Visa 2007 Annual Report Download - page 76

Table of Contents
and increase Visa-branded transactions. These contracts, which range in term from one to 13 years, provide incentives based on payments volume growth or
card issuance, or provide marketing and program support based on specific performance requirements. Visa U.S.A. provides cash and other incentives to
certain customers in exchange for their commitment to generate certain payments volume using Visa-branded products for an agreed period of time.
Pricing varies and may be modified on a customer-by-customer basis through volume and support incentive arrangements. In this regard, volume and
support incentives represent a form of price reduction to these customers. Accordingly, we record these arrangements as a reduction to operating revenues.
Certain incentives are estimated based on projected performance criteria and may change when actual performance varies from projections, resulting in
adjustments to volume and support incentives. Management regularly reviews volume and support incentives and estimates of performance. Estimated costs
associated with these contracts are adjusted as appropriate to reflect payments volume performance and projections that are higher or lower than
management's original expectation or to reflect contract amendments.
International Transaction Fees
International transaction fees are assessed to customers on non-U.S. transactions of U.S.-based issuing financial institutions and U.S. transactions of
non-U.S.-based issuing financial institutions. International transaction fees are generally driven by cross-border payments volume, which include the
settlement of currency exchange activities in connection with the settlement of multi-currency transactions. International transaction fees are influenced by
levels of travel and the extent to which Visa-branded products are utilized for travel purposes. These fees are recognized as revenues in the same period the
related transactions occur or services are performed.
Other Revenues
Other revenues represent optional card enhancements, such as extended cardholder protection and concierge services, cardholder services, software
development services and other services provided to Visa U.S.A.'s customers, Visa International, Visa Canada and Visa Europe. Software development
services are provided on a time and materials basis primarily to Visa International, Visa Europe and Visa Canada. Prior period revenues associated with
previous issuer fees, which were superseded by new issuer acceptance fees discussed above, have been reclassified to service fees for comparative purposes in
Visa U.S.A.'s consolidated financial statements for fiscal 2006 and fiscal 2005.
Operating Expenses
Our operating expenses consist of personnel; network, electronic data processing (EDP) and communications; advertising, marketing and promotion;
professional and consulting fees; administrative and other, and litigation provision.
Personnel
Personnel expense consists of salaries, incentives and various fringe benefits.
Network, EDP and Communications
Network, EDP and communications represent expenses for the operation of our electronic payments network, including maintenance, depreciation and
fees for other data processing services.
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