Visa 2008 Annual Report Download - page 19

Table of Contents
above. In many countries, local debit brands are the primary brands, and our brands are used primarily to enable cross-border transactions, which typically
constitute a small portion of overall transaction volume. See Item 8—Financial Statements and Supplementary Data for financial information about
geographic areas.
Some of our major competitors, including American Express and Discover, operate closed-loop systems. Closed-loop systems can benefit from direct
access to consumer and merchant information, and they tend to have greater control over cardholder service than do operators of open-loop payments
networks, like Visa, which depend on their financial institution customers to provide products and services directly to the cardholder. In recent years, the
major closed-loop systems, American Express and Discover, have begun working directly with issuing and acquiring financial institutions, thus emulating
certain aspects of the open-loop system, including setting transfer pricing.
In addition, we compete against companies that are developing and implementing alternative payments networks. Among other things, these
competitors provide Internet currencies, which can be used to buy and sell goods online, virtual checking programs, which permit the direct debit of consumer
checking accounts for both online and point-of-sale transactions and services that support payments to and from proprietary accounts for Internet, mobile
commerce and other applications. A number of these new entrants rely principally on the Internet to support their services and may enjoy lower costs than we
do. In mobile commerce, we also face competition from established network operators that may be in a position to enable mobile devices to process electronic
payments or transfer money, and to use their existing billing systems to process these payments and transfers between their customers and third parties
without our involvement.
Our Visa Debit Processing Service is the largest provider of issuer processing services for United States issuers of Visa debit, prepaid and ATM
products, and thus also competes with third party processors, such as First Data Corporation and Total System Services, Inc., also known as TSYS.
We believe that the primary factors affecting our competitive position in the payments industry include:
• our ability to maintain the quality and integrity of our transaction processing systems;
• our relationships with our customers;
• our relationships with merchants;
• the impact of existing litigation, legislation and government regulation;
• pricing to our customers;
• the impact of globalization and consolidation of financial institutions and merchants; and
• our ability to develop and implement new payment programs, systems and technologies.
Litigation has and may continue to affect our ability to compete in the global payments industry. For example, as a result of the June 2003 settlement of
a U.S. merchant lawsuit against Visa U.S.A. and MasterCard, merchants may choose not to accept U.S.-issued Visa debit cards in the United States while still
accepting Visa-branded credit cards, and vice versa. In addition, following the final judgment in our Department of Justice litigation, members of Visa U.S.A.
may issue certain payment cards that compete with Visa-branded cards, such as American Express or Discover, while remaining Visa members. Since this
final judgment, several members of Visa U.S.A., including, but not limited to, Bank of America, Citibank, HSBC/Metris, U.S.A.A., Barclaycard U.S., GE
Consumer Finance, Inc., First Bank & Trust, Central National Bank & Trust and Brenham National Bank, have begun to issue, or have announced that they
will issue, American Express or Discover-branded cards. Outside of the United States, our customers have historically been permitted to issue American
Express cards, as well as the cards of other competing general purpose card networks.
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