MasterCard 2008 Annual Report Download - page 32

We believe that the principal factors affecting our competitive position in the global payments industry are:
• pricing;
• customer relationships;
• the impact of existing and future litigation, legislation and government regulation;
• the impact of globalization and consolidation of financial institutions and merchants;
• the acceptance base, reputation and brand recognition of payment cards;
• the quality, security and integrity of transaction processing;
• the relative value of services and products offered;
• regulation and local laws;
• the success and scope of marketing and promotional campaigns;
• the impact of consolidation in the banking industry;
• new market entrants; and
• the ability to develop and implement competitive new card programs, systems and technologies in both
physical and virtual environments.
Government Regulation
Government regulation impacts key aspects of our business. We are subject to regulations that affect the
payment industry in the many countries in which our cards are used. Regulation of the payments industry has
increased significantly in the last several years. In particular, interchange fees associated with four-party payment
systems like ours are being reviewed or challenged in various jurisdictions, including the European Union. See
Note 20 (Legal and Regulatory Proceedings) to the consolidated financial statements included in Item 8 of this
Report.
Furthermore, MasterCard customers are subject to numerous regulations applicable to banks and other
financial institutions in the United States and elsewhere, and as a consequence MasterCard is impacted by such
regulations. Certain of our operations are periodically reviewed by the U.S. Federal Financial Institutions
Examination Council (“FFIEC”) under its authority to examine financial institutions’ technology service
providers. Examinations by the FFIEC cover areas such as data integrity and data security. In recent years, the
U.S. federal banking regulators have adopted a series of regulatory measures affecting credit card payment terms
and requiring more conservative accounting, greater risk management and in some cases higher capital
requirements for bank credit card activities, particularly in the case of banks that focus on subprime cardholders.
In addition, MasterCard Europe operates a retail payment system in Europe and is subject to oversight by the
National Bank of Belgium pursuant to standards published by the European Central Bank that are principally
targeted at managing financial, legal and operations risk.
In addition, aspects of our operations or business are subject to privacy regulation in the United States, the
European Union and elsewhere, as well as regulations imposed by the U.S. Treasury’s Office of Foreign Assets
Control (“OFAC”). For example, in the United States, we and our customers are respectively subject to Federal
Trade Commission and federal banking agency information safeguarding requirements under the Gramm-Leach-
Bliley Act. The Federal Trade Commission’s information safeguarding rules require us to develop, implement
and maintain a written, comprehensive information security program containing safeguards that are appropriate
for our size and complexity, the nature and scope of our activities, and the sensitivity of any customer
information at issue. Our customers in the United States are subject to similar requirements under the guidelines
issued by the federal banking agencies. As part of their compliance with the requirements, each of our U.S.
customers is expected to have a program in place for responding to unauthorized access to, or use of, customer
information that could result in substantial harm or inconvenience to customers.
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