Visa 2014 Annual Report Download - page 28

ITEM 1A. Risk Factors
Regulatory Risks
Additional regulation of interchange reimbursement rates may have a material, adverse impact
on our financial condition, revenues, results of operations, prospects for future growth and
overall business.
We generally do not receive any revenue related to interchange reimbursement fees in a purchase
transaction as those fees are paid by the acquirers to the issuers. They are, however, a factor on which
we compete with other payments providers and are therefore an important determinant of the volume
of transactions we process. Consequently, changes to these fees can substantially affect our revenues
and overall payments volume.
We have historically set default debit interchange reimbursement rates in the United States and
many other geographies. In the United States, the Dodd-Frank Act has limited our ability to establish
default debit interchange reimbursement rates. See —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. Interchange reimbursement rates have also become subject to
continued or increased government regulation elsewhere, and regulatory authorities and central banks
in a number of jurisdictions have reviewed or are reviewing these rates. In certain jurisdictions,
interchange reimbursement rates, our operating regulations and related practices, are subject to
continuing or increased government regulation. These jurisdictions include, for example, Australia,
Canada, Brazil, Europe, India, Mexico, Malaysia, Russia and South Africa.
When we cannot set default interchange reimbursement rates at optimal levels, issuers and
acquirers may find our payments system less attractive. It may increase the attractiveness of other
payments systems like competitors’ closed-loop payments systems with direct connections to both
merchants and consumers. In addition, as a result of such regulations, we believe some issuers are
charging new or higher fees to consumers. In certain instances, some acquirers elect to charge higher
discount rates to merchants, regardless of the level of Visa interchange reimbursement rate, leading
merchants not to accept Visa-branded cards or payment products or to steer account holders to
alternate payment systems or forms of payment. In addition, some issuers and acquirers have
obtained, and may continue to obtain, incentives from us and reductions in the rates that we charge in
an effort to reduce the expense of their card programs. For these reasons, additional regulation of
interchange reimbursement rates may make Visa-branded cards and payment products less desirable,
reduce our overall transaction volumes, and have a material, adverse impact on our financial condition,
revenues, results of operations, prospects for future growth and overall business.
Additional regulations that prohibit us from contracting with clients or requiring them to use
only our network, or that deny them the option of selecting only our network, may decrease the
number of transactions we process, and materially and adversely affect our financial condition,
revenues, results of operations, prospects for future growth and overall business.
In order to provide account holders a consistent experience and transparency into VisaNet, we
promote certain practices to ensure that Visa-branded cards are processed over our network. We have
historically had agreements with some issuers under which they agree to issue certain payment cards
that use only the Visa network or receive incentives if they do so. In addition, certain issuers of some
products have historically chosen to include only our network. We refer to these various practices as
network exclusivity.
In addition, certain network or issuer rules or practices may be viewed as limiting the routing
options of merchants when multiple debit networks co-reside on Visa debit cards. For example, Visa’s
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