Visa deposits $405 million into litigation escrow

Visa disclosed on September 23 that it authorized a $405 million deposit into its U.S. litigation escrow account on September 18, 2026. The deposit was made under the company's U.S. retrospective responsibility plan, which protects Class A common shareholders from legacy U.S. litigation liabilities by allocating the financial burden to Class B holders, who are primarily U.S. financial institutions.

Funding the escrow account reduces the conversion rates of Class B shares into Class A stock, diluting Class B equity holders. The conversion rate for Class B-1 shares declined from 1.5445 to 1.5400, Class B-2 fell from 1.5014 to 1.4924, and Class B-3 dropped from 1.4953 to 1.4773. In total, the adjustment eliminated roughly 1.104 million as-converted Class B shares. Visa noted that this contraction in its fully diluted share count creates the exact same accretive earnings per share impact as repurchasing Class A shares in the open market.

The transaction takes place alongside persistent legal outlays and rising expenses. In the third quarter of fiscal 2026, Visa recorded a $237 million litigation provision and $563 million in severance charges. GAAP operating expenses expanded 19% year over year to $4.8 billion, driven by higher marketing costs, personnel expenses, and client incentives, which increased 18% to $4.7 billion.

Despite those liabilities, Visa generated $11.6 billion in net revenue during the third quarter, up 14% year over year, and $5.6 billion in GAAP net income. Processed transactions grew 10% to 71.7 billion, total cross-border volume rose 13%, and other revenue increased 45% to $1.5 billion. During the period, the company returned $6.2 billion to shareholders through share buybacks and dividends.