Visa 2014 Annual Report Download - page 38

Some merchants have sought to reduce their costs associated with payment card acceptance by
lobbying for new legislation and regulatory enforcement and by filing lawsuits. If they continue, we may
face increased compliance and litigation expenses.
We also face competitive pressures on pricing. We and our clients negotiate pricing discounts and
other incentive arrangements with certain large merchants to increase acceptance and usage of Visa-
branded payment cards. If merchants continue to consolidate, we and our clients may have to increase
the incentives provided to certain large merchants. Some merchants also continue to invest in their
own payment solutions, using both traditional and new technology platforms. Examples include closed-
loop payment systems that are specific to a single merchant or multi-merchant solutions like the
Merchant Customer Exchange, which is designed for a mobile platform and has many merchant
participants. Such programs may offer unique or specialized benefits to consumers, including
discounts or customized offers. If merchants are able to drive broad consumer adoption and usage, it
could adversely impact our transaction volume.
All of these factors could materially and adversely affect our revenues, results of operations,
prospects for future growth and overall business. Competitive and regulatory pressures on pricing
could make it difficult to offset the cost of these incentives.
Certain financial institutions or merchants have exclusive, or nearly exclusive, relationships
with our competitors to issue or accept payment cards, and these relationships may adversely
affect our ability to maintain or increase our revenues.
Certain financial institutions or merchants have longstanding exclusive, or nearly exclusive,
relationships with our competitors to issue or accept payment cards. These relationships may make it
difficult or cost-prohibitive for us to conduct material amounts of business with them. In addition, these
financial institutions or merchants may be more successful and may grow more quickly than our
existing clients or merchants, which could put us at a competitive disadvantage and prevent us from
growing our business and revenues.
Failure to maintain relationships with issuers, acquirers, merchants and account holders, and
the failure of our financial institution clients or third parties to provide services on our behalf
could materially and adversely affect our business.
We depend and will continue to depend significantly on relationships with our financial institution
clients and on their relationships with account holders and merchants to support and to compete
effectively for our programs and services. We do not issue cards, extend credit to account holders or
determine the interest rates or other fees charged to account holders using cards that carry our
brands. Each issuer determines these competitive card features for their customers.
As a result of the Dodd-Frank Act’s changes to the network exclusivity rules, we have engaged
and will continue to engage in significantly more discussions with merchants, acquirers and
processors. We already engage in many co-branding efforts, in which we contract with merchants, who
directly receive incentives from us. We also engage with merchants, acquirers and processors and
provide incentives to promote routing preference and acceptance growth. As these and other
relationships become more prevalent and take on a greater importance to our business, our success
will increasingly depend on our ability to sustain and grow these relationships.
Outside the United States, some governments only permit local providers to complete domestic
processing, which prohibits us from overseeing the end-to-end processing of the transactions.
Therefore, we depend on our close working relationships with our clients in these regions to effectively
manage the processing of transactions involving Visa-branded cards. Our inability to oversee the
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