Visa 2014 Annual Report Download - page 40

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challenges in the credit environment, bank instability, downgrades of sovereign, bank and commercial
debt, political issues affecting the handling of national debt, and the uncertainty arising from new
government policies could also impact our clients, merchants and account holders.
The fragility of the current situation would be exacerbated if additional negative economic
developments or crises were to arise around the world. These include defaults on government debt,
exhaustion of national economic stimulus packages, significant increases in oil prices, tax increases, a
significant decline in the commercial real estate market and policy missteps. Most recently, the
economic situations in various countries in Europe have been particularly unstable, arising from the
real prospect of debt defaults. If such defaults occur, or if the measures taken to avert such defaults
create their own instability, economic turmoil is likely to result, and the impact is likely to be global and
highly significant.
The volatility of the current economic environment in advanced and emerging economies and the
responses by financial institutions and governments may create new risks or increase the impact of
existing ones. These include the following:
• Depressed consumer and business confidence may continue to decrease account holder
spending.
• Uncertainty and volatility in the performance of our clients’ businesses may reduce the
accuracy of our estimates of our revenues, rebates, incentives and realization of prepaid
assets.
• Our clients may implement cost-reduction initiatives that reduce or eliminate payment card
marketing budgets or increase requests for greater incentives or reduced fees from us.
• Our clients may decrease spending for optional or enhanced services, which could reduce
account holders’ desire to use these products.
• Our clients may increase account holder fees as a cost-recovery initiative, or as a result of
regulatory action, decreasing their value proposition to consumers and reducing consumers’
desire to use our products.
• Government intervention or investments in our clients may negatively affect our business in
those regions with our financial institution clients.
• Tightening of credit availability could affect the ability of participating financial institutions to
lend to us under the terms of our credit facility.
• The U.S. government’s inability to meet its obligations or a possible further downgrade in the
U.S. debt rating could adversely affect the liquidity of our investments, a substantial portion of
which are in U.S. treasury and government securities.
• Our clients may default on their settlement obligations, including for reasons unrelated to
payment card activity, such as mortgage loan commitments.
• Adverse fluctuations in foreign currency exchange rates could negatively affect the dollar
value of our revenues and payments in foreign currencies.
• The current economic environment could lead some clients to curtail or postpone near-term
investments in growing their card portfolios, limit credit lines, modify fees and loyalty
programs, or take other actions that adversely affect the growth of our volume and revenue
streams from these clients.
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