Visa 2014 Annual Report Download - page 37

• new players and intermediaries in the payments value chain may redirect transactions or steer
account holders away from our network; or
• new services and technologies that we develop may be impacted by industry-wide solutions
and standards set by organizations such as EMVCo, related to EMV-chip payment technology,
tokenization, or other technologies.
Our failure to compete effectively in light of any such developments could materially and adversely
affect our business, financial condition, revenues, results of operations and prospects for future growth.
Disintermediation from the payments value chain could harm our business.
Our position in the payments value chain is key to our business. Some of our competitors,
including American Express, Discover, private-label card networks and certain alternate payments
systems, operate closed-loop payments systems, with direct connections to both merchants and
consumers without any intermediaries. These competitors seek to derive competitive advantages from
this business model. Regulatory actions such as the Dodd-Frank Act may provide them with increased
opportunity to do so. In addition, although other competitors are pursuing similar lines of business or
adopting similar commercial models, they have not attracted the same level of legal or regulatory
scrutiny of their pricing and business practices as operators of multi-party payments systems such as
ours.
We also run the risk of disintermediation by virtue of increasing bilateral agreements between
entities that prefer not to use our payments network for processing payments. For example, merchants
could process transactions directly with issuers, or processors could process transactions directly
between issuers and acquirers.
Additional consolidation in the banking industry could result in us losing business and create
pressure on the fees we charge our clients, which could materially and adversely affect our
business, revenues, results of operations and prospects for future growth.
Additional consolidation in the banking industry may result in the acquisition of one or more of our
largest clients by an institution with a strong relationship with one of our competitors or with one of our
competitors directly. This could result in the acquired financial institution’s Visa business shifting to a
competitor, resulting in a substantial loss of business to us.
Additional consolidation in the banking industry could also reduce the overall number of new and
existing clients, who may seek and obtain greater pricing discounts or other incentives from us. In
addition, more consolidation could prompt our existing clients to seek to renegotiate their pricing
agreements with us to obtain more favorable terms. We may also be adversely affected by price
compression should one of our clients absorb another financial institution and qualify for higher
volume-based discounts on the combined volumes of the merged businesses. Pressure on the fees we
charge our clients caused by such consolidation could materially and adversely affect our business,
revenues, results of operations and prospects for future growth.
Merchants’ continued focus on the costs associated with payment card acceptance may result
in more litigation, regulation, regulatory enforcement, incentive arrangements and other
initiatives.
We rely in part on merchants and their relationships with our clients to maintain and expand the
acceptance of Visa-branded payment cards. Consolidation in the retail industry is producing a group of
larger merchants that is having a significant impact on all participants in the global payments industry.
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