Visa 2008 Annual Report Download - page 33

Table of Contents
• Participants in the payments industry may merge, create joint ventures or form other business combinations that may strengthen their existing
business propositions or create new payment services that compete with our services.
• Competition from alternative types of payment services, such as online payment services and services that permit direct debit of consumer
checking accounts or ACH payments, may increase.
Our failure to compete effectively against any of the foregoing competitive threats, could materially and adversely affect our revenues, operating
results, prospects for future growth and overall business.
Our operating revenues would decline significantly if we lost one or more of our largest customers, which could have a material adverse impact on
our business.
A significant portion of our operating revenues are concentrated among our largest customers. Our operating revenues from our five largest customers
represented approximately $1.6 billion, or 26%, of our operating revenue for fiscal 2008 and $1.2 billion, or 23%, and $938 million, or 24%, of our pro forma
operating revenues for fiscal 2007 and fiscal 2006, respectively. In addition, our largest customer, JPMorgan Chase, accounted for $501 million, or 8%, of our
operating revenue for fiscal 2008, and $454 million, or 9%, and $408 million, or 10%, of our pro forma operating revenues for fiscal 2007 and 2006,
respectively. Most of our larger customer relationships (including our customer relationships with JPMorgan Chase and Bank of America) are not exclusive
and in certain circumstances (including, in some cases, on relatively short notice) may be terminated by our customers. Our customers can reassess their
commitments to us at any time in the future and/or develop their own competitive services. Loss of business from any of our largest customers could have a
material adverse effect on our business.
Consolidation of the banking industry could result in our losing business and may create pressure on the fees we charge our customers, which may
materially and adversely affect our revenues and profitability.
Over the last several years, the banking industry has undergone substantial consolidation, and, based on current economic conditions, we have seen this
trend accelerate. We expect this trend to continue in the future. Significant ongoing consolidation in the banking industry may result in one of our largest
customers being acquired by an institution that has a strong relationship with a competitor, resulting in a substantial loss of business. In addition, one or more
of our customers could seek to merge with or acquire one of our competitors, and any such transaction could have a material adverse effect on our business
and prospects. Examples of recent consolidations involve financial institutions with substantial Visa card portfolios: the acquisition of assets of Washington
Mutual Bank by JP Morgan Chase, and Wachovia's plans to merge with Wells Fargo.
Continued consolidation in the banking industry would also reduce the overall number of our customers and potential customers and could increase the
bargaining power of our remaining customers and potential customers. This consolidation could lead financial institutions to seek greater pricing discounts or
other incentives with us. In addition, consolidation could prompt our existing customers to seek to renegotiate their pricing agreements with us to obtain more
favorable terms. We may also be adversely impacted by price compression should one of our financial institution customers absorb another financial
institution and qualify for higher volume-based discounts on the combined volumes of the merged business. Pressure on the fees we charge our customers
caused by such consolidation could materially and adversely affect our revenues, operating results, prospects for future growth and overall business. In
addition, the current economic environment could lead some customers to curtail or postpone near-term investments in growing their card portfolios, limit
credit lines, or take other actions which impact adversely the growth of our volume and revenue streams from these customers.
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