This management's discussion and analysis ("MD&A") provides a review of the results of operations, financial condition, the liquidity and capital resources of Visa Inc. and its subsidiaries ("Visa," "we," "our" and "the Company") on a historical basis and outlines the factors that have affected recent earnings, as well as those factors that may affect future earnings. The MD&A should be read in conjunction with the consolidated financial statements and related notes included in Item 8.

Overview

Visa is a global payments technology company that connects consumers, businesses, banks and governments around the world, enabling them to use digital currency instead of checks and cash. We provide financial institutions with payment processing platforms that encompass consumer credit, debit, prepaid and commercial payments. We facilitate global commerce through the transfer of value and information among financial institutions, merchants, consumers, businesses and government entities. Each of these constituencies has played a key role in the ongoing worldwide migration from paper-based to electronic forms of payment, and we believe that this transformation continues to yield significant growth opportunities. We continue to explore additional opportunities to enhance our competitive position by expanding the scope of payment services to benefit our existing customers and to position Visa to serve more and different constituencies.

In order to respond to industry dynamics and enhance Visa's ability to compete, we consummated a reorganization in October 2007, and in March 2008 completed our IPO. The global alignment of various functions and best practices provides us the business scale to effectively deliver our existing core products across more and different geographies and to accelerate the delivery of product innovations across different market segments.

Overall Economic Conditions

Our business is affected by overall economic conditions and consumer spending. We expect that soft economic conditions will continue to moderate consumer and commercial spending, and our rate of payments volume growth, in the near term. Regulatory measures enacted in the United States during the third quarter of fiscal 2009 expected to take effect in fiscal 2010 will impact our financial institution customers. Should financial institutions constrict credit offerings in response to these measures, this could ultimately impact consumer spending and our payments volumes. However, we believe that the continuing secular shift to electronic payment products for non-discretionary spending will buffer the impact to our overall payments volume growth. This shift is particularly clear in debit products, where Visa has a strong market position in the United States and significant growth opportunities internationally.

Funding of the Litigation Escrow Account

During December 2008 and July 2009, we deposited $1.1 billion and $0.7 billion, respectively, into the litigation escrow account (the "Escrow Account") previously established under the Retrospective Responsibility Plan (the "Plan"). Under the terms of the Plan, when Visa funds the Escrow Account, the shares of class B common stock retained by our U.S. financial institution customers and their affiliates 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. On that basis, fundings of the Escrow Account in December 2008 and July 2009 had the effect of repurchasing 20,800,824 and 11,578,878 class A common stock equivalents, respectively. See Note 4-Retrospective Responsibility Plan to our consolidated financial statements.

Share Repurchase Plan

In October 2009 our board of directors authorized a $1.0 billion share repurchase plan. The authorization will be in place through September 30, 2010, and is subject to extension or expansion at the determination of our board of directors. See the Liquidity and Capital Resources section for further discussion.

Sale of Investment in Companhia Brasileira de Meois de Pagamento ("VisaNet do Brasil")

In June 2009, Visa International Service Association, a wholly-owned subsidiary of the Company sold its 10% ownership interest in VisaNet do Brasil in connection with its initial public offering. As a result of this transaction, we received approximately $1 billion in net proceeds and recognized a pre-tax gain of $473 million in investment income, net on our statement of operations. The amount of the gain net of tax was $237 million. Following their initial public offering, we amended an existing agreement with VisaNet do Brasil which grants a license to use Visa trademarks and technology intellectual property. We expect the license fees to be earned during fiscal 2010 to offset the loss of dividend income as a result of the sale of our ownership interest.

Expansion of Our Processing Capabilities

Expanding our processing capabilities worldwide is a core component of our long-term growth strategy. As part of this strategy, we created Visa Processing Services Pte. Ltd. ("VPS"), a joint venture with Yalamanchili International Pte. Ltd. ("Yalamanchili"). We hold a 70% interest in VPS. Yalamanchili is a payments processor and software company with operations in Asia. VPS will allow us to extend our industry-leading processing capabilities in geographies where electronic payments are growing rapidly, providing multi-currency and multi-language debit, credit and prepaid processing services to financial institutions, processors and payment companies. VPS will also have capabilities to provide ATM, money transfer and private label processing, as well as a range of payments services, including risk and fraud management, mobile applications, loyalty and cardholder support. VPS provides prepaid and debit processing solutions and complements our Debit Processing Service.

Nominal Payments Volume and Transaction Counts

We believe that payments volume and processed transactions are key drivers of our business. Payments volume is the basis for service revenues and processed transactions are the basis for data processing revenues. As anticipated, for fiscal 2009 as compared to fiscal 2008, nominal payments volume declined in credit and commercial products, which was offset by growth in debit resulting in minimal year over year nominal payments volume impact.

This table sets forth nominal product payments volumes for the periods presented in nominal dollars(1):

                                          U.S.A.                                  Rest of World                                 Visa Inc.
                            12 months      12 months                    12 months      12 months                    12 months      12 months
                              ended          ended                        ended          ended                        ended          ended
                            June 30,       June 30,        %            June 30,       June 30,        %            June 30,       June 30,        %
                             2009(4)        2008(4)      Change          2009(4)        2008(4)      Change          2009(4)        2008(4)      Change
                                                                        (in billions, except percentages)
Nominal Payments Volume
Consumer credit            $       613    $       661        (7 )%     $       811    $       802         1 %      $     1,424    $     1,463        (3 )%
Consumer debit(2)                  787            733         7 %              148            133        11 %              935            866         8 %
Commercial and other               221            217         2 %               99            108        (8 )%             320            325        (1 )%

Total Nominal Payments
Volume                     $     1,621    $     1,611         1 %      $     1,058    $     1,043         2 %      $     2,679    $     2,654         1 %
Cash volume                        380            406        (6 )%           1,189          1,127         5 %            1,569          1,533         2 %

Total Nominal Volume(3)    $     2,001    $     2,017        (1 )%     $     2,248    $     2,170         4 %      $     4,248    $     4,187         1 %

(1) Figures may not sum due to rounding. Percentage change calculated based on whole numbers, not rounded numbers.

(2) Includes prepaid volume.

(3) Total nominal volume is the sum of total nominal payments volume and cash volume. Total nominal payments volume is the total monetary value of transactions for goods and services that are purchased. Cash volume generally consists of cash access transactions, balances access transactions, balance transfers and convenience checks. Total nominal volume is provided by our financial institution customers, subject to verification by Visa. From time to time, previously submitted volume information may be updated. Prior year volume information presented in these tables has not been updated, as subsequent adjustments were not material.

(4) Service revenues in a given quarter is assessed based on payments volume in the prior quarter. Therefore, service revenues reported with respect to the twelve months ended September 30, 2009 and September 30, 2008 were based on payments volume reported by our financial institution customers for the twelve months ended June 30, 2009 and June 30, 2008, respectively.

This table sets forth transaction volumes processed by our VisaNet system during the following fiscal periods:

Results of Operations

Operating Revenues

Our operating revenues are primarily generated from payment volume on Visa-branded cards for goods and services, as well as the number, size and type of transactions processed on our VisaNet system. We do not earn revenues from, or bear credit risk with respect to, interest and fees paid by cardholders on Visa-branded cards. Our issuing customers have the responsibility for issuing cards and determining interest rates and fees paid by cardholders, and most other competitive card features. We do not earn revenues from the fees that merchants are charged for card acceptance, including the merchant discount rate. Our acquiring customers, which are generally responsible for soliciting merchants, establish and earn these fees.

The following sets forth the components of our operating revenues:

Service revenues are earned from customers for their participation in card programs carrying marks of the Visa brand. Service revenues are assessed using a calculation of pricing applied to the prior quarter's payments volume.

Data processing revenues are earned for authorization, clearing, settlement, transaction processing services and other maintenance and support services that facilitate transaction and information processing among our customers globally and Visa Europe. Data processing revenues are based on information we accumulate from VisaNet, our secure, centralized, global processing platform, which provides transaction processing services linking issuers and acquirers.

International transaction revenues are assessed to customers on transactions where the cardholder's issuer country is different from the merchant's country. International transaction revenues are generally driven by cross-border payments volume, which includes single currency transactions, and currency conversion activities for transactions involving more than one currency.

Other revenues consist primarily of optional service or product enhancements, such as extended cardholder protection and concierge services, cardholder services and fees for licensing and certification. Other revenues also include revenues earned from Visa Europe in connection with the Visa Europe Framework Agreement.

Volume and support incentives represent contracts with financial institution customers, merchants and other business partners for various programs designed to build payments volume and to increase product acceptance. These incentives are accounted for as reductions of operating revenues.

Operating Expenses

Personnel includes salaries, stock-based compensation, incentives and various fringe benefits.

Network, EDP and communications primarily represents expenses for the operation of our electronic payments network, including maintenance, equipment rental and fees for other data processing services.

Advertising, marketing and promotion includes expenses associated with advertising and marketing campaigns, sponsorships, and other related promotions to promote the Visa brand.

Visa International fees represents fees that Visa U.S.A. paid to Visa International prior to our reorganization for services primarily related to global brand management, global product enhancements, management of global system development and interoperability, and corporate support to the entire Visa enterprise. These fees ceased as a result of our reorganization.

Professional and consulting fees consist of fees for consulting, contractors, legal and other professional services.

Depreciation and amortization includes depreciation expenses of properties and equipment, as well as amortization of purchased and internally developed software. Also included in this amount are depreciation and amortization of the incremental basis in technology and other assets acquired in our reorganization.

Administrative and other primarily consists of facilities costs, foreign exchange gains and losses and other corporate and overhead expenses in support of our business.

Litigation provision is an estimate of litigation expense and is based on management's understanding of our litigation profile, the specifics of the case, advice of counsel to the extent appropriate, and management's best estimate of incurred loss at the balance sheet dates.

Other Income (Expense)

Interest expense primarily includes accretion associated with litigation settlements to be paid over periods longer than one year and interest incurred on outstanding debt.

Investment income, net represents returns on our fixed-income securities and other investments. Investment income also includes cash dividends received from other cost and equity method investments.

Other non-operating income primarily relates to the change in fair value of the liability under the Framework Agreement with Visa Europe. This liability was fully discharged in October 2008.

Visa Inc. Fiscal 2009 and 2008 and Visa U.S.A. Fiscal 2007

The following discussion of results of operations compares Visa Inc. consolidated results for fiscal 2009 and 2008 and Visa U.S.A. results for fiscal 2007. Visa U.S.A. was the accounting acquirer in the reorganization that took place on October 1, 2007, and therefore Visa U.S.A. results are considered the historical predecessor for those of Visa Inc., and are included for comparison.

Operating Revenues

The following table sets forth our operating revenues earned in the U.S.,
throughout the rest of the world, and from Visa Europe. Operating revenues for
periods prior to October 1, 2007 are for Visa U.S.A., and are not presented in
the table below, Revenues earned from Visa Europe are a result of our
contractual arrangement with Visa Europe.



                                              Fiscal Year ended September 30,
                                                               $              %
                                         2009      2008      Change       Change (1)
                                             (in millions, except percentages)
     U.S. operating revenues            $ 4,023   $ 3,664   $    359              10 %
     Rest of world operating revenues     2,669     2,378        291              12 %
     EU fee operating revenues              219       221         (2 )            (1 )%

     Total Operating Revenues           $ 6,911   $ 6,263   $    648              10 %

(1) Percentage change calculated based on whole numbers, not rounded numbers.

Operating revenues globally reflect the impact of pricing modifications made on various services as a result of innovations in our product line and improvements in our service model. U.S. revenues also reflect volume and support incentives incurred on initiation or early renewal of significant long term customer contracts. We regularly review our pricing strategy to ensure that it competitively aligns with the value and growth opportunities provided to our customers.

A significant portion of the revenues we earn outside the United States results from cross-border business and leisure travel, which has moderated in the current economic environment. Revenues from processing foreign currency transactions for our customers fluctuate with cross-border travel and the extent to which Visa-branded products are utilized for travel purposes.

Our operating revenues are impacted by fluctuations in foreign currency rates. Operating revenues are impacted by the overall strengthening or weakening of the U.S. dollar compared to local or regional currencies in which our payments volumes are denominated. The strengthening of the U.S. dollar in fiscal 2009 over the prior year resulted in a 3% decline in total operating revenues, including the impact from our hedging activities. The decline primarily impacted service and international transaction revenues.

The following table sets forth the components of our total operating revenues:

                                                 Fiscal Year ended
                                                   September 30,                         $ Change            % Change(1)
                                                                        Visa        2009        2008        2009      2008
                                      Visa Inc.        Visa Inc.       U.S.A.        vs.         vs.        vs.       vs.
                                        2009             2008           2007        2008        2007        2008      2007
                                                               (in millions, except percentages)
Service revenues                     $     3,174      $     3,061      $ 1,945      $ 113      $ 1,116         4 %      57 %
Data processing revenues                   2,430            2,073        1,416        357          657        17 %      46 %
International transaction revenues         1,916            1,721          454        195        1,267        11 %     279 %
Other revenues                               625              569          280         56          289        10 %     104 %
Volume and support incentives             (1,234 )         (1,161 )       (505 )      (73 )       (656 )       6 %     130 %

Total Operating Revenues             $     6,911      $     6,263      $ 3,590      $ 648      $ 2,673        10 %      74 %

(1) Percentage change calculated based on whole numbers, not rounded numbers.

Revenue growth in fiscal 2009 primarily reflects a moderate increase in nominal payments volume, solid growth of processed transactions and strategic pricing modifications. Operating revenues increased during fiscal 2008 from fiscal 2007, primarily due to the inclusion of operating revenues from acquired regions, double digit growth in nominal payments volume, processed transactions and cross-border nominal payments volume, combined with competitive pricing adjustments. The discussion below comparing fiscal 2008 and 2007 focuses on factors other than the inclusion of $2.4 billion of the acquired regions' operating revenues in fiscal 2008.

• Service revenues increased in fiscal 2009 primarily due to strategic pricing modifications implemented in the second half of the year, combined with modest growth of 1% in nominal global payments volume. Service revenues increased during fiscal 2008 compared to 2007 primarily reflecting nominal U.S. payments volume growth of 11%. We expect that soft economic conditions will continue to moderate consumer and commercial spending, and our rate of nominal payments volume growth, in the near term.

• Data processing revenues increased in fiscal 2009 due to growth in the number of transactions processed of 8% during the year, combined with strategic pricing modifications. Data processing revenues increased during fiscal 2008 compared to fiscal 2007 primarily due to a growth of 12% in transaction volumes, coupled with competitive pricing adjustments related to the Interlink Network. We believe that the secular shift to electronic payments will continue on a global basis.

• Other revenues increased during fiscal 2009 and 2008 primarily due to growth in revenues related to the Visa Extras loyalty platform for administrative and rewards fulfillment services performed in support of the platform. The increase in other revenues during fiscal 2008 also reflects license and other service fees from Visa Europe following the reorganization, offset by the absence of project revenues previously earned for services provided to Visa International and Visa Canada in fiscal 2007.

• Volume and support incentives increased primarily due to incentives incurred on initiation or early renewal of significant long term customer contracts in fiscal 2009. These incentives were partially offset by the absence of a non-recurring charge related to a customer agreement executed in fiscal 2008. In addition, fiscal 2008 incentives reflect the accounting impacts of: (i) conforming accounting policies upon reorganization; and
(ii) the retirement of certain issuer programs in fiscal 2007. We expect volume and support incentive to increase somewhat in fiscal 2010. The actual amount of volume and support incentives will vary based on modifications to performance expectations for these contracts, amendments to existing contracts or new contracts.

The net asset (liability) of volume and support incentives changed during the year as follows:

                                                        Fiscal 2009            Fiscal 2008
                                                                  (in millions)
Beginning balance at October 1, net asset
(liability)(1)                                         $         130          $         (87 )
Provision
Current year provision                                        (1,239 )               (1,167 )
Performance adjustments(2)                                        41                     15
Contractual adjustments(3)                                       (36 )                   (9 )

Subtotal volume and support incentives                        (1,234 )               (1,161 )

Payments                                                       1,136                  1,378

Ending balance at September 30, net asset(1) $ 32 $ 130

(1) Balance represents the net of the current and long term asset and current liability portions of volume and support incentives as presented in our consolidated balance sheet.

(2) Amount represents downward adjustments in estimated obligations under incentive agreements resulting from management's refinement of its estimate of projected sales performance as new information becomes available.

(3) Amount represents adjustments resulting from amendments to existing contractual terms.

Operating Expenses

The following table sets forth components of our total operating expenses for
the periods presented.



                                       Fiscal Year ended
                                         September 30,                     $ Change               % Change(1)
                                                           Visa       2009          2008        2009       2008
                               Visa Inc.     Visa Inc.    U.S.A.      vs.           vs.         vs.        vs.
                                 2009          2008        2007       2008          2007        2008       2007
                                                      (in millions, except percentages)
Personnel                     $     1,143   $     1,199   $   721   $    (56 )    $    478        (5 )%      66 %
Network, EDP and
communications                        393           339       249         54            90        16 %       36 %
Advertising, marketing and
promotion                             918         1,016       581        (98 )         435       (10 )%      75 %
Visa International fees                -             -        173         -           (173 )      -          NM
Professional and consulting
fees                                  353           438       334        (85 )         104       (19 )%      31 %
Depreciation and
amortization                          226           237       126        (11 )         111        (5 )%      89 %
Administrative and other              338           332       202          6           130         2 %       64 %
Litigation provision                    2         1,470     2,653     (1,468 )      (1,183 )      NM        (45 )%

Total Operating Expenses      $     3,373   $     5,031   $ 5,039   $ (1,658 )    $     (8 )     (33 )%      -   %

(1) Percentage change calculated based on whole numbers, not rounded numbers.

Operating expenses decreased during fiscal 2009, driven by the absence of the litigation provision in connection with our Discover settlement in fiscal 2008, coupled with lower costs in personnel, marketing and professional fees. Operating expenses remained flat in fiscal 2008 compared to fiscal 2007. Fiscal 2008 and 2007 comparisons below focus on factors other than the inclusion of acquired regions' operating expenses in fiscal 2008, which totaled $1.3 billion. This increase was substantially offset by a decrease in litigation provision of $1.2 billion.

• Personnel decreased in fiscal 2009 primarily reflecting the absence of larger severance and other charges incurred in fiscal 2008 associated with workforce consolidation and elimination of overlapping functions, combined . . .