MasterCard 2009 Annual Report Download - page 45

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have a material adverse impact on our business and prospects. In addition, one or more of our customers could
seek to merge with, or acquire, one of our competitors, and any such transaction could also have a material
adverse impact on our business and prospects.
The continued consolidation in the banking industry, whether as a result of an acquisition of a substantial
MasterCard portfolio by an institution with a strong relationship with a competitor or the combination of two
institutions with which MasterCard has a strong relationship, would also produce a smaller number of large
customers, which could increase the bargaining power of our customers. This consolidation could lead to lower
prices and/or more favorable terms for our customers. Any such lower prices and/or more favorable terms could
materially and adversely affect our revenue and profitability.
Our revenue could fluctuate and decrease significantly in the longer term if we lose a significant portion
of business from one or more of our largest significant customers, which could have a material adverse long-
term impact on our business.
Most of our customer relationships are not exclusive and in certain circumstances may be terminated by our
customers. Our customers can reassess their commitments to us at any time in the future and/or develop their
own competitive services. Accordingly, our business agreements with customers may not reduce the risk inherent
in our business that customers may terminate their relationships with us in favor of relationships with our
competitors, or for other reasons, or might not meet their contractual obligations to us.
In addition, a significant portion of our revenue is concentrated among our five largest customers. In 2009,
the net revenues from these customers represented an aggregate of approximately $1.4 billion, or 28%, of total
revenue. Loss of business from any of our large customers could have a material adverse impact on our business.
Merchants are increasingly focused on the costs of accepting card-based forms of payment, which may
lead to additional litigation and regulatory proceedings and may increase the costs of our incentive programs,
which could materially and adversely affect our profitability.
We rely on merchants and their relationships with our customers to expand the acceptance of our cards.
Consolidation in the retail industry is producing a set of larger merchants with increasingly global scope. We
believe that these merchants are having a significant impact on all participants in the global payments industry,
including MasterCard. For instance, as a result of the settlement agreement in connection with the U.S. merchant
lawsuit, merchants have the right to reject our debit cards in the United States while still accepting other
MasterCard-branded cards, and vice versa. See Note 19 (Obligations Under Litigation Settlements) and Note 21
(Legal and Regulatory Proceedings) to the consolidated financial statements included in Part II, Item 8. In
addition, some large merchants are supporting many of the legal, regulatory and legislative challenges to
interchange fees that MasterCard is now defending, since interchange fees represent a significant component of
the costs that merchants pay to accept payment cards. See “Risk Factors—Legal and Regulatory Risks—
Interchange fees are subject to increasingly intense legal, regulatory and legislative scrutiny worldwide, which
may have a material adverse impact on our revenue, our prospects for future growth and our overall business,
financial condition and results of operations.” The increasing focus of merchants on the costs of accepting
various forms of payment may lead to additional litigation and regulatory proceedings. Merchants are also able to
negotiate incentives from us and pricing concessions from our customers as a condition to accepting our payment
cards. As merchants consolidate and become even larger, we may have to increase the amount of incentives that
we provide to certain merchants, which could materially and adversely affect our revenues and profitability.
A decline in cross-border travel could adversely affect our revenues and profitability, as a significant
portion of our revenue is generated from cross-border transactions.
We process substantially all cross-border transactions using MasterCard, Maestro and Cirrus-branded cards
and generate a significant amount of revenue from cross-border volume fees and transaction processing fees.
Revenue from processing cross-border and currency conversion transactions for our customers fluctuates with
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