MasterCard 2013 Annual Report Download - page 27

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23
• Competitors, customers, governments and other industry participants may develop products that compete with
or replace value-added services we currently provide to support our transaction processing which could, if
significant numbers of cardholders choose to use them, replace our own processing services or could force us
to change our pricing or practices for these services.
• Participants in the payments industry may merge, create joint ventures or form other business combinations
that may strengthen their existing business services or create new payment services that compete with our
services.
Our failure to compete effectively against any of the foregoing competitive threats could materially and adversely affect
our overall business and results of operations.
We face continued intense competitive pressure on the prices we charge our customers, which may materially
and adversely affect our business and results of operations.
We generate revenue from the fees that we charge issuers and acquirers for providing transaction processing and other
payment-related services and from assessments on the dollar volume of activity on cards and other devices carrying
our brands. In order to increase transaction volumes, enter new markets and expand our card base, we seek to enter
into business agreements with customers through which we offer incentives, pricing discounts and other support to
customers that issue and promote our products. In order to stay competitive, we may have to increase the amount of
these incentives and pricing discounts. Over the past several years, we have experienced continued pricing pressure.
The demand from our customers for better pricing arrangements and greater rebates and incentives moderates our
growth. We may not be able to continue our expansion strategy to process additional transaction volumes or to provide
additional services to our customers at levels sufficient to compensate for such lower fees or increased costs in the
future, which could materially and adversely affect our overall business and results of operations. In addition, increased
pressure on prices enhances the importance of cost containment and productivity initiatives in areas other than those
relating to customer incentives. We may not succeed in these efforts.
In the future, we may not be able to enter into agreements with our customers on terms that we consider favorable, and
we may be required to modify existing agreements in order to maintain relationships and to compete with others in the
industry. Some of our competitors are larger and have greater financial resources than we do and accordingly may be
able to charge lower prices to our customers. In addition, to the extent that we offer discounts or incentives under such
agreements, we will need to further increase transaction volumes or the amount of services provided thereunder in
order to benefit incrementally from such agreements and to increase revenue and profit, and we may not be successful
in doing so, particularly in the current regulatory environment. Our customers also may implement cost reduction
initiatives that reduce or eliminate payment product marketing or increase requests for greater incentives or greater
cost stability. These factors could have a material adverse impact on our overall business and results of operations.
Continuing consolidation or other changes in or affecting the banking industry could result in a loss of business
for us and create pressure on the fees we charge our customers, resulting in lower prices and/or more favorable
terms for our customers, which may materially and adversely affect our overall business and results of operations.
The banking industry has undergone substantial, accelerated consolidation in the past. Consolidations have included
customers with a substantial MasterCard portfolio being acquired by institutions with a strong relationship with a
competitor. If significant consolidation were to continue in the banking industry, it may result in the substantial loss
of business for us, which could 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 overall business.
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 we have 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 results of operations.