Visa 2008 Annual Report Download - page 37

Table of Contents
Account data breaches involving card data stored by us or third parties could adversely affect our reputation and revenues.
We and our customers, merchants and other third parties store cardholder account information in connection with our payment cards. In addition, our
customers may use third-party processors to process transactions generated by cards carrying our brands. Breach of the systems on which sensitive cardholder
data and account information are stored could lead to fraudulent activity involving our cards, reputational damage and lead to claims against us. For example,
in January 2007, TJX Companies, Inc., a large retailer with stores in the United States, Canada and the United Kingdom, disclosed a significant security
breach in connection with card and account information, which exposed tens of millions of payment cards issued under our brands and our competitors'
brands to fraudulent use. If we are sued in connection with any data security breach, we could be involved in protracted litigation. If unsuccessful in defending
such lawsuits, we may be forced to pay damages and/or change our business practices or pricing structure, any of which could have a material adverse effect
on our revenues and profitability. In addition, any reputational damage resulting from an account data breach at one of our customers, merchants or other third
parties could decrease the use and acceptance of our cards, which could have a material adverse impact on our payments volume, revenues and future growth
prospects. Finally, any data security breach could result in additional regulation, which could materially increase our costs.
An increase in fraudulent and other illegal activity involving our cards could lead to reputational damage to our brands and could reduce the use
and acceptance of our cards.
Criminals are using increasingly sophisticated methods to capture cardholder account information to engage in illegal activities such as fraud and
identity theft. As outsourcing and specialization become a more acceptable way of doing business in the payments industry, there are more third parties
involved in processing transactions using our cards. If fraud levels involving our cards were to rise, it could lead to reputational damage to our brands, which
could reduce the use and acceptance of our cards, or to greater regulation, which could increase our compliance costs.
Visa Europe's payments system operations are becoming increasingly independent from ours, and if we are unable to maintain seamless interaction
of our respective systems, our business and the global perception of the Visa brand could be impaired.
Visa Europe currently has a regionally controlled processing platform. In June 2006, Visa Europe began operating an authorization system that is
separate from ours and Visa Europe plans to begin operating a transaction clearing and settlement system that is separate from ours. Because we and Visa
Europe have independent processing platforms, interoperability must be maintained. Visa Europe's authorization system has experienced interruptions in
service, and it could experience further interruptions in the future. To the extent that system disruptions occur, it may affect our cardholders who are traveling
in Visa Europe's region and impair our reputation. The increasingly independent payments system operations of Visa Europe could present certain challenges
to our business because differences between the two processing systems may make it more difficult to maintain the interoperability of our respective systems.
In addition, under the framework agreement, we are restricted from requiring Visa Europe to implement certain changes that we may deem important unless
we agree to pay for the implementation costs. Any of the foregoing could result in a loss of payments volume or of customers or could materially increase our
costs.
Adverse currency fluctuations could decrease revenues and increase expenses.
We conduct business globally in many foreign currencies, but report our financial results in U.S. dollars. We are therefore exposed to adverse
movements in foreign currency exchange rates because depreciation of non-U.S. currencies against the U.S. dollar reduces the U.S. dollar value of the non-
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