Visa 2014 Annual Report Download - page 21
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•Interchange multidistrict litigation settlement. In fiscal 2014, we obtained final court approval of
a settlement in the interchange multidistrict litigation, subject to any appeals. We believe that
this settlement supports the long-term health and competitiveness of the payments industry in
the United States. A number of objectors to the settlement, however, have appealed the final
judgment, and a number of opt-out cases have been filed by merchants. See Item 1A—Risk
Factors—Our retrospective responsibility plan may not adequately insulate us from the impact
of settlements or final judgments and Item 8—Financial Statements and Supplementary
Data—Note 20—Legal Matters included elsewhere in this report.
Nature of Operations
Visa’s mission is to accelerate the electronification of commerce. We operate an open-loop
payments network, VisaNet, through which Visa connects and manages the exchange of information
and value between: (i) issuers — financial institutions that issue Visa-branded cards or payment
products to account holders, and (ii) acquirers — financial institutions that contract with merchants to
accept Visa-branded cards or payment products. We do not earn revenues from, or bear credit risk
with respect to, interest or fees paid by account holders on Visa-branded cards or payment products.
The issuers have the responsibility for issuing cards and other payment products, and determining the
interest rates and fees paid by the account holders.
Interchange reimbursement fees represent a transfer of value between the financial institutions
participating in our open-loop payments network. On purchase transactions, interchange reimbursement
fees are paid by the acquirers to the issuers. We generally do not receive any revenue related to
interchange reimbursement fees. In addition, we generally do not earn any revenue from the fees that
merchants are charged for acceptance by the acquirers, including the merchant discount rate. The
acquirers are typically responsible for soliciting merchants, and establishing and earning these fees.
A typical Visa transaction begins when the account holder presents his or her Visa-branded card
or payment product to a merchant as payment for goods or services. The transaction information is
then transmitted electronically to the acquirer and routed through VisaNet to the issuer for
authorization. Following authorization, a clearing file containing the final transaction data is submitted
from the acquirer and processed for final settlement between the issuer and acquirer. The following
diagram illustrates the processing steps involved in a typical transaction on VisaNet.
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