Visa 2008 Annual Report Download - page 241

Table of Contents
into a master agreement, effective at January 1, 2005 and amended and supplemented March 31, 2005, pursuant to which JPMorgan Chase agreed, among
other things, to issue Visa-branded credit and debit cards in exchange for certain pricing terms, payments and other incentives. Visa U.S.A. and its affiliates
provide, among other things, authorization, processing, settlement, account support, advertising and promotional services to JPMorgan Chase. Operating
revenues recognized as a result of fees paid, net of incentives, from JPMorgan Chase and its affiliates were $345 million, $408 million, $454 million and $501
million in fiscal 2005, 2006, 2007 and 2008 respectively.
Though JPMorgan Chase is one of our largest customers globally, the terms we provide to JPMorgan Chase, including pricing terms, payments and
other incentives, are substantially similar in structure and value to the terms provided to our other customers, whether or not affiliated with us, except to the
extent such terms are adjusted based on customer size. Due to its relative customer size and contribution to our revenue, JPMorgan Chase generally receives
terms which, in the aggregate, are more favorable than the terms afforded to our other customers that produce less revenue for us. Specific terms include:
• Standard Pricing Rates with Volume Tiers. JPMorgan Chase is subject to the same standard pricing rates that apply to all Visa U.S.A. customers.
Our standard pricing is tiered and rates decrease as a customer generates greater volume.
• Pricing Discounts for Participation in Our U.S. Partnership Program. Over 450 Visa U.S.A. customers meet the eligibility requirements of our
U.S. partnership program and receive additional tiered pricing discounts applied to our standard pricing. JPMorgan meets the requirements of the
U.S. partnership program and receives the corresponding discounts.
• Additional Incentives. Additional incentives are cash payments and other incentives that we offer to selected customers, typically our larger
customers, in exchange for their commitment to generate certain payments volume using Visa-branded products for an agreed period of time. The
total value of these incentives varies and is primarily based on the size of the customer. The incentives provided to JPMorgan Chase
were negotiated on an arms-length basis and are individually tailored to mutually-agreed upon objectives and include fixed incentives, growth
based incentives and conversion support.
Over the past three fiscal years the aggregate amount of financial incentives provided to JPMorgan Chase has been larger than those afforded to other
customers that produce less revenue for us.
Consistent with most of our larger customer relationships, our relationship with JPMorgan Chase in certain circumstances may be terminated on
relatively short notice. The agreement was entered into by a predecessor to Visa prior to the adoption of the policy. The Company believes the terms of the
agreement were at least as favorable as they would have been had it contracted with unrelated third parties under the same or similar circumstances.
Further, JPMorgan Chase is a party to the Company's $3.0 billion five-year revolving credit facility that was entered into on February 15, 2008. No
amounts were outstanding under the credit facility at any time and no interest has been paid.
See Note 11—Debt to our consolidated financial statements included in Item 8 of this report for more information about the credit facility.
Texas Independent Bancshares Inc.
Texas Independent Bancshares, Inc. is a non-equity member of Visa U.S.A. Charles T. Doyle, our regional director from our U.S.A. region, is the
Chairman of the Board, Chief Executive Officer and a
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