Visa 2011 Annual Report Download - page 28

Table of Contents
for higher volume-based discounts on the combined volumes of the merged businesses. Pressure on the fees we charge our clients caused by such
consolidation could materially and adversely affect our revenues, results of operations, prospects for future growth and overall business. In addition, the
current economic environment could lead some clients to curtail or postpone near-term investments in growing their card portfolios, limit credit lines or take
other actions that affect adversely the growth of our volume and revenue streams from these clients.
Merchants' continued focus on the costs associated with payment card acceptance may result in more litigation, regulation, regulatory enforcement
and incentive arrangements.
We rely in part on merchants and their relationships with our clients to maintain and expand the acceptance of our payment cards. Consolidation in the
retail industry is producing a group of larger merchants that is having a significant impact on all participants in the global payments industry. Some merchants
are seeking to reduce their costs associated with payment card acceptance by lobbying for new legislation and regulatory enforcement and by bringing
litigation. If they continue, these efforts could materially and adversely affect our revenues, results of operations, prospects for future growth and overall
business.
We, as well as our clients, negotiate pricing discounts and other incentive arrangements with certain large merchants to increase acceptance and usage
of our payment cards. If merchants continue to consolidate, we and our clients may have to increase the incentives provided to certain larger merchants. This
could materially and adversely affect our revenues, results of operations, prospects for future growth and overall business. Competitive and regulatory
pressures on pricing could make it difficult to offset the cost of these incentives.
Certain financial institutions have exclusive, or nearly exclusive, relationships with our competitors to issue payment cards, and these relationships
may adversely affect our ability to maintain or increase our revenues.
Certain financial institutions have longstanding exclusive, or nearly exclusive, relationships with our competitors to issue payment cards. These
relationships may make it difficult or cost-prohibitive for us to conduct material amounts of business with them in order to increase our revenues. In addition,
these financial institutions may be more successful and may grow more quickly than our clients, which could put us at a competitive disadvantage.
Failure to maintain relationships with our clients, merchant acquirers, merchants and third-party vendors, and the failure of clients to provide
services on our behalf, could materially and adversely affect our business.
We depend and will continue to depend significantly on relationships with our clients and on their relationships with cardholders and merchants to
support our programs and services. We do not have direct relationships with cardholders. We do not issue cards, extend credit to cardholders or determine the
interest rates, if any, or other fees charged to cardholders using cards that carry our brands. Each issuer determines these and most other competitive card
features. As a result, the success of our business has depended significantly on, and will continue to depend on, the continued success and competitiveness of
our clients and the strength of our relationships with them.
Historically, we have not solicited merchants to accept our cards. In the wake of the Reform Act's changes to rules on network exclusivity, we expect to
engage in significantly more discussions with merchants and merchant acquirers. We already engage in many co-branding efforts, in which we contract with
the merchant, who directly receives incentive funding. We also engage in some amount of merchant acceptance activity. As these and other relationships take
on a greater importance for both
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