Visa 2014 Annual Report Download - page 22

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Our operating revenues are comprised principally of service revenues, data processing revenues
and international transaction revenues, and are reduced by costs incurred under client incentive
arrangements. The Company has one reportable segment, Payment Services.
•Service revenues. Service revenues consist of revenues earned for providing financial
institution clients with support services for the delivery of Visa-branded payment products and
solutions. Service revenues are primarily generated from payments volume on Visa-branded
cards and payment products for purchased goods and services.
•Data processing revenues. Data processing revenues consist of revenues earned for
authorization, clearing, settlement, network access and other maintenance and support
services that facilitate transaction and information processing among our clients globally and
with Visa Europe. Data processing revenues are primarily generated from the number of
transactions we process.
•International transaction revenues. International transaction revenues consist of revenues
earned for cross-border transaction processing and currency conversion activities. Cross-
border transactions arise when the country of origin of the issuer is different from that of the
merchant. International transaction revenues are primarily generated by cross-border
payments and cash volume.
•Client incentives. Client incentives consist of long-term contracts with financial institution clients
and other business partners for various programs designed to build payments volume, increase
Visa-branded card and product acceptance and win merchant routing transactions over our
network. These incentives are primarily accounted for as reductions to operating revenues.
U.S. dollar settlements with our financial institution clients are typically settled within the same day
and do not result in a receivable or payable balance. Settlement currencies other than the U.S. dollar
generally remain outstanding for one to two business days, resulting in amounts due from and to
financial institution clients. These amounts are presented as settlement receivable and settlement
payable on our consolidated balance sheets, respectively.
In order to maintain the integrity of and minimize disruptions to our payments network, we
indemnify our financial institution clients for settlement losses suffered due to the failure of any other
client to fund its settlement obligations in accordance with our operating regulations. The settlement
indemnification applies to the amount of Visa payment transactions that have occurred, but have not
yet settled. We maintain and regularly review global settlement risk policies and procedures to manage
settlement exposure, which may require clients to post collateral if certain credit standards are not met.
Cash equivalents collateral is reflected in customer collateral on our consolidated balance sheets as it
is held in escrow in our name. All other collateral is excluded from the consolidated balance sheets.
We have incurred no material loss related to settlement risk in recent years.
Core Products and Services
Visa provides a wide variety of payment solutions that support payment products that issuers can
offer to their account holders: (i) pay now with debit; (ii) pay ahead with prepaid; or (iii) pay later with
credit products. Visa also offers a growing suite of innovative digital, eCommerce and mobile products
and services. These services facilitate transactions on our network among account holders, merchants,
financial institutions and governments in mature and emerging markets globally.
•Debit. Our debit payment solutions support issuers’ payment products that draw on demand
deposit accounts, such as checking accounts.
•Prepaid. Our prepaid payment solutions support issuers’ payment products that access a pre-
funded amount, allowing account holders to enjoy the convenience and security of a payment
card in lieu of cash or checks.
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