MasterCard 2009 Annual Report Download - page 42

Business Risks
Unprecedented global economic events in financial markets around the world have directly and adversely
affected, and may continue to affect, many of our customers, merchants that accept our brands and
cardholders who use our brands, which could result in a material and adverse impact on our prospects,
growth, profitability, revenue and overall business.
The competitive and evolving nature of the global payments industry provides both challenges to and
opportunities for the continued growth of our business. Unprecedented events which began during 2008
continued to impact the financial markets around the world, including continued distress in the credit
environment, continued equity market volatility and additional government intervention. In particular, the
economies of the United States and the United Kingdom have continued to be significantly impacted by this
economic turmoil, and it is also impacting other economies around the world. Some existing customers have
been placed in receivership or administration or have a significant amount of their stock owned by their
governments. Many financial institutions are facing increased regulatory and governmental influence, including
potential changes in laws and regulations. Many of our financial institution customers, merchants that accept our
brands and cardholders who use our brands have been directly and adversely impacted.
MasterCard’s financial results may be negatively impacted by actions taken by individual financial
institutions or by governmental or regulatory bodies in response to the economic crisis. The severity of the
economic environment may accelerate the timing of or increase the impact of risks to our financial performance
that have historically been present. As a result, our revenue growth has been and may be negatively impacted, or
we may be impacted, in several ways, including but not limited to the following:
• Declining economies, foreign currency fluctuations and the pace of economic recovery can change
consumer spending behaviors; for example, a significant portion of our revenues is dependent on cross
border travel patterns, which may continue to change.
• Constriction of consumer and business confidence such as in recessionary environments and those
markets experiencing high unemployment may continue to cause decreased spending by cardholders.
• Our customers may restrict credit lines to cardholders or limit the issuance of new cards to mitigate
increasing cardholder defaults.
• Uncertainty and volatility in the performance of our customers’ businesses may make estimates of our
revenues, rebates, incentives and realization of prepaid assets less predictable.
• Our customers may implement cost reduction initiatives that reduce or eliminate payment card
marketing or increase requests for greater incentives or greater cost stability.
• Our customers may decrease spending for optional or enhanced services.
• Government intervention and/or investments in our customers may have potential negative effects on
our business with those banking institutions or otherwise alter their strategic direction away from our
products.
• Tightening of credit availability could impact the ability of participating financial institutions to lend to
us under the terms of our credit facility.
• Our customers may default on their settlement obligations. See Note 22 (Settlement and Travelers
Cheque Risk Management) to the consolidated financial statements included in Part II, Item 8 for
further discussion of our settlement exposure.
• Our business and prospects, as well as our revenue and profitability, could be materially and adversely
affected by consolidation of our customers. See “Consolidation or other changes affecting the banking
industry could result in a loss of business for MasterCard and may result in lower prices and/or more
favorable terms for our customers, which may materially and adversely affect our revenue and
profitability” in this Part I, Item 1A.
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