Visa 2015 Annual Report Download - page 34

where our products co-reside with other networks and merchants have a choice of network routing
options. The economic pressures on our clients arising from the Dodd-Frank Act have also increased
our use of incentives. As a result, the provision of certain products and services may be less profitable
or become unprofitable, which may materially and adversely affect our revenues and profits.
If we continue to increase incentives to our clients, we will need to find ways to offset the financial
impact by increasing payments volume, increasing the amount of fee-based services we provide or
both. We may not succeed in doing so, particularly in the current regulatory environment. In addition,
we benefit from long-term contracts with certain clients, including those that are large contributors to
our revenue. Continued pressure on our fees could prevent us from maintaining such agreements in
the future on the same or favorable terms. We may also have to modify existing agreements in order to
maintain relationships or comply with regulations. While we may implement cost containment and
productivity initiatives in areas other than those surrounding client incentives, we may not be
successful in our efforts or they may not offset the decreases in our revenues.
We face intense competition in our industry.
The global payments industry is intensely competitive and, as a result, our payment programs
compete against all forms of payment. These include cash, checks, electronic, eCommerce, virtual
currencies and mobile payments, as well as traditional general purpose card networks. In addition, our
open-loop payments network competes against other alternate payment systems such as closed-loop
payment systems. Traditional or nontraditional competitors may put us at a competitive disadvantage
by leveraging services or products in areas in which we do not directly compete to win business in
areas where we do compete.
Our clients can reassess their commitments to us at any time or develop their own competitive
services. The Dodd-Frank Act increased this competitive pressure. The risk to maintaining or securing
our clients’ long-term commitments to our products increased with the Dodd-Frank Act’s restrictions on
network exclusivity in the debit sector. We do not have exclusivity with our largest clients such as
JPMorgan Chase and Bank of America. In certain circumstances, our clients may terminate these
relationships on relatively short notice without significant early termination fees. Because a significant
portion of our operating revenues is concentrated among our largest clients, the loss of business from
any of these clients could have an adverse effect on the Company. See Note 13— Enterprise-wide
Disclosures and Concentration of Business to our consolidated financial statements included in Item 8
of this report.
Additionally, some of our competitors may develop substantially better technology or have greater
financial resources. They may offer a wider range of programs, products and services than we do,
including more innovative ones. They may use advertising and marketing strategies that are more
effective than ours, achieving broader brand recognition and merchant acceptance. They may also
develop better security solutions or more favorable pricing arrangements.
Certain of our competitors operate with different business models, have different cost structures or
participate selectively in different market segments. They may ultimately prove more successful or
more adaptable to new regulatory, technological and other developments. In many cases, these
competitors have the support of government mandates that prohibit, limit or otherwise hinder our ability
to compete for or otherwise secure transactions within those countries and regions.
We expect there to be changes in the competitive landscape in the future. For example:
• competitors, clients and others may develop products that compete with, impair or replace
the value-added services we provide to support our transaction processing;
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