MasterCard 2012 Annual Report Download - page 44

• Uncertainties in the United States related to the upcoming deadline on the debt limit and budgetary
discussions could affect the United States’ credit rating and could affect consumer confidence and
spending.
• 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 value-added services.
• Government intervention, including the effect of laws, regulations and/or government investments in
our customers, may have potential negative effects on our business and our relationships with customers
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, including due to an increased probability of
sovereign defaults in several European countries causing a liquidity crisis for our customers. See Note
19 (Settlement and Other Risk Management) to the consolidated financial statements included in Part II,
Item 8 of this Report for further discussion of our settlement exposure.
• Our overall business and results of operations could be materially and adversely affected by
consolidation of our customers. See our risk factor in “Risk Factors—Business Risks” in this Part I,
Item 1A with respect to additional consolidation for further discussion.
Any of these developments could have a material adverse impact on our overall business and results of
operations.
A decline in cross-border travel could adversely affect our results of operations, 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
cross-border travel and our customers’ need for transactions to be converted into their base currency. Cross-
border travel may be adversely affected by world geopolitical, economic, weather and other conditions. These
include the threat of terrorism and outbreaks of flu, viruses and other diseases. Any such decline in cross-border
travel could adversely affect our results of operations.
General economic and global political conditions may adversely affect trends in consumer spending,
which may materially and adversely impact our results of operations.
The global payments industry depends heavily upon the overall level of consumer, business and government
spending. General economic conditions (such as unemployment, housing and changes in interest rates) and other
political conditions (such as devaluation of currencies and government restrictions on consumer spending, as
well as the impact of events in the United States such as the upcoming deadline on the debt limit) in key
countries in which we operate may adversely affect our financial performance by reducing the number or average
purchase amount of transactions involving our payment cards and devices. Also, as we are principally based in
the United States, a negative perception of the United States could impact the perception of our company, which
could adversely affect our business.
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