.33% 1
4.27% 1
Discount rate for net periodic benefit cost
4.33% 
4.27% 
4.81% 
Non-U.S. Pension Plans
 
 
 
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
 
 
 
Discount rate for benefit obligation
2.40% 1
 
 
Discount rate for net periodic benefit cost
3.10% 
 
 
Expected long-term rate of return on plan assets
3.92% 2
 
 
Rate of increase in compensation levels for:
 
 
 
Benefit obligation
3.20% 
 
 
Net periodic benefit cost
3.00% 
 
 
U.S. Other Postretirement Benefits
 
 
 
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
 
 
 
Discount rate for benefit obligation
1.91% 1
2.43% 1
2.59% 1
Discount rate for net periodic benefit cost
2.43% 
2.59% 
2.76% 
Expected long-term rate of return on plan assets
7.00% 2
7.00% 2
7.00% 2
Rate of increase in compensation levels for:
 
 
 
Benefit obligation
 
4.00% 
4.00% 
Net periodic benefit cost
 
4.00% 
4.50% 
Plan's Investments at Fair Value (Detail) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2016
Sep. 30, 2015
Sep. 30, 2014
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
 
 
 
Fair Value, Assets, Level 1 to Level 2 Transfers, Amount
$ 0 
 
 
U.S. Plans
 
 
 
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
 
 
 
Fair Value Measurements
1,077 
1,022 
1,117 
Non-U.S. Plans
 
 
 
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
 
 
 
Fair Value Measurements
415 
0 
 
Pension Benefits
 
 
 
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
 
 
 
Fair Value, Assets, Level 1 to Level 2 Transfers, Amount
0 
0 
 
Fair Value, Measurements, Recurring |
Level 1 |
U.S. Plans
 
 
 
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
 
 
 
Fair Value Measurements
811 
756 
 
Fair Value, Measurements, Recurring |
Level 1 |
Non-U.S. Plans
 
 
 
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
 
 
 
Fair Value Measurements
273 
 
 
Fair Value, Measurements, Recurring |
Level 1 |
Cash equivalents |
U.S. Plans
 
 
 
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
 
 
 
Fair Value Measurements
39 
11 
 
Fair Value, Measurements, Recurring |
Level 1 |
Cash equivalents |
Non-U.S. Plans
 
 
 
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
 
 
 
Fair Value Measurements
105 
 
 
Fair Value, Measurements, Recurring |
Level 1 |
U.S. treasury securities |
U.S. Plans
 
 
 
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
 
 
 
Fair Value Measurements
100 
74 
 
Fair Value, Measurements, Recurring |
Level 1 |
U.K. treasury securities |
Non-U.S. Plans
 
 
 
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
 
 
 
Fair Value Measurements
52 
 
 
Fair Value, Measurements, Recurring |
Level 1 |
Equity securities |
U.S. Plans
 
 
 
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
 
 
 
Fair Value Measurements
672 
671 
 
Fair Value, Measurements, Recurring |
Level 1 |
Equity securities |
Non-U.S. Plans
 
 
 
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
 
 
 
Fair Value Measurements
116 
 
 
Fair Value, Measurements, Recurring |
Level 2 |
U.S. Plans
 
 
 
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
 
 
 
Fair Value Measurements
215 
235 
 
Fair Value, Measurements, Recurring |
Level 2 |
Non-U.S. Plans
 
 
 
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
 
 
 
Fair Value Measurements
113 
 
 
Fair Value, Measurements, Recurring |
Level 2 |
Corporate debt securities |
U.S. Plans
 
 
 
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
 
 
 
Fair Value Measurements
185 
169 
 
Fair Value, Measurements, Recurring |
Level 2 |
Corporate debt securities |
Non-U.S. Plans
 
 
 
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
 
 
 
Fair Value Measurements
39 
 
 
Fair Value, Measurements, Recurring |
Level 2 |
U.S. government-sponsored debt securities |
U.S. Plans
 
 
 
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
 
 
 
Fair Value Measurements
30 
66 
 
Fair Value, Measurements, Recurring |
Level 2 |
Multi-asset securities |
Non-U.S. Plans
 
 
 
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
 
 
 
Fair Value Measurements
74 
 
 
Fair Value, Measurements, Recurring |
Level 3 |
U.S. Plans
 
 
 
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
 
 
 
Fair Value Measurements
51 
31 
 
Fair Value, Measurements, Recurring |
Level 3 |
Non-U.S. Plans
 
 
 
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
 
 
 
Fair Value Measurements
29 
 
 
Fair Value, Measurements, Recurring |
Level 3 |
Asset-backed securities |
U.S. Plans
 
 
 
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
 
 
 
Fair Value Measurements
51 
31 
 
Fair Value, Measurements, Recurring |
Level 3 |
Asset-backed securities |
Non-U.S. Plans
 
 
 
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
 
 
 
Fair Value Measurements
29 
 
 
Total |
Fair Value, Measurements, Recurring |
U.S. Plans
 
 
 
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
 
 
 
Fair Value Measurements
1,077 
1,022 
 
Total |
Fair Value, Measurements, Recurring |
Non-U.S. Plans
 
 
 
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
 
 
 
Fair Value Measurements
415 
 
 
Total |
Fair Value, Measurements, Recurring |
Cash equivalents |
U.S. Plans
 
 
 
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
 
 
 
Fair Value Measurements
39 
11 
 
Total |
Fair Value, Measurements, Recurring |
Cash equivalents |
Non-U.S. Plans
 
 
 
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
 
 
 
Fair Value Measurements
105 
 
 
Total |
Fair Value, Measurements, Recurring |
Corporate debt securities |
U.S. Plans
 
 
 
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
 
 
 
Fair Value Measurements
185 
169 
 
Total |
Fair Value, Measurements, Recurring |
Corporate debt securities |
Non-U.S. Plans
 
 
 
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
 
 
 
Fair Value Measurements
39 
 
 
Total |
Fair Value, Measurements, Recurring |
U.S. government-sponsored debt securities |
U.S. Plans
 
 
 
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
 
 
 
Fair Value Measurements
30 
66 
 
Total |
Fair Value, Measurements, Recurring |
U.S. treasury securities |
U.S. Plans
 
 
 
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
 
 
 
Fair Value Measurements
100 
74 
 
Total |
Fair Value, Measurements, Recurring |
U.K. treasury securities |
Non-U.S. Plans
 
 
 
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
 
 
 
Fair Value Measurements
52 
 
 
Total |
Fair Value, Measurements, Recurring |
Asset-backed securities |
U.S. Plans
 
 
 
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
 
 
 
Fair Value Measurements
51 
31 
 
Total |
Fair Value, Measurements, Recurring |
Asset-backed securities |
Non-U.S. Plans
 
 
 
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
 
 
 
Fair Value Measurements
29 
 
 
Total |
Fair Value, Measurements, Recurring |
Equity securities |
U.S. Plans
 
 
 
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
 
 
 
Fair Value Measurements
672 
671 
 
Total |
Fair Value, Measurements, Recurring |
Equity securities |
Non-U.S. Plans
 
 
 
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
 
 
 
Fair Value Measurements
116 
 
 
Total |
Fair Value, Measurements, Recurring |
Multi-asset securities |
Non-U.S. Plans
 
 
 
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
 
 
 
Fair Value Measurements
$ 74 
 
 
Cash Flows - Actual Employer Contributions (Detail) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Sep. 30, 2016
Sep. 30, 2015
U.S. Pension Plans
 
 
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
 
 
Actual employer contributions
$ 1 
$ 16 
Expected employer contributions
 
 
Expected employer contributions 2017
9 
 
Expected benefit payments
 
 
Expected benefit payments 2017
165 
 
Expected benefit payments 2018
88 
 
Expected benefit payments 2019
85 
 
Expected benefit payments 2020
84 
 
Expected benefit payments 2021
81 
 
Expected benefit payments 2022-2026
350 
 
U.S. Other Postretirement Benefits
 
 
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
 
 
Actual employer contributions
3 
3 
Expected employer contributions
 
 
Expected employer contributions 2017
3 
 
Expected benefit payments
 
 
Expected benefit payments 2017
3 
 
Expected benefit payments 2018
3 
 
Expected benefit payments 2019
2 
 
Expected benefit payments 2020
2 
 
Expected benefit payments 2021
2 
 
Expected benefit payments 2022-2026
2 
 
Non-U.S. Pension Plans
 
 
Defined Benefit Plans and Other Postretirement Benefit Plans Table Text Block [Line Items]
 
 
Actual employer contributions
102 
0 
Expected employer contributions
 
 
Expected employer contributions 2017
6 
 
Expected benefit payments
 
 
Expected benefit payments 2017
4 
 
Expected benefit payments 2018
4 
 
Expected benefit payments 2019
5 
 
Expected benefit payments 2020
5 
 
Expected benefit payments 2021
5 
 
Expected benefit payments 2022-2026
$ 27 
 
Settlement Guarantee Management - Additional Information (Detail) (USD $)
12 Months Ended
Sep. 30, 2016
month
Sep. 30, 2015
Settlement Guarantee Management [Abstract]
 
 
Number of Rolling Months of Average Chargebacks Volume Included in Settlement Risk Exposure
4 
 
Estimated maximum settlement exposure
$ 67,800,000,000 
$ 43,500,000,000 
Covered settlement exposure
2,900,000,000 
2,200,000,000 
Estimated probability-weighted value of the guarantee
$ 2,000,000 
$ 1,000,000 
Collateral (Detail) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2016
Sep. 30, 2015
Business Acquisition [Line Items]
 
 
Cash equivalents
$ 1,295 
$ 1,023 
Pledged securities at market value
170 
154 
Letters of credit
1,311 
1,178 
Guarantees
1,418 
971 
Total
4,194 
3,326 
Visa Europe
 
 
Business Acquisition [Line Items]
 
 
Cash equivalents
294 1
 
Pledged securities at market value
0 
 
Letters of credit
144 
 
Guarantees
375 
 
Total
$ 813 
 
Derivative Financial Instruments - Additional Information (Detail) (USD $)
12 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Sep. 30, 2014
Sep. 30, 2016
Foreign exchange derivative instruments
Sep. 30, 2015
Foreign exchange derivative instruments
Sep. 30, 2016
Prepaid Expenses and Other Current Assets [Member]
Sep. 30, 2016
Accrued Liabilities
Sep. 30, 2016
Other Assets
Jun. 21, 2016
Visa Europe
Sep. 30, 2016
Visa Europe
Foreign exchange derivative instruments
Sep. 30, 2015
Visa Europe
Foreign exchange derivative instruments
Jun. 21, 2016
Designated as Hedging Instrument
Visa Europe
Derivative [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
The aggregate notional amount of the Company's foreign currency forward contracts outstanding
 
 
 
$ 1,600,000,000 
$ 1,200,000,000 
 
 
 
 
$ 1,100,000,000 
$ 0 
 
Increase in aggregate notional amounts
 
 
 
189,000,000 
 
 
 
 
 
 
 
 
Cash flow hedges in an asset position
 
 
 
 
 
17,000,000 
 
 
 
 
 
 
Cash flow hedges in a liability position
 
 
 
 
 
 
78,000,000 
 
 
 
 
 
Reduction in earnings from excluded forward points and ineffectiveness
30,000,000 
29,000,000 
27,000,000 
 
 
 
 
 
 
 
 
 
Expected amount of accumulated other comprehensive income (loss) expected to be reclassified
58,000,000 
 
 
 
 
 
 
 
 
 
 
 
Gain (Loss) on Foreign Currency Derivatives Recorded in Earnings, Net
74,000,000 
 
 
 
 
 
 
 
 
 
 
 
Collateral received with counterparties
 
 
 
 
 
 
8,000,000 
 
 
 
 
 
Posted collateral
 
 
 
 
 
 
 
54,000,000 
 
 
 
 
Deferred cash consideration liability
 
 
 
 
 
 
 
 
1,236,000,000 1
 
 
1,200,000,000 
Net investment
 
 
 
 
 
 
 
 
18,800,000,000 
 
 
 
Other Comprehensive Income (Loss), Foreign Currency Transaction and Translation Adjustment, Net of Tax
$ (218,000,000)
$ 1,000,000 
$ (1,000,000)
 
 
 
 
 
 
 
 
 
Long-Lived Net Property, Equipment and Technology Assets Classified by Major Geographic Area (Detail) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2016
Sep. 30, 2015
Segment Reporting Information [Line Items]
 
 
Property, equipment and technology, net
$ 2,150 
$ 1,888 
United States
 
 
Segment Reporting Information [Line Items]
 
 
Property, equipment and technology, net
1,827 
1,806 
Countries Outside of United States
 
 
Segment Reporting Information [Line Items]
 
 
Property, equipment and technology, net
$ 323 
$ 82 
Enterprise-wide Disclosures and Concentration of Business - Additional Information (Detail)
12 Months Ended
Sep. 30, 2016
country
Sep. 30, 2015
country
Sep. 30, 2014
country
Geographic Concentration Risk |
Total Operating Revenue
 
 
 
Concentration Risk [Line Items]
 
 
 
Number of countries, outside the United States, that exceeded 10%
0 
0 
0 
Customer Concentration Risk |
Net Operating Revenue
 
 
 
Concentration Risk [Line Items]
 
 
 
Number of customers that exceeded 10%
0 
0 
0 
United States |
Geographic Concentration Risk |
Total Operating Revenue
 
 
 
Concentration Risk [Line Items]
 
 
 
Concentration Risk, Percentage
52.00% 
53.00% 
54.00% 
Stockholders' Equity - Additional Information (Detail) (USD $)
12 Months Ended 12 Months Ended 0 Months Ended 12 Months Ended
Sep. 30, 2016
Oct. 31, 2016
Subsequent Event
Sep. 30, 2016
Deposit into Litigation Escrow
Oct. 31, 2015
October 2015 Share Repurchase Program
Jul. 21, 2016
July 2016 Share Repurchase Program
Mar. 19, 2015
Class A common stock
Sep. 30, 2016
Class A common stock
Sep. 30, 2015
Class A common stock
Sep. 30, 2016
Class B common stock
conversion_rate
Sep. 30, 2015
Class B common stock
Mar. 19, 2015
Class B common stock
conversion_rate
Sep. 30, 2016
Class C common stock
conversion_rate
Jun. 21, 2016
Class C common stock
Sep. 30, 2015
Class C common stock
Mar. 19, 2015
Class C common stock
conversion_rate
Sep. 30, 2016
Class C common stock
Accelerated Share Repurchase Program Aggregate
Sep. 30, 2016
Preferred Stock
Sep. 30, 2015
Preferred Stock
Class of Stock [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common stock, shares, outstanding
 
 
 
 
 
 
1,871,000,000 1
1,950,000,000 
245,000,000 
245,000,000 
 
17,000,000 
550,000 
20,000,000 
 
 
 
 
Common Stock, Value, Outstanding
 
 
 
 
 
 
$ 0 
$ 0 
$ 0 
$ 0 
 
$ 0 
$ (170,000,000)2
$ 0 
 
 
 
 
Common stock split, conversion ratio
 
 
 
 
 
4 
 
 
 
 
 
 
 
 
 
 
 
 
Common stock, conversion rate
 
 
 
 
 
 
 
 
1.6483 3
 
1.6483 3
4.0000 
 
 
4.0 
 
 
 
Share repurchase plan, authorized amount
 
 
 
5,000,000,000 
5,000,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stock repurchase plan, remaining authorized funds
5,800,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Deposits into litigation escrow account
 
 
0 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Shares of class C common stock released from transfer restrictions, converted to class A common stock
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
134,000,000 
 
 
Preferred stock, shares outstanding
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
5,000,000 
0 
Dividends, paid
$ 1,400,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dividends, paid per share
$ 0.14 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dividends, per share amount declared
 
$ 0.165 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of Shares of Class A Common Shares Outstanding on an As-Converted Basis (Detail)
0 Months Ended 0 Months Ended 12 Months Ended 0 Months Ended 0 Months Ended
Sep. 30, 2016
Jun. 21, 2016
Sep. 30, 2016
Series B Preferred Stock
conversion_rate
Sep. 30, 2015
Series B Preferred Stock
Sep. 30, 2016
Series C Preferred Stock
conversion_rate
Sep. 30, 2015
Series C Preferred Stock
Sep. 30, 2016
Class A common stock
Sep. 30, 2016
Class A common stock
Sep. 30, 2015
Class A common stock
Sep. 30, 2016
Class B common stock
Sep. 30, 2016
Class B common stock
conversion_rate
Sep. 30, 2015
Class B common stock
Mar. 19, 2015
Class B common stock
conversion_rate
Sep. 30, 2016
Class C common stock
Sep. 30, 2016
Class C common stock
conversion_rate
Jun. 21, 2016
Class C common stock
Sep. 30, 2015
Class C common stock
Mar. 19, 2015
Class C common stock
conversion_rate
Jun. 21, 2016
Visa Europe
Class of Stock [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stock Repurchased and Retired During Period, Shares
1,000,000 
 
 
 
 
 
 
91,000,000 1 2
44,000,000 1
 
 
 
 
 
 
 
 
 
 
Preferred stock, shares outstanding
 
 
2,000,000 
0 
3,000,000 
0 
 
 
 
 
 
 
 
 
 
 
 
 
 
preferred stock series B conversion rate
 
 
13.9520 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Shares Outstanding As Converted Basis
 
 
35,000,000 3
 
44,000,000 3
 
 
 
 
 
 
 
 
 
 
 
 
 
 
preferred stock series C conversion rate
 
 
 
 
13.9520 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Common stock, shares, outstanding
 
 
 
 
 
 
 
1,871,000,000 4
1,950,000,000 
 
245,000,000 
245,000,000 
 
 
17,000,000 
550,000 
20,000,000 
 
 
Common stock, conversion rate
 
 
 
 
 
 
 
 
 
 
1.6483 5
 
1.6483 5
 
4.0000 
 
 
4.0 
 
Conversion of class C common stock upon sale into public market (in shares)
2,422,000,000 3
 
 
 
 
 
1,871,000,000 3 4
 
 
405,000,000 3
 
 
 
67,000,000 3
 
 
 
 
 
Initial conversion rate of UK&I and Europe preferred stock into class A common or class A equivalent preferred stock
 
13.952 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
13.952 
Stockholders' Equity Share Repurchases in the Open Market (Details) (USD $)
In Millions, except Per Share data, unless otherwise specified
0 Months Ended 12 Months Ended
Sep. 30, 2016
Sep. 30, 2016
Sep. 30, 2015
Sep. 30, 2014
Class of Stock [Line Items]
 
 
 
 
Shares repurchased in the open market
1 
 
 
 
Total cost
$ 120 
$ 6,987 
$ 2,910 
$ 4,118 
Class A common stock
 
 
 
 
Class of Stock [Line Items]
 
 
 
 
Shares repurchased in the open market
 
91 1 2
44 1
 
Average repurchase price per share
 
$ 77.05 2 3
$ 65.98 3
 
Total cost
 
$ 6,987 2
$ 2,910 
 
Stockholders' Equity Effect of Escrow Funding on the Company Repurchaseing its Common Stock (Details) (USD $)
In Millions, unless otherwise specified
0 Months Ended 12 Months Ended 0 Months Ended
Sep. 30, 2016
Sep. 30, 2016
Deposit into Litigation Escrow
Sep. 30, 2016
Class A common stock
Sep. 30, 2016
Class B common stock
Sep. 30, 2016
Class B common stock
conversion_rate
Mar. 19, 2015
Class B common stock
conversion_rate
Class of Stock [Line Items]
 
 
 
 
 
 
Deposits under the retrospective responsibility plan
 
$ 0 
 
 
 
 
Common stock, conversion rate
 
 
 
 
1.6483 1
1.6483 1
As-converted class B common stock outstanding after deposits
2,422 2
 
1,871 2 3
405 2
 
 
Basic and Diluted Earnings Per Share (Detail) (USD $)
In Millions, except Per Share data, unless otherwise specified
0 Months Ended 12 Months Ended
Mar. 19, 2015
Sep. 30, 2016
Sep. 30, 2015
Sep. 30, 2014
Schedule of Earnings Per Share, Basic and Diluted, by Common Class, Including Two Class Method [Line Items]
 
 
 
 
Income allocation - Basic
 
$ 5,991 1
$ 6,328 1
$ 5,438 1
Dilutive shares of outstanding stock awards included in computation of weighted-average dilutive shares outstanding
 
5 
6 
7 
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount
 
2 
2 
2 
Class A common stock
 
 
 
 
Schedule of Earnings Per Share, Basic and Diluted, by Common Class, Including Two Class Method [Line Items]
 
 
 
 
Income allocation - Basic
 
4,738 1
5,044 1
4,307 1
Weighted Average Shares Outstanding - Basic
 
1,906 2
1,954 
1,993 
Earnings per Share - Basic
 
$ 2.49 2 3
$ 2.58 
$ 2.16 
Income allocation - Diluted
 
5,991 1
6,328 1
5,438 1
Weighted Average Shares Outstanding - Diluted
 
2,414 2 3 4
2,457 
2,523 
Earnings per Share - Diluted
 
$ 2.48 2 3
$ 2.58 
$ 2.16 
Common stock split, conversion ratio
4 
 
 
 
Class B common stock
 
 
 
 
Schedule of Earnings Per Share, Basic and Diluted, by Common Class, Including Two Class Method [Line Items]
 
 
 
 
Income allocation - Basic
 
1,006 1 5
1,045 1 5
892 1 5
Weighted Average Shares Outstanding - Basic
 
245 2
245 
245 
Earnings per Share - Basic
 
$ 4.10 2 3 5
$ 4.26 
$ 3.63 
Income allocation - Diluted
 
1,004 1 5
1,042 1 5
890 1 5
Weighted Average Shares Outstanding - Diluted
 
245 2 3 5
245 
245 
Earnings per Share - Diluted
 
$ 4.09 2 3 5
$ 4.25 
$ 3.62 
Weighted Average Number Shares Outstanding, As-Converted Basis
 
405 
405 
413 
Class C common stock
 
 
 
 
Schedule of Earnings Per Share, Basic and Diluted, by Common Class, Including Two Class Method [Line Items]
 
 
 
 
Income allocation - Basic
 
185 1 5
224 1 5
222 1 5
Weighted Average Shares Outstanding - Basic
 
19 2
22 
26 
Earnings per Share - Basic
 
$ 9.94 2 3 5
$ 10.33 
$ 8.65 
Income allocation - Diluted
 
185 1 5
223 1 5
221 1 5
Weighted Average Shares Outstanding - Diluted
 
19 2 3 5
22 
26 
Earnings per Share - Diluted
 
$ 9.93 2 3 5
$ 10.30 
$ 8.62 
Weighted Average Number Shares Outstanding, As-Converted Basis
 
75 
87 
103 
Participating Securities
 
 
 
 
Schedule of Earnings Per Share, Basic and Diluted, by Common Class, Including Two Class Method [Line Items]
 
 
 
 
Income allocation - Basic
 
62 1 6
15 1 6
17 1 6
Income allocation - Diluted
 
$ 61 1 6
$ 15 1 6
$ 16 1 6
Share-based Compensation - Additional Information (Detail) (USD $)
In Millions, except Per Share data, unless otherwise specified
12 Months Ended 0 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Sep. 30, 2014
Sep. 30, 2016
Employee Stock Option
Sep. 30, 2016
Restricted Stock Awards
Sep. 30, 2015
Restricted Stock Awards
Sep. 30, 2014
Restricted Stock Awards
Sep. 30, 2016
Restricted Stock Units
Sep. 30, 2015
Restricted Stock Units
Sep. 30, 2014
Restricted Stock Units
Sep. 30, 2016
Performance Based Shares
Sep. 30, 2015
Performance Based Shares
Sep. 30, 2014
Performance Based Shares
Mar. 19, 2015
Class A common stock
Sep. 30, 2016
Equity Incentive Compensation Plan, 2007 [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Maximum number of Class A Common Stock authorized for issuance under the 2007 Equity Incentive Compensation Plan ("the "EIP")
20 
 
 
 
 
 
 
 
 
 
 
 
 
 
236 
Share-based compensation expense
$ 211 
$ 184 
$ 172 
 
 
 
 
 
 
 
 
 
 
 
 
Employee Service Share-based Compensation, Tax Benefit from Compensation Expense
62 
54 
51 
 
 
 
 
 
 
 
 
 
 
 
 
Common stock split, conversion ratio
 
 
 
 
 
 
 
 
 
 
 
 
 
4 
 
Share-based Compensation Arrangement by Share-based Payment Award, Expiration Period
10 years 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Vesting period from the date of grant
 
 
 
3 years 
 
 
 
 
 
 
3 years 
3 years 
3 years 
 
 
Total intrinsic value from options exercised
103 
134 
187 
 
 
 
 
 
 
 
 
 
 
 
 
Tax benefit realized from options exercised
35 
86 
65 
 
 
 
 
 
 
 
 
 
 
 
 
Unrecognized compensation cost
19 
 
 
 
54 
 
 
140 
 
 
18 
 
 
 
 
Total unrecognized compensation cost related to non-vested options expected to be recognized over a weighted average period (in years)
1 year 4 months 24 days 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average grant date fair value (in dollars per share)
 
 
 
 
$ 0.00 
$ 63.71 
$ 49.98 
$ 79.77 
$ 62.88 
$ 49.44 
 
 
 
 
 
Total fair value of RSAs and RSUs vested
$ 142 
$ 132 
$ 126 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average grant date fair value per share
 
 
 
 
 
 
 
 
 
 
$ 92.71 
$ 69.78 
$ 56.37 
 
 
Weighted average remaining contractual term
5 years 2 months 19 days 
 
 
 
10 months 6 days 
 
 
1 year 7 months 27 days 
 
 
 
 
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award, Discount from Market Price, Purchase Date
15.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assumptions Used to Estimate the Fair Value of Each Stock Option on the Date of Grant Using a Black-Scholes Option Pricing Model (Detail)
12 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Sep. 30, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
Expected term (in years)(1)
4 years 4 months 6 days 1
4 years 6 months 18 days 1
4 years 9 months 18 days 1
Risk-free rate of return(2)
1.50% 2
1.50% 2
1.30% 2
Expected volatility(3)
21.70% 3
22.00% 3
25.20% 3
Expected dividend yield(4)
0.70% 4
0.80% 4
0.80% 4
Fair value per option granted
$ 15.01 
$ 12.04 
$ 11.03 
Minimum
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
Expected volatility(3)
20.00% 
21.00% 
22.00% 
Maximum
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
Expected volatility(3)
23.00% 
23.00% 
26.00% 
Visa
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
Expected term peer weighted percentage
77.00% 
67.00% 
58.00% 
Peer Companies
 
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
 
Expected term peer weighted percentage
23.00% 
33.00% 
42.00% 
Summary of Option Activity (Detail) (USD $)
In Millions, except Share data, unless otherwise specified
12 Months Ended
Sep. 30, 2016
Options
 
Beginning balance
9,677,717 
Granted
1,438,048 
Forfeited
(463,378)
Exercised
(1,775,903)
Ending balance
8,876,484 
Options exercisable at September 30, 2016
6,204,589 
Options exercisable and expected to be vested at September 30, 2015
8,582,576 1
Share-based Compensation Arrangement by Share-based Payment Award, Options, Additional Disclosures [Abstract]
 
Beginning balance
$ 28.07 
Granted
$ 79.98 
Forfeited
$ 21.76 
Exercised
$ 20.00 
Ending balance
$ 38.42 
Options exercisable at September 30, 2016
$ 24.87 
Options exercisable and expected to vest at September 30, 2016(2)
$ 37.35 1
Weighted-Average Remaining Contractual Term
 
Outstanding at September 30, 2016
5 years 2 months 19 days 
Options exercisable at September 30, 2016
3 years 9 months 15 days 
Options exercisable and expected to vest at September 30, 2016(2)
5 years 1 month 10 days 1
Aggregate Intrinsic Value
 
Outstanding at September 30, 2016
$ 393 
Options exercisable at September 30, 2016
359 
Options exercisable and expected to vest at September 30, 2016(2)
$ 389 1
Stock price used to calculate aggregate intrinsic value
$ 82.7 
Summary of RSA and RSU Activity (Detail) (USD $)
12 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Sep. 30, 2014
Weighted-Average Remaining Contactual Term
 
 
 
Outstanding at September 30, 2016
5 years 2 months 19 days 
 
 
Aggregate Intrinsic Value
 
 
 
Stock price used to calculate aggregate intrinsic value
$ 82.7 
 
 
Restricted Stock Awards
 
 
 
Restricted stock
 
 
 
Beginning balance
4,064,687 
 
 
Granted
0 
 
 
Vested
(2,061,406)
 
 
Forfeited
(236,699)
 
 
Ending balance
1,766,582 
4,064,687 
 
Weighted-Average Grant Date Fair Value
 
 
 
Beginning balance
$ 54.09 
 
 
Granted
$ 0.00 
$ 63.71 
$ 49.98 
Vested
$ 49.06 
 
 
Forfeited
$ 59.34 
 
 
Ending balance
$ 59.26 
$ 54.09 
 
Weighted-Average Remaining Contactual Term
 
 
 
Outstanding at September 30, 2016
10 months 6 days 
 
 
Aggregate Intrinsic Value
 
 
 
Outstanding at September 30, 2016
$ 146,000,000 
 
 
Restricted Stock Units
 
 
 
Restricted stock
 
 
 
Beginning balance
1,442,522 
 
 
Granted
2,735,115 
 
 
Vested
(789,180)
 
 
Forfeited
(241,503)
 
 
Ending balance
3,146,954 
1,442,522 
 
Weighted-Average Grant Date Fair Value
 
 
 
Beginning balance
$ 53.80 
 
 
Granted
$ 79.77 
$ 62.88 
$ 49.44 
Vested
$ 51.58 
 
 
Forfeited
$ 73.02 
 
 
Ending balance
$ 75.48 
$ 53.80 
 
Weighted-Average Remaining Contactual Term
 
 
 
Outstanding at September 30, 2016
1 year 7 months 27 days 
 
 
Aggregate Intrinsic Value
 
 
 
Outstanding at September 30, 2016
$ 260,000,000 
 
 
Summary of Performance-based Shares Activity (Detail) (USD $)
12 Months Ended
Sep. 30, 2016
Weighted- Average Remaining Contractual Term
 
Outstanding at September 30, 2016
5 years 2 months 19 days 
Aggregate Intrinsic Value
 
Stock price used to calculate aggregate intrinsic value
$ 82.7 
Performance Awards
 
Shares
 
Beginning balance
(1,263,962)
Granted
604,219 1
Vested
(645,320)
Unearned
123,387 
Forfeited
(57,462)
Ending balance
(1,042,012)
Weighted- Average Grant Date Fair Value
 
Beginning balance
$ 57.61 
Granted
$ 92.71 1
Vested
$ 54.59 
Unearned
$ 54.59 
Forfeited
$ 73.07 
Ending balance
$ 78.24 
Weighted- Average Remaining Contractual Term
 
Outstanding at September 30, 2016
10 months 29 days 
Aggregate Intrinsic Value
 
Outstanding at September 30, 2016
$ 86,000,000 2
Commitments and Contingencies - Additional Information (Detail)
12 Months Ended
Sep. 30, 2016
USD ($)
Sep. 30, 2015
USD ($)
Sep. 30, 2014
USD ($)
Sep. 30, 2016
Minimum
Sep. 30, 2016
Maximum
Jun. 21, 2016
Visa Europe
EUR (€)
Other Commitments [Line Items]
 
 
 
 
 
 
Rent expense incurred
$ 134,000,000 
$ 136,000,000 
$ 134,000,000 
 
 
 
Client Incentive Agreement Period
 
 
 
1 year 
16 years 
 
Share capital of Visa Europe acquired (percent)
 
 
 
 
 
100.00% 
Contingent consideration
 
 
 
 
 
1,000,000,000 
Accrued interest on contingent consideration
 
 
 
 
 
€ 0 
Future Minimum Payments on Leases and Marketing and Sponsorship Agreements (Detail) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2016
Commitments and Contingencies Disclosure [Abstract]
 
Operating leases, 2017
$ 126 
Operating leases, 2018
103 
Operating leases, 2019
82 
Operating leases, 2020
61 
Operating leases, 2021
57 
Operating leases, Thereafter
190 
Operating leases
619 
Marketing and sponsorships, 2017
126 
Marketing and sponsorships, 2018
128 
Marketing and sponsorships, 2019
120 
Marketing and sponsorships, 2020
110 
Marketing and sponsorships, 2021
38 
Marketing and sponsorships, Thereafter
33 
Marketing and sponsorships
555 
Total, 2017
252 
Total, 2018
231 
Total, 2019
202 
Total, 2020
171 
Total, 2021
95 
Total, Thereafter
223 
Total
$ 1,174 
Expected Reduction of Revenue for Volume and Support Incentive Agreements (Detail) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Sep. 30, 2016
Commitments and Contingencies Disclosure [Abstract]
 
Client incentives, 2017
$ 4,211 
Client incentives, 2018
3,752 
Client incentives, 2019
3,211 
Client incentives, 2020
2,628 
Client incentives, 2021
2,245 
Client incentives, Thereafter
4,617 
Client incentives
$ 20,664 
Income Taxes - Additional Information (Detail) (USD $)
0 Months Ended 12 Months Ended 0 Months Ended 12 Months Ended 12 Months Ended 3 Months Ended 12 Months Ended
Jun. 21, 2016
Sep. 30, 2016
Sep. 30, 2015
Sep. 30, 2014
Sep. 30, 2016
Other Assets
Sep. 30, 2015
Other Assets
Jun. 21, 2016
Visa Europe
Sep. 30, 2016
Visa Europe
Sep. 30, 2016
Visa Europe
Other Assets
Sep. 30, 2015
Visa Europe
Other Assets
Sep. 30, 2016
Non United States Customers
Sep. 30, 2015
Non United States Customers
Sep. 30, 2014
Non United States Customers
Sep. 30, 2016
Federal
Sep. 30, 2016
State and Local Jurisdiction
Sep. 30, 2016
Foreign Country
Sep. 30, 2016
Foreign Country
Visa Europe
Sep. 30, 2016
Foreign Country
Visa Europe
Tax Credit Carryforward [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
US income before taxes
 
$ 5,839,000,000 
$ 7,214,000,000 
$ 6,140,000,000 
 
 
 
 
 
 
$ 2,500,000,000 
$ 2,400,000,000 
$ 2,300,000,000 
 
 
 
 
 
Deferred tax assets, net
 
2,712,000,000 
1,172,000,000 
 
 
 
 
 
22,000,000 
13,000,000 
 
 
 
 
 
 
 
 
Net operating loss carryforwards
 
 
 
 
 
 
 
 
 
 
 
 
 
17,000,000 
21,000,000 
117,000,000 
 
 
Federal foreign tax credit carryforward
 
 
 
 
 
 
 
 
 
 
 
 
 
15,000,000 
 
 
 
 
U.S. federal statutory rate
 
35.00% 
35.00% 
35.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income tax provision, percent
 
25.00% 
30.00% 
30.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Visa Europe Framework Agreement loss
1,900,000,000 
1,877,000,000 
0 
0 
 
 
1,856,000,000 1
1,184,000,000 
 
 
 
 
 
 
 
 
 
 
Tax benefit upon remeasurement of deferred tax liability to reflect tax rate change
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(88,000,000)
(88,000,000)
Revaluation of Visa Europe put option
 
255,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unrecognized Tax Benefits, Period Increase (Decrease)
 
 
(296,000,000)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unrecognized Tax Benefits, Decrease Resulting from Prior Period Tax Positions
 
0 
239,000,000 
0 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Effective Income Tax Rate Reconciliation, Deduction, Qualified Production Activity, Amount
 
 
 
264,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Prior years U.S. domestic production activities deduction
 
0 
0 
191,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income taxes receivable included in prepaid and other current assets
 
232,000,000 
77,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income Taxes Receivable
 
 
627,000,000 
 
731,000,000 
627,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
Income taxes payable included in accrued taxes as part of accrued liabilities
 
153,000,000 
75,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Accrued income taxes included in other long-term liabilities
 
911,000,000 2
752,000,000 2
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cumulative undistributed earnings of the Company's international subsidiaries intended to be reinvested indefinitely outside the U.S
 
8,300,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Decreased Singapore tax as a result of the tax incentive agreement
 
(235,000,000)
(192,000,000)
(168,000,000)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Benefit of the tax incentive agreement on diluted net income per share
 
$ 0.10 
$ 0.08 
$ 0.07 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total unrecognized tax benefits exclusive of interest and penalties
 
1,160,000,000 
1,051,000,000 
1,303,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unrecognized tax benefits, if recognized, would reduce the effective tax rate in a future period
 
926,000,000 
859,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest expense included in interest expense and administrative and other
 
15,000,000 
(6,000,000)
10,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Accrued penalties related to uncertain tax positions
 
3,000,000 
1,000,000 
2,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Accrued interest related to uncertain tax positions in other long term liabilities
 
61,000,000 
33,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Accrued penalties related to uncertain tax positions in other long term liabilities
 
$ 17,000,000 
$ 6,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
[1] the loss upon consummation of the transaction resulting from the effective settlement of the Framework Agreement between Visa and Visa Europe. The Visa Europe Framework Agreement provided Visa Europe with a perpetual, exclusive right to operate the Visa business in the Visa Europe region in exchange for a license fee paid to Visa. Under the terms of the Framework Agreement, the license fee paid by Visa Europe has increased modestly since inception in 2007, while the value of the Visa Europe business has increased at a greater rate. Using an income approach, the Company assessed the contractual terms and conditions of the Framework Agreement as compared to current market conditions and the historical and expected financial performance of Visa Europe. Based on the analysis performed, the Company determined that the terms were not at fair value as determined under U.S. GAAP at the Closing. The present value of the expected differential between payments required by the Framework Agreement and those that would be required if the contract were at fair value under U.S. GAAP was calculated over the Framework Agreement's contractual perpetual term, resulting in a loss of $1.9 billion recognized within operating expense in the Company's consolidated statement of operations during the third quarter of fiscal 2016, and a reduction to the purchase accounting consideration; and
Income Before Taxes by Fiscal Year (Detail) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Sep. 30, 2014
Income Tax Disclosure [Abstract]
 
 
 
U.S.
$ 5,839 
$ 7,214 
$ 6,140 
Non-U.S.
2,173 
1,781 
1,584 
Income before income taxes
$ 8,012 1
$ 8,995 
$ 7,724 
Income Tax Expense by Fiscal Year (Detail) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Sep. 30, 2014
Current:
 
 
 
U.S. federal
$ 2,250 
$ 1,991 
$ 2,353 
State and local
181 
168 
237 
Non-U.S.
368 
300 
274 
Total current taxes
2,799 
2,459 
2,864 
Deferred:
 
 
 
U.S. federal
(508)
181 
(576)
State and local
(63)
1 
(31)
Non-U.S.
(207)
26 
29 
Total deferred taxes
(778)
208 
(578)
Income tax provision
$ 2,021 1
$ 2,667 
$ 2,286 
Tax Effect of Temporary Differences that Give Rise to Significant Portions of Deferred Tax Assets and Liabilities (Detail) (USD $)
In Millions, unless otherwise specified
Sep. 30, 2016
Sep. 30, 2015
Deferred Tax Assets
 
 
Accrued compensation and benefits
$ 277 
$ 141 
Comprehensive (income) loss
106 
51 
Accrued litigation obligation
373 
391 
Client incentives
266 
191 
Net operating loss carryforwards
32 
50 
Federal benefit of state taxes
195 
203 
Federal benefit of foreign taxes
1,214 
0 
Other
280 
185 
Valuation allowance
31 
40 
Deferred tax assets
2,712 
1,172 
Deferred Tax Liabilities
 
 
Property, equipment and technology, net
(278)
(315)
Intangible assets
(7,013)
(3,964)
Foreign taxes
(106)
(153)
Other
(101)
0 
Deferred tax liabilities
(7,498)
(4,432)
Net deferred tax liabilities
$ (4,786)
$ (3,260)
Information that Causes the Income Tax Expense to Differ from the Amount of Income Tax Determined by Applying the Applicable U.S. Federal Statutory Rate of 35% to Pretax Income (Detail) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Sep. 30, 2014
Income Tax Disclosure [Abstract]
 
 
 
U.S. federal income tax at statutory rate
$ 2,804 
$ 3,148 
$ 2,704 
State income taxes, net of federal benefit
135 
194 
129 
Non-U.S. tax effect, net of federal benefit
(553)
(327)
(278)
Prior years U.S. domestic production activities deduction
0 
0 
(191)
Remeasurement of deferred tax liability
(88)
0 
0 
Reversal of prior years tax reserves related to the resolution of uncertain tax positions
0 
(239)
0 
Revaluation of Visa Europe put option
(89)
0 
0 
Other, net
(188)
(109)
(78)
Income tax provision
$ 2,021 1
$ 2,667 
$ 2,286 
U.S. federal income tax at statutory rate, percent
35.00% 
35.00% 
35.00% 
State income taxes, net of federal benefit, percent
2.00% 
2.00% 
2.00% 
Non-U.S. tax effect, net of federal benefit, percent
(7.00%)
(4.00%)
(4.00%)
Prior years U.S. domestic production activities deduction, percent
0.00% 
0.00% 
(2.00%)
Remeasurement of deferred tax liability, percent
(1.00%)
0.00% 
0.00% 
Reversal of prior years tax reserves related to the resolution of uncertain tax positions, percent
0.00% 
(2.00%)
0.00% 
Revaluation of Visa Europe put option, percent
(1.00%)
0.00% 
0.00% 
Other, net, percent
(3.00%)
(1.00%)
(1.00%)
Income tax expense, percent
25.00% 
30.00% 
30.00% 
Reconciliation of Beginning and Ending Unrecognized Tax Benefits by Fiscal Year (Detail) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward]
 
 
Beginning Balance
$ 1,051 
$ 1,303 
Increases of unrecognized tax benefits related to prior years
153 
44 
Decreases of unrecognized tax benefits related to prior years
(180)
(413)
Increases of unrecognized tax benefits related to current year
138 
120 
Reductions to unrecognized tax benefits related to lapsing statute of limitations
(2)
(3)
Ending Balance
$ 1,160 
$ 1,051 
Legal Matters - Additional Information (Detail) (USD $)
0 Months Ended 12 Months Ended 0 Months Ended 12 Months Ended 0 Months Ended 60 Months Ended 24 Months Ended 1 Months Ended 1 Months Ended 12 Months Ended 31 Months Ended 0 Months Ended 12 Months Ended 3 Months Ended 36 Months Ended 12 Months Ended
Oct. 19, 2012
Sep. 30, 2016
Jan. 27, 2014
Class Plaintiffs
Dec. 10, 2012
Class Plaintiffs
Sep. 30, 2014
Class Plaintiffs
Oct. 29, 2012
Individual Plaintiffs
Dec. 16, 2013
Consumer Interchange Litigation
Sep. 30, 2016
Interchange Opt Out Litigation
case_filed
Dec. 31, 2004
Indirect Purchaser Actions
state
Sep. 30, 2015
U.K. Merchant Litigation
merchant
Dec. 31, 2010
Canadian Competition Proceedings
entity
financial_institution
Oct. 11, 2012
National ATM Council Class Action
atm_operator
Oct. 31, 2011
Consumer Class Actions
financial_institution
Sep. 30, 2016
Settled Litigation
Sep. 30, 2015
Settled Litigation
Sep. 30, 2015
Threatened Litigation
Europe Interchange Rate Litigation
merchant
Jan. 27, 2014
Covered Litigation
Interchange Multidistrict Litigation
Sep. 30, 2016
Unsettled
Sep. 30, 2015
Unsettled
Sep. 30, 2015
Covered Litigation
Sep. 30, 2016
Covered Litigation
Settled Litigation
Sep. 30, 2016
Visa, MasterCard, and Certain U.S. Financial Institutions
Interchange Opt Out Litigation
litigation_case
Sep. 30, 2016
Visa
Interchange Opt Out Litigation
litigation_case
Loss Contingencies [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Payments for legal settlements
 
 
$ 4,000,000,000 
$ 4,000,000,000 
$ 4,000,000,000 
$ 350,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Distribution to class merchants, rate amount
0.10% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Distribution to class merchants, period
   
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consecutive months of distribution to class merchants
8 months 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Provision for legal matters
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,100,000,000 
2,000,000 
14,000,000 
 
 
 
 
Deposits into litigation escrow account
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
450,000,000 
 
 
 
Payments on unsettled and settled matters
 
 
 
 
 
 
 
 
 
 
 
 
 
(47,000,000)
(446,000,000)
 
 
 
 
 
(528,000,000)
 
 
Decrease in deferred tax assets reflecting the current tax deduction related to payments made in connection with the covered litigation
 
978,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Damages sought by plaintiff from all defendants
 
 
 
 
 
 
$ 54,000,000,000 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of opt-out cases filed
 
 
 
 
 
 
 
50 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of claims filed
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4 
3 
Settlements reached by percentage of sales volume of merchants who opted out
 
 
 
 
 
 
 
51.00% 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of states where consumers reside
 
 
 
 
 
 
 
 
19 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of plaintiffs
 
 
 
 
 
 
 
 
 
100 
 
 
 
 
 
30 
 
 
 
 
 
 
 
Number of Financial Institutions
 
 
 
 
 
 
 
 
 
 
10 
 
3 
 
 
 
 
 
 
 
 
 
 
Number of MasterCard entities
 
 
 
 
 
 
 
 
 
 
2 
 
 
 
 
 
 
 
 
 
 
 
 
Number of non-bank ATM operators
 
 
 
 
 
 
 
 
 
 
 
13 
 
 
 
 
 
 
 
 
 
 
 
Legal Matters Legal Matters - Accrued Litigation (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended 12 Months Ended 36 Months Ended 12 Months Ended 1 Months Ended
Sep. 30, 2016
Sep. 30, 2015
Sep. 30, 2014
Sep. 30, 2016
Unsettled
Sep. 30, 2015
Unsettled
Sep. 30, 2016
Settled Litigation
Sep. 30, 2015
Settled Litigation
Sep. 30, 2016
U.S. Covered Litigation
Sep. 30, 2015
U.S. Covered Litigation
Sep. 30, 2014
U.S. Covered Litigation
Sep. 30, 2016
U.S. Covered Litigation
Settled Litigation
Sep. 30, 2015
U.S. Covered Litigation
Settled Litigation
Sep. 30, 2016
Covered Litigation
Settled Litigation
Sep. 30, 2016
U.S. Covered Litigation
Dec. 31, 2010
Canadian Competition Proceedings
financial_institution
Loss Contingencies [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of Financial Institutions
 
 
 
 
 
 
 
 
 
 
 
 
 
 
10 
Loss Contingency Accrual [Roll Forward]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Accrued Litigation, Beginning of Period
$ 981 
$ 1,024 
$ 1,456 
 
 
 
 
$ 978 
$ 1,023 
$ 1,449 
 
 
 
$ 0 
 
Provision for unsettled legal matters
 
 
 
2 
14 
 
 
 
 
 
 
 
 
2 
 
Payments on unsettled and settled matters
 
 
 
 
 
(47)
(446)
 
 
 
(45)
(426)
(528)
 
 
Accrued Litigation, End of Period
$ 981 
$ 1,024 
$ 1,456 
 
 
 
 
$ 978 
$ 1,023 
$ 1,449 
 
 
 
$ 2