Visa 2014 Annual Report Download - page 41

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• Declines in stock prices or significant instability in the securities markets worldwide could
cause consumer spending to decline materially.
Any of these developments could have a material adverse impact on our prospects, growth,
revenue, profitability and overall business.
A decline in non-U.S. and cross-border activity and in multi-currency transactions could
adversely affect our revenues and profitability, as we generate a significant portion of our
revenue from such transactions.
• We generate a significant amount of our revenues from cross-border transactions, and our
clients pay us fees in connection with them. Cross-border transactions arise when the country
of origin of the issuer is different from that of the merchant. Some of these cross-border
transaction fees vary depending on whether the transaction currency is different than the
account holder’s billing currency as provided to Visa by his or her issuer.
• In addition, Visa derives revenue from foreign currency exchange activities that result when
our clients settle transactions in different currencies. A reduction in multi-currency
transactions may reduce the need for foreign currency exchange activities and adversely
affect our revenues. Limitations or changes in our ability to set foreign currency exchange
rates for multi-currency transactions as a result of regulation, changes to tax policy, litigation,
competitive pressures, reduced volatility in currency markets, or other reasons may also
adversely affect our revenues.
• Cross-border travel may be adversely affected by global geopolitical, economic, social and
other conditions. These include the threat of terrorism, social or political instability, natural
disasters, effects of climate change and outbreaks of flu, viruses and other diseases. The
need for conversion of currencies declines as cross-border travel is impacted.
• Moreover, if our financial institution clients decide to change practices (e.g., prohibit certain
transactions or increase account holder fees associated with cross-border transactions) there
could be a decline in account holder spending because the value proposition to the consumer
could be reduced.
Transactions outside the United States represent an increasingly important part of our strategy,
which we hope will continue to grow. However, a decline in non-U.S. and cross-border activity and
multi-currency transactions will decrease the number of cross-border transactions we process and our
revenues and profitability may be materially and adversely affected.
We risk loss or insolvency if our clients fail to fund settlement obligations for which we have
provided indemnifications.
We indemnify issuers and acquirers for any settlement loss they suffer due to the failure of another
issuer or acquirer to fund its settlement obligations in accordance with our operating regulations. In
certain instances, we may indemnify issuers or acquirers even in situations in which a transaction is
not processed by our system. This indemnification creates settlement risk for us due to the difference
in timing between the date of a payment transaction and the date of subsequent settlement. While the
amount of our indemnification obligations has no limit, our exposure under the indemnification is
restricted to the amount of unsettled Visa payment transactions at any point in time.
Concurrent settlement failures involving more than one of our largest clients, several of our smaller
clients or systemic operational failures lasting more than a single day could cause us to exceed our
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