Visa 2008 Annual Report Download - page 35

Table of Contents
cards. Our inability to control the end-to-end processing on cards carrying our brands in many countries may put us at a competitive disadvantage by limiting
our ability to ensure the quality of the services supporting our brand.
In addition, we depend on third parties to provide various services on our behalf and to the extent that any third party vendors fail to deliver services,
our business and reputation could be impaired.
Our brands and reputation are key assets of our business and may be affected by how we are perceived in the marketplace.
Our brands and their attributes are key assets of our business. The ability to attract and retain consumer cardholders and corporate clients to Visa-
branded products is highly dependent upon the external perceptions of our company and our industry. Our business may be affected by actions taken by our
customers that impact the perception of our brands. From time to time, our customers may take actions that we do not believe to be in the best interests of our
brands, such as creditor practices that may be viewed as "predatory," which may materially and adversely impact our business. Adverse developments with
respect to our industry may also, by association, impair our reputation, or result in greater regulatory or legislative scrutiny.
Global economic, political and other conditions may adversely affect trends in consumer spending and cross-border travel, which may materially
and adversely impact our revenues, operating results, prospects for future growth and overall business.
The global payments industry depends heavily upon the overall level of consumer, business and government spending. For example, a sustained
deterioration in general economic conditions, particularly in the United States and the Asia-Pacific region, where approximately 59% and 17%, respectively,
of our operating revenues were generated in fiscal 2008, and 66% and 14%, respectively, of our pro forma revenues were generated for fiscal 2007 and, 71%
and 12%, respectively, of our pro forma revenues were generated for fiscal 2006, or increases in interest rates in key countries in which we operate, may
adversely affect our financial performance by reducing the number or average purchase amount of transactions involving payment cards carrying our brands.
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. A significant portion of the
revenues we earn outside the United States results from cross-border business and leisure travel, which may be adversely affected by world geopolitical,
economic and other conditions, including the threat of terrorism and outbreak of diseases, such as SARS and avian flu. In particular, revenues from processing
foreign currency transactions for our customers fluctuate with cross-border travel and our customers' need for transactions to be converted into their base
currency. In addition, as we are principally domiciled in the United States, a negative perception of the United States could impact the perception of our
company, which could materially and adversely affect our revenues, operating results, prospects for future growth and overall business.
As a guarantor of certain obligations of Visa members, we are exposed to risk of loss or insolvency if any member fails to fund its settlement
obligations.
We indemnify Visa members for any settlement loss suffered due to the failure of a member to fund its daily settlement obligations. In certain
instances, we may indemnify members even in situations in which a transaction is not processed by our system. This indemnification creates settlement risk
for us due to the difference in timing between the date of a payment transaction and the date of subsequent settlement. The term and amount of the
indemnification are unlimited.
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