Visa 2009 Annual Report Download - page 22

Table of Contents
Our Framework Agreement with Visa Europe includes indemnity obligations that could expose us to significant liabilities.
Under our Framework Agreement with Visa Europe, we are required to indemnify Visa Europe for losses resulting from any claims in the United States
or anywhere else outside of Visa Europe's region arising from our or their activities that relate to our payments business or the payments business of Visa
Europe. This obligation applies even if neither we nor any of our related parties or agents participated in the actions that gave rise to such claims. Such an
obligation could expose us to significant liabilities for activities over which we have little or no control. Our retrospective responsibility plan would not cover
these liabilities.
Business Risks
We face intense competitive pressure on customer pricing, which may materially and adversely affect our revenues and profitability.
In order to increase payments volume, enter new market segments and expand our card base, we offer incentives to customers such as up-front cash
payments, fee discounts, credits, performance-based growth incentives, marketing support payments and other support, such as marketing consulting and
market research studies. Over the past several years, we have increased our use of incentives such as up-front cash payments and fee discounts in many
countries, including the United States. In order to stay competitive, we may have to continue to increase our use of incentives. Such pressure may make the
provision of certain products and services less profitable or unprofitable and materially and adversely affect our operating revenues and profitability if we
continue to increase incentives to our customers, we will need to further increase payments volume or the amount of services we provide in order to benefit
incrementally from such arrangements and to increase revenues and profit, and we may not be successful in doing so. In addition, we enter into long-term
contracts with certain customers. Continued pressure on fees could prevent us from entering into such agreements in the future on terms we consider favorable
and may require us to modify existing agreements in order to maintain relationships. Increased pricing pressure also enhances the importance of cost
containment and productivity initiatives in areas other than those relating to customer incentives, and we may not succeed in these efforts.
Our operating results may suffer because of intense competition in the global payments industry.
The global payments industry is intensely competitive. Our payment programs compete against all forms of payment, including cash, checks and
electronic transactions such as wire transfers and automatic clearing house payments. In addition, our payment programs compete against the card- based
payments systems of our competitors, such as MasterCard, American Express, Discover and private-label cards issued by merchants. Some of our competitors
may develop substantially greater financial and other resources than we have, may offer a wider range of programs and services than we offer, may use more
effective advertising and marketing strategies to achieve broader brand recognition or merchant acceptance than we have or may develop better security
solutions or more favorable pricing arrangements. Our competitors may also introduce more innovative programs and services than us.
Certain of our competitors, including American Express, Discover, private-label card networks and certain alternative payments systems, operate
closed-loop payments systems with direct connections to both merchants and consumers, without involving intermediaries. These competitors seek to derive
competitive advantages from their business models. In addition, these competitors have not attracted the same level of legal or regulatory scrutiny of their
pricing and business practices as have operators of open-loop multi-party payments systems such as ours.
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