MasterCard 2014 Annual Report Download - page 21

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19
put us at a competitive disadvantage. Our failure to compete effectively against any of the foregoing competitive threats could
materially and adversely affect our overall business and results of operations.
Potential future changes in the competitive landscape, including disintermediation from other participants in the payments
value chain, also could harm our business.
We expect that there may be future changes in the competitive landscape, including:
• Parties that process our transactions in certain countries may try to eliminate our position as an intermediary in the payment
process. For example, merchants could process transactions directly with issuers, or processors could process transactions
directly between issuers and acquirers. Large scale consolidation within processors could result in these processors
developing bilateral agreements or in some cases processing the entire transaction on their own network, thereby
disintermediating us.
• Rapid and significant technological changes could occur, resulting in new and innovative payment methods (including
cryptocurrencies) and programs that could place us at a competitive disadvantage and that could reduce the use of
MasterCard products.
• Competitors, customers, governments and other industry participants may develop products that compete with or replace
value-added products and services we currently provide to support our transaction processing. These products could
replace our own processing offerings or could force us to change our pricing or practices for these offerings.
• 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.
• New services and technologies that we develop may be impacted by industry-wide solutions and standards related to
EMV, tokenization or other safety and security technologies.
Our failure to compete effectively against any of the foregoing competitive threats could materially and adversely affect our overall
business and results of operations.
Continued intense competitive pressure on the prices we charge our customers may materially and adversely affect our
business and results of operations.
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 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