Visa 2012 Annual Report Download - page 24

Table of Contents
transactions directly with issuers, or processors could process transactions directly between issuers and acquirers.
Additional consolidation in the banking industry could result in our losing business and create pressure on the fees we
charge our clients, materially and adversely affecting our business, revenues, results of operations and prospects for
future growth
In the recent past, the banking industry experienced substantial, accelerated consolidation. This could happen again.
Significant consolidation in the banking industry may result in the acquisition of one or more of our largest clients by an institution
with a strong relationship with one of our competitors. This could result in the acquired bank's Visa business shifting to that
competitor, resulting in a substantial loss of business to us. In addition, one or more of our clients could merge with or acquire one
of our competitors, shifting its payments volume to that competitor.
Additional consolidation in the banking industry could also reduce the overall number of our clients and potential clients and
could increase the negotiating power of our remaining clients and potential clients. This consolidation could lead financial
institutions to seek greater pricing discounts or other incentives with us. In addition, more consolidation could prompt our existing
clients to seek to renegotiate their pricing agreements with us to obtain more favorable terms. We may also be adversely affected
by price compression should one of our clients absorb another financial institution and qualify 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 business, revenues, results of operations and prospects for future growth.
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 have sought 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 and 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 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 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. With the exception of several large merchants, historically, we have generally not solicited
merchants directly to accept our cards. 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.
In the wake of the Dodd-Frank Act's changes to rules on network exclusivity, we have engaged and expect to continue to
engage in significantly more discussions with merchants and merchant acquirers and processors. We
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