First Data 2009 Annual Report Download - page 24

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. 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 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 implementing 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 Retail and Alliance Services business. The Company’s
inability to respond to new competitors and technological advancements could impact all of the Company’s
businesses.
Changes in credit card association or other network rules or standards could adversely affect the Company’s
business.
In order to provide the Company’s transaction processing services, several of the Company’s subsidiaries
are registered with Visa and MasterCard and other networks as members or service providers for member
institutions. As such, the Company and many of its customers are subject to card association and network rules
that could subject the Company or its customers to a variety of fines or penalties that may be levied by the card
associations or networks for certain acts or omissions by the Company, acquirer customers, processing customers
and merchants. Visa, MasterCard and other networks, some of which are the Company’s competitors, set the
standards with respect to which the Company must comply. The termination of the Company’s member
registration or the Company’s status as a certified service provider, or any changes in card association or other
network rules or standards, including interpretation and implementation of the rules or standards, that increase
the cost of doing business or limit the Company’s ability to provide transaction processing services to or through
the Company’s customers, could have an adverse effect on the Company’s business, operating results and
financial condition.
Changes in card association and debit network fees or products could increase costs or otherwise limit the
Company’s operations.
From time to time, card associations and debit networks increase the organization and/or processing fees
(known as interchange fees) that they charge. It is possible that competitive pressures will result in the Company
absorbing a portion of such increases in the future, which would increase its operating costs, reduce its profit
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