Visa 2009 Annual Report Download - page 26

Table of Contents
Settlement at risk (or exposure) is estimated based on the sum of the following inputs: (1) average daily volumes during the quarter multiplied by the
estimated number of days to settle plus a safety margin; and (2) four months of rolling average chargebacks volume; and (3) the total balance for outstanding
travelers cheques. See Note 12—Settlement Guarantee Management to our consolidated financial statements included in Item 8 of this report.
Some Visa customers are composed of groups of financial institutions. Some of these customers have elected to limit their responsibility for settlement
losses arising from the failure of their constituent financial institutions in exchange for managing their constituent financial institutions in accordance with our
credit risk policy. To the extent that any settlement failure resulting from a constituent financial institution exceeds the limits established by our credit risk
policy, we would have to absorb the cost of such settlement failure, which could materially and adversely affect our cash flow.
If our transaction processing systems are disrupted or we cannot process transactions efficiently, the perception of our brands and our revenues or
operating results could be materially and adversely affected.
Our transaction processing systems may experience service interruptions or degradation because of processing or other technology malfunction, fire,
natural disasters, power loss, disruptions in long distance or local telecommunications access, fraud, terrorism or accident. Our visibility in the global
payments industry may attract terrorists and hackers to conduct physical or computer-based attacks, leading to an interruption in service, increased costs or the
compromise of data security. Additionally, we rely on service providers for the timely transmission of information across our global data network. If a service
provider fails to provide the communications capacity or services we require, as a result of natural disaster, operational disruption, terrorism or any other
reason, the failure could interrupt our services, adversely affect the perception of our brands' reliability and materially reduce our revenues or profitability.
If we are not able to keep pace with the rapid technological developments in the payments industry to provide customers, merchants and cardholders
with new and innovative payment programs and services, the use of our cards could decline, which could reduce our revenues and income.
The payments industry is subject to rapid, significant technological changes, including continuing developments of technologies in the areas of smart
cards, radio frequency and proximity payment devices (such as contactless cards), e-commerce and mobile commerce. We cannot predict the effect of
technological changes on our business. We rely in part on third parties, including some of our competitors and potential competitors, for the development of
and access to new technologies. We expect that new services and technologies applicable to the payments industry will continue to emerge, and these new
services and technologies may be superior to, or render obsolete, the technologies we currently use in our card products and services. In addition, our ability to
adopt new services and technologies that we develop may be inhibited by a need for industry-wide standards, by resistance from customers or merchants to
such changes or by third parties' intellectual property. Our success will depend, in part, on our ability to develop new technologies and adapt to technological
changes and evolving industry standards.
Account data breaches involving card data stored by us or third parties could adversely affect our reputation and revenues.
We, our customers, merchants and other third parties store cardholder account information in connection with our payment cards. In addition, our
customers may use third-party processors to process transactions generated by cards carrying our brands. Breach of the systems on which
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