Visa 2007 Annual Report Download - page 148

Table of Contents
VISA U.S.A. INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
In April 2007, the Company retired both of these programs. Under program rules, remaining unused funds from these programs were returned to issuers
at September 30, 2007. The volume and support incentives table below has been updated to include commitments under agreements sponsored by these
retired programs. See Note 13—Restricted Assets and Liabilities.
The expected reduction of future earnings resulting from volume and support incentives, including acceptance agreements sponsored by the retired
programs described above, is estimated as follows:
Volume and Support Incentives Agreements(1)
For the Years Ending September 30
Financial
Institutions Merchants Total
(in thousands)
2008 $ 459,186 $ 288,362 $ 747,548
2009 468,688 257,142 725,830
2010 417,788 241,322 659,110
2011 348,002 240,312 588,314
2012 230,349 222,404 452,753
Thereafter 347,305 274,345 621,650
Total volume and support incentives $ 2,271,318 $ 1,523,887 $ 3,795,205
(1) The expected reduction of future earnings related to acceptance agreements sponsored by the retired programs described above is approximately $1.1 billion of the commitment for
volume and support incentives.
In connection with these contractual commitments and sponsorship agreements described above, the Company has an obligation to spend certain
minimum amounts for advertising and marketing promotion over the contract terms. The Company's maximum advertising and marketing commitment
through June 2013 is $85.9 million, which is not included in the table above. Certain volume and support incentives also require the Company to undertake
marketing, promotional or other activities to support the overall activities of the contract and to maintain the member, merchant or sponsorship relationships.
Settlement Indemnification
Under the Visa U.S.A. bylaws, the Company indemnifies issuing and acquiring members for settlement losses suffered by reason of the failure of any
other member to honor credit and debit drafts, travelers cheques, or other instruments processed in accordance with the Operating Regulations. Visa
International is the Company's settlement agent. Under the Visa International bylaws, the Company partially indemnifies Visa International from losses due to
the failure of a member. The term and the amount of the indemnity are not limited. The Company is responsible for losses up to $1.0 million plus .003% of
the Company's payments volume for the year preceding the loss, or approximately $40.0 million in fiscal 2007. Excess worldwide losses are allocated among
Visa entities based on their proportionate share of total payments volume.
The Company provides data processing services for deposit access products, including comprehensive support for the following payment products: the
Visa Check card, Visa Buxx and the Interlink network. The Company also supports point-of-sale check service drivers at over 1,000 ATMs and provides
gateway access to all major U.S. payment networks.
The Company is subject to settlement risk for credit and debit transactions due to the difference in timing between the payment transaction date and
subsequent settlement. The Company has global risk management
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