Visa’s fees grew faster than the revenue it kept

Add up Visa’s four revenue categories for its latest quarter and you get $17.262 billion. Its reported net revenue was $12.139 billion. The difference isn’t a missing business. It’s client incentives.

That distinction matters when forecasting growth. More activity can bring more fees and larger incentives at the same time. Investors need to estimate what remains after both, before turning revenue into a profit forecast.

This chart does not plot client incentives. Historical earnings use earnings per share (EPS) multiplied by today’s share count, and the dashed earnings line contains analyst estimates. The dated table below explains one assumption behind a revenue forecast; live chart data may cover newer periods.

The deduction comes before operating costs

Using the figures in the 2025 and 2026 releases, revenue before incentives grew 15.3%. Net revenue grew 13.2%. The bridge is $2.290 billion of additional revenue before incentives, less $0.875 billion of additional incentives, leaving $1.415 billion of net revenue growth.

Net revenue still has to cover operating costs and other charges before it becomes profit. But the incentives in this table have already been deducted. Subtracting them again from net revenue would count the same deduction twice.

A larger incentive can still be a good deal

Visa’s 2025 annual report describes incentives for financial institutions, sellers and other partners to encourage volume and use of its services. It generally records them as revenue reductions. Payments for a distinct good or service are an exception and go into operating expenses.

Imagine a network earning $100 before incentives and granting clients $30, leaving $70 of net revenue. A new agreement raises those figures to $120 and $38, leaving $82. These are hypothetical amounts. The network gives up a larger share, but still earns more net revenue. Whether the agreement improves profit depends on the additional costs of serving that business.

So a rising incentive ratio is a reason to investigate, not proof that the business is deteriorating. Ask what the company receives in return: more business, a longer relationship, or better economics elsewhere. Then check whether the extra revenue justifies what it gives up. The public totals alone cannot tell you the return on an individual contract.

Keep the forecast and the accounting consistent

In the reported quarters, incentives were 28.4% and 29.7% of the calculated revenue totals before incentives. Those are not profit margins or fees charged on all payments. They compare two lines in Visa’s revenue calculation.

For a forecast, first estimate revenue before incentives, then apply an explicit incentive assumption. Try a higher share as well as a flat one. Alternatively, forecast net revenue directly. Either method can work; combining a net-revenue forecast with another deduction for the same incentives cannot.

Don’t read the quarterly deduction as cash paid during those three months, either. The accounting policy spreads upfront incentives over contract terms and accrues performance-based amounts. Recognition and payment can happen at different times.

At the next release, compare the same three lines over matching periods: revenue before incentives, incentives, and net revenue. If the forecast depends on incentives taking a smaller share, look for evidence supporting that assumption rather than letting it hide inside a growth rate.

Then return to Visa’s earnings chart: do the profits implied by that revenue forecast support the valuation? Business growth and the price paid for it are separate questions, as the Costco valuation example shows.