Visa 2007 Annual Report Download - page 28

Table of Contents
In recent years, a number of regulations relating to the price of credit and directed at our financial institution customers have been implemented in some
jurisdictions in which our cards are used. In the United States, regulators and the U.S. Congress have increased their scrutiny of our customers' pricing and
underwriting standards relating to credit. For example, a number of regulations have been issued to implement the U.S. Fair and Accurate Credit Transactions
Act, and other regulations are expected to be issued in 2007. One such regulation pertaining to risk-based pricing could have a significant impact on the
application process for credit cards and result in increased costs of issuance and/or a decrease in the flexibility of card issuers to set the price of credit.
Another such regulation is a significant proposal to amend Regulation Z, which implements the Truth-in-Lending Act, and will change the substance and
format of consumer disclosures made by financial institutions. In addition, the U.S. Senate Permanent Subcommittee on Investigations and other Committees
and Subcommittees may continue to consider the methods used to calculate finance charges and allocate payments received from cardholders and the methods
by which default interest rates, late fees and over-the-credit-limit fees are determined, imposed and disclosed. Any regulation in this regard could impact our
customers' ability to issue cards profitably in certain segments and impact our payments volume and revenues.
We and our customers are subject to regulations related to privacy, data use and security in the jurisdictions in which we do business. For example, in
the United States, our customers and we are respectively subject to the banking regulators' information safeguard rules and the Federal Trade Commission's
rules under the Gramm-Leach-Bliley Act, respectively. These rules require that our customers and we develop, implement and maintain written,
comprehensive information security programs containing safeguards that are appropriate to our size and complexity, the nature and scope of our activities and
the sensitivity of any customer information at issue.
In recent years, there has been a heightened legislative and regulatory focus on data security. In the United States, a number of bills have been
introduced in Congress and there have been several Congressional hearings to address these issues. Congress is considering data security/data breach
legislation which, if implemented, could affect our customers and us. In addition, a number of U.S. states have enacted security breach legislation, requiring
varying levels of consumer notification in the event of a security breach, and several other states are considering similar legislation.
Governments in certain countries have acted, or could act, to provide resources or protection to selected national payment card providers or national
payment processing providers to support domestic competitors or to displace us from, prevent us from entering into, or substantially restrict us from
participating in, particular geographies. For example, our customers in China are not permitted to issue cards carrying our brands for domestic use in China.
Governments in certain other countries have considered similar restrictions from time to time.
Many jurisdictions in which our customers and we operate are considering, or are expected to consider, legislation with regard to Internet transactions,
and in particular with regard to choice of law, the legality of certain e-commerce transactions, the collection of applicable taxes and copyright and trademark
infringement. If implemented, these initiatives could require our customers and us to monitor, filter, restrict or otherwise oversee various categories of
payment card transactions or to take other actions. For example, draft regulations were proposed on October 1, 2007 pursuant to recently enacted U.S.
legislation regarding Internet gambling, which will require our customers and us to code and block certain types of Internet gambling transactions. Comments
on these draft regulations were due December 12, 2007 and final regulations will be forthcoming at an undetermined date. Various U.S. regulatory agencies
are also considering additional regulation covering capital requirements, privacy, disclosure rules, security and marketing, which could impact our customers
and us directly. Increases in fraud or other illegal activity involving our cards could also lead to regulatory intervention, such as mandatory card re-issuance.
Certain of our operations in the United States are periodically reviewed by the Federal Financial Institution Examination Council to ensure our
compliance with applicable data integrity and security requirements, as well as other requirements applicable to us as a result of our role as a service provider
to financial institutions. In
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