First Data 2008 Annual Report Download - page 26

Future consolidation of client financial institutions or other client groups may adversely affect the Company's financial condition.
The Company has experienced the negative impact of the bank industry consolidation in recent years. Bank industry consolidation impacts existing and
potential clients in the Company's service areas, primarily in Financial Services and Merchant Services. The Company's alliance strategy could be negatively
impacted as a result of consolidations, especially where the banks involved are committed to their internal merchant processing businesses that compete with
the Company. Bank consolidation has led to an increasingly concentrated client base in the industry, resulting in a changing client mix for Financial Services
as well as increased price compression. Further consolidation in the bank industry or other client base could have a negative impact on the Company.
The Company is subject to the credit risk that its merchants and agents will be unable to satisfy obligations for which the Company may also be liable.
The Company is subject to the credit risk of its merchants and agents being unable to satisfy obligations for which the Company also may be liable. For
example, the Company and its merchant acquiring alliances are contingently liable for transactions originally acquired by the Company that are disputed by
the card holder and charged back to the merchants. If the Company or the alliance are unable to collect this amount from the merchant, due to the merchant's
insolvency or other reasons, the Company or the alliance will bear the loss for the amount of the refund paid to the cardholder. Also, the Company's
subsidiary Integrated Payments Systems, Inc. potentially may be liable if holders of official checks that it issues are sold by an agent bank which then
becomes insolvent, to the extent that such liabilities are not federally insured or otherwise recovered through the receivership process. The Company has an
active program to manage its credit risk and often mitigates its risk by obtaining collateral. Notwithstanding the Company's program for managing its credit
risk, it is possible that a default on such obligations by one or more of the Company's merchants or agents could have a material adverse effect on the
Company's business.
The Company's cost saving plans are based on assumptions that may prove to be inaccurate which may negatively impact the Company's operating
results.
The Company is in the process of consolidating its data centers and command centers in the United States and internationally. In addition, the Company
is implementing other cost improvement and cost containment programs across all of the Company's business segments. While the Company expects its cost
saving initiatives to result in significant cost savings throughout the Company's organization, its estimated savings are based on several assumptions that may
prove to be inaccurate, and as a result the Company cannot assure that it will realize these cost savings. The failure to achieve the Company's estimated cost
savings would negatively affect its financial condition and results of operations.
The ability to adopt technology to changing industry and customer needs or trends may affect the Company's competitiveness or demand for the
Company's products, which may adversely affect the Company's operating results.
Changes in technology may limit the competitiveness of and demand for the Company's services. The Company's businesses operate in industries that
are subject to technological advancements, developing industry standards and changing customer needs and preferences. Also, the Company's customers
continue to adopt new technology for business and personal uses. The Company must anticipate and respond to these industry and customer changes in order
to remain competitive within the Company's relative markets. For example, the ability to adopt technological advancements surrounding point-of-sale
("POS") technology available to merchants could have an impact on the Company's International and Merchant Services business. The Company's inability to
respond to new competitors and technological advancements could impact all of the Company's businesses.
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