Visa 2008 Annual Report Download - page 34

Table of Contents
Merchants are pursuing litigation and supporting regulatory proceedings relating to the costs associated with payment card acceptance and are
negotiating incentive arrangements, including pricing discounts, all of which may increase our costs and materially and adversely affect our
profitability.
We rely in part on merchants and their relationships with our customers to maintain and expand the acceptance of our payment cards. We believe that
consolidation in the retail industry is producing a set of larger merchants that are having a significant impact on all participants in the global payments
industry. For instance, some large merchants are bringing lawsuits against us with regard to, or advocating regulation of, interchange fees, which may
represent a significant cost that merchants pay to accept payment cards. The emphasis merchants are placing on the costs associated with payment card
acceptance may lead to additional regulation and litigation, which would not be covered by our retrospective responsibility plan and which could impair our
revenues, operating results, prospects for future growth and overall business.
We, along with our customers, negotiate pricing discounts and other incentive arrangements with certain large merchants to increase acceptance of our
payment cards. If merchants continue to consolidate, we and our customers may have to increase the incentives provided to certain larger merchants, which
could materially and adversely affect our revenues, operating results, prospects for future growth and overall business.
Certain financial institutions have exclusive, or near exclusive, relationships with our competitors to issue payment cards, and these relationships
may adversely affect our ability to maintain or increase our revenues.
Certain financial institutions have long-standing exclusive, or near exclusive, relationships with our competitors to issue payment cards, and these
relationships may make it difficult or cost-prohibitive for us to do material amounts of business with them in order to increase our revenues. In addition, these
financial institutions may be more successful and may grow faster than the financial institutions that primarily issue our cards, which could put us at a
competitive disadvantage.
We depend significantly on our relationships with our customers and other third parties to deliver services and manage our payments system. As a
result, our success and reputation are significantly dependent on the success of our customers and the quality of the services they provide. If we are
unable to maintain those relationships, or if third parties on which we depend fail to deliver services on our behalf, our business may be materially
and adversely affected.
We are, and will continue to be, significantly dependent on relationships with our customers and their relationships with cardholders and merchants to
support our programs and services. We do not issue cards, extend credit to cardholders or determine the interest rates (if applicable) or other fees charged to
cardholders using cards that carry our brands. Each issuer determines these and most other competitive card features. In addition, we do not generally solicit
merchants to accept our cards and we do not establish the discount rates that merchants are charged for card acceptance, which are responsibilities of
acquirers. As a result, the success of our business significantly depends on the continued success and competitiveness of our customers and the strength of our
relationships with them.
Outside of the United States and certain other countries, most domestic (as opposed to cross-border) transactions conducted using our payment cards
are authorized, cleared and settled by our customers or other processors without involving our processing systems. Because we do not provide domestic
transaction processing services in these countries, do not generally have direct relationships with merchants and never have direct relationships with
cardholders, we depend on our close working relationships with our customers to effectively manage the processing of transactions involving our
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