Visa 2012 Annual Report Download - page 40

Download and view the complete annual report

Please find page 40 of the 2012 Visa annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 136

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136

Table of Contents
Results of Operations
Operating Revenues
Our operating revenues are primarily generated from payments volume on Visa-
branded cards for goods and services, as well
as the number, size and type of transactions processed on our payment processing platforms. We do not earn revenues from, or
bear credit risk with respect to, interest or fees paid by cardholders on Visa-branded cards. Our issuing clients have the
responsibility for issuing cards and determining the interest rates and fees paid by cardholders, and most other competitive card
features. We generally do not earn revenues from the fees that merchants are charged for card acceptance by the issuing bank,
including the merchant discount rate. Our acquiring clients, which are generally responsible for soliciting merchants, establish and
earn these fees.
The following sets forth the components of our operating revenues:
Service revenues consist primarily of revenues earned for providing clients with a supported global business infrastructure
and for services which support the various product platforms that enable clients to deliver Visa products and payment services.
Current quarter service revenues are primarily assessed using a calculation of pricing applied to the prior quarter's payments
volume. Service revenues also include assessments designed to support ongoing acceptance and volume growth initiatives, which
are recognized in the same period the related volume is transacted.
Data processing revenues are earned for authorization, clearing, settlement, transaction processing services, network access
and other maintenance and support services that facilitate transaction and information processing among our clients globally and
Visa Europe. Data processing revenues are also earned for transactions processed by CyberSource's online payment gateway and
PlaySpan's virtual goods payment platform . Data processing revenues are recognized in the same period the related transactions
occur or services are rendered.
International transaction revenues are earned for processing cross-border transactions, and currency conversion activities.
Cross-border transactions arise when the cardholder's issuer country is different from the merchant's country. International
transaction revenues are generally driven by cross-border payments and cash volume.
Other revenues consist primarily of license fees for use of the Visa brand, revenues earned from Visa Europe in connection
with the Visa Europe Framework Agreement, fees from cardholder services, licensing and certification and certain activities related
to our acquired entities. Other revenues also include optional service or product enhancements, such as extended cardholder
protection and concierge services.
Client incentives represent contracts with clients and other business partners for various programs designed to build
payments volume, increase product acceptance and win merchant preference to route transactions over our network. These
incentives are primarily accounted for as reductions to operating revenues.
Operating Expenses
Personnel includes salaries, incentive compensation, stock-based compensation, fringe benefits and contractor expense.
Network and processing primarily represents expenses for the operation of our processing network, including maintenance,
equipment rental and fees for other data processing services.
38
2012
2011
2010
2012 vs. 2011
% Change
(1)
2011 vs. 2010
% Change
(1)
(in millions)
Visa processed transactions
(2)
53,324
50,922
45,411
5
%
12
%
CyberSource billable transactions
(3)
5,182
4,137
3,032
(4)
25
%
36
%
(1)
Figures in the table may not recalculate exactly due to rounding. Percentage changes are calculated based on whole numbers,
not the rounded numbers presented.
(2)
Represents transactions involving Visa, Visa Electron, Interlink and PLUS cards processed on Visa's networks.
(3)
Transactions include, but are not limited to, authorization, settlement payment network connectivity, fraud management,
payment security management, tax services and delivery address verification. Since its July 2010 acquisition, CyberSource
activity has primarily contributed to our data processing revenues.
(4)
Includes CyberSource transactions prior to the July 2010 acquisition.