The Cost of Keeping Them Is on the Income StatementNarrow moat

Client incentives are what a diversified and powerful customer base costs: $15.8 billion in fiscal 2025 against $55.8 billion of gross revenue¹, growing 14% while net revenue grew 11%.

The line is paid to grow payments volume, increase acceptance and drive usage — which in practice means keeping issuers issuing Visa rather than Mastercard. It is renegotiated portfolio by portfolio on a rolling calendar that the banks control, in auctions with exactly one other bidder who can also afford to win. Visa does not choose when its largest commercial decisions happen.

This is the clearest evidence available that the network's power is shared rather than owned. A supplier with genuinely unilateral pricing power does not return a quarter of its revenue to its distributors, and does not have to return a larger share every year to hold the same position.

The counter-argument is that incentives buy volume worth more than they cost, and that is probably true today at the margin. It stops being true if issuer economics are compressed enough — by interchange regulation, most plausibly — that banks need a bigger share simply to stay interested in the category.