Visa 2014 Annual Report Download - page 25

In the global debit network market segment, our Interlink and Visa Electron brands compete with
Maestro, owned by MasterCard, and various regional and country-specific debit network brands,
including STAR, NYCE and PULSE in the United States, EFTPOS in Australia, NETS in Singapore and
Interac in Canada. In addition to our PLUS brand, the primary cash access card brands are Cirrus,
owned by MasterCard, and many of the debit network brands referenced above. In many countries,
local debit brands provide the primary network, and our brands are used primarily to enable cross-
border transactions, which typically constitute a small portion of our overall transaction volume.
The global payments industry continues to undergo dynamic change. We may face increasing
competition from emerging players in the payment space, many of which are non-financial institution
networks that have departed from the more traditional business model. The emergence of these
potentially competitive networks has primarily been via the online channel with a focus on eCommerce
and/or mobile technologies. PayPal and Alipay are examples. These providers compete with us directly
in some cases, yet may also be significant partners and customers of ours.
We also face increasingly intense competitive pressure on the prices we charge our financial
institution clients. We believe our fundamental value proposition of convenience, interoperability,
accessibility and security offers us a key competitive advantage. We succeed in part because we
understand the needs of the individual markets in which we operate. We do so by partnering with local
financial institutions, merchants, governments, non-governmental organizations and business
organizations to provide tailored solutions to meet their varied needs. We believe Visa is well-
positioned competitively, due to our global brand, our broad set of Visa-branded payment products and
our proven track record of processing payment transactions securely and reliably through VisaNet.
Employees
At September 30, 2014, we employed approximately 9,500 persons worldwide. We consider our
relationships with our employees to be good.
Government Regulation
Interchange reimbursement fees. We have historically set default debit interchange
reimbursement rates in the United States and many other geographies. During fiscal 2012, the Federal
Reserve implemented new rules under the Dodd-Frank Act, setting a cap on the maximum U.S. debit
interchange reimbursement fee assessed for debit products issued by large financial institutions.
These rules continue to have an adverse impact on our pricing, reduce the number and volume of U.S.
debit transactions we process and decrease our associated revenues. As a result, we have
significantly modified our debit strategy and continue to renegotiate some portions of our contracts with
our financial institution clients. In July 2013, a federal court invalidated the newly implemented rules,
finding that the Federal Reserve improperly considered certain costs in setting a cap on the maximum
debit interchange reimbursement rate and that issuers must make at least two unaffiliated networks
available for processing each electronic debit transaction, regardless of authorization method. On
March 21, 2014, the Court of Appeals for the D.C. Circuit reversed the district court’s ruling and agreed
with the Federal Reserve, except for a single issue related to the interchange cost calculation which
was referred back to the Federal Reserve for reconsideration. On August 18, 2014, the plaintiff
merchants filed a petition for review of the appeals court’s decision in the U.S. Supreme Court, seeking
review of a portion of the rules pertaining to the interchange cost calculation. The current rules remain
in place while the case is ongoing. See Item 1A—Risk Factors—The Dodd-Frank Act may continue to
have a material, adverse impact on our financial condition, revenues, results of operations, prospects
for future growth and overall business and Item 7—Management’s Discussion and Analysis of
Financial Condition and Results of Operations—Overview included elsewhere in this report.
Certain jurisdictions outside the United States also regulate debit and credit interchange
reimbursement rates in their regions. For example, the Reserve Bank of Australia regulates
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