Visa 2008 Annual Report Download - page 171

Table of Contents
VISA INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
September 30, 2008
(in millions, except as noted)
Volume and Support Incentives
The Company has agreements with customers for various programs designed to build sales volume and increase the acceptance of its payment products.
These agreements, with original terms ranging from one to thirteen years, provide card issuance, marketing and program support based on specific
performance requirements. These agreements are designed to encourage customer business and to increase overall Visa-branded payment volume, thereby
reducing unit transaction processing costs and increasing brand awareness for all Visa customers.
Payments made and obligations incurred under these programs are included on the Company's consolidated balance sheets. The Company's obligation
under these customer agreements will be amortized as a reduction to revenue in the same period as the related revenues are earned, based on management's
estimate of the customer's performance compared to the terms of the incentive agreement. The agreements may or may not limit the amount of customer
incentive payments. Excluding anticipated revenue to be earned from higher payments and transaction volumes in connection with these agreements, the
Company's potential exposure under agreements with and without limits to incentive payments, is estimated as follows at September 30, 2008:
Fiscal (in millions)
Volume and
Support Incentives
2009 $ 1,088
2010 1,105
2011 945
2012 798
2013 1,005
Thereafter 3
Total $ 4,944
The ultimate amounts to be paid under these agreements may be greater than or less than the estimates above. Based on these agreements, increases in
the incentive payments are generally driven by increased payment and transaction volume, and as a result, in the event incentive payments exceed this
estimate such payments are not expected to have a material effect on the Company's financial condition, results of operations or cash flows.
Indemnification under Framework Agreement
In connection with the framework agreement entered into between Visa Inc. and Visa Europe, Visa Europe indemnifies Visa Inc. for any claims arising
out of the provision of the services brought by Visa Europe's member banks against Visa Inc., while Visa Inc. indemnifies Visa Europe for any claims arising
out of the provision of the services brought against Visa Europe by Visa Inc.'s customer financial institutions. Based on current known facts, the Company
assessed the probability of loss in the future as remote. Consequently, the estimated maximum probability-weighted liability is considered insignificant and no
liability has been accrued. For further information with respect to the Company's commitments and contingencies also see Note 4—Visa Europe, Note 5—
Retrospective Responsibility Plan, Note 11—Debt, Note 13—Settlement Guarantee Management and Note 23—Legal Matters.
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