Visa 2008 Annual Report Download - page 20

Table of Contents
The banking industry has undergone consolidation, and, based on current economic conditions, we have seen this trend accelerate. We expect this trend
to continue in the future. A major financial institution customer may be acquired by an institution that has a strong relationship with a competitor, resulting in
a substantial loss of business. Because continued consolidation in the banking industry results in fewer financial institutions of increased size, the bargaining
power of the remaining financial institutions increases.
Government Regulation
Government regulation impacts key aspects of our business. We are subject to government regulation of the payments industry in many countries in
which our cards are used. Our customers are also subject to numerous regulations applicable to banks and other financial institutions in the United States and
elsewhere, and as a consequence our business is affected by such regulations. In recent years our business has come under increasing regulatory scrutiny. In
particular, interchange fees associated with open-loop payments systems such as ours are being reviewed or challenged in various jurisdictions in which our
cards are used.
As the volume of card-based payments has increased in recent years, interchange fees, including our default interchange rates, have become subject to
increased regulatory scrutiny worldwide. We believe that regulators are increasingly adopting a similar approach to interchange fees, and, as a result,
developments in any one jurisdiction may influence regulatory approaches in other jurisdictions. Interchange fees have been the topic of recent committee
hearings in the U.S. House of Representatives and the U.S. Senate, as well as conferences held by a number of U.S. Federal Reserve Banks. In addition, the
U.S. House of Representatives has passed a bill that would commission a study by the Federal Trade Commission of the role of interchange fees in alleged
price gouging at gas stations. Individual state legislatures in the United States are also reviewing interchange fees, and legislators in a number of states have
proposed bills that purport to limit interchange fees or merchant discount rates or to prohibit their application to portions of a transaction. In addition, the
Merchants Payments Coalition, a coalition of trade associations representing businesses that accept credit and debit cards, is mounting a challenge to
interchange fees in the United States by seeking legislative and regulatory intervention.
A number of bills that would affect interchange fees were introduced in both the U.S. House of Representatives and the U.S. Senate in current
Congress. A hearing was held in the House Judiciary Committee on interchange fees and a bill that would regulate the interchange fee process passed the
House Judiciary Committee, but, to date, that bill has not been considered further.
Most jurisdictions in which we and our customers operate have implemented, amended or have pending anti-money laundering regulations. In 2002, we
and our customers became subject to the provisions of the U.S.A. PATRIOT Act, which requires the creation and implementation of comprehensive anti-
money laundering programs. In general, this requires that we make certain efforts to prevent our payments system from being used to facilitate money
laundering and the financing of terrorist activities, including, for example, the designation of a compliance officer, training of employees, adoption of internal
policies and procedures to mitigate money laundering risks, and periodic audits.
We are subject to regulations imposed by the U.S. Treasury Office of Foreign Assets Control, or OFAC. OFAC restricts financial dealings with Cuba,
Iran, Myanmar and Sudan, as well as financial dealings with certain restricted third parties, such as identified money laundering fronts for terrorists or
narcotics traffickers. While we prohibit financial institutions that are domiciled in those countries or are restricted parties from being Visa members, many
Visa International members are non-U.S. financial
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