Visa 2008 Annual Report Download - page 39

Table of Contents
Our relationship with Visa Europe is governed by our framework agreement, which gives Visa Europe very broad rights to operate the Visa business
in Visa Europe's region. We have limited ability to control their operations and limited recourse in the event of a breach by Visa Europe.
Historically, Visa Europe had been subject to the same global operating rules as Visa U.S.A., Visa International and Visa Canada. These global
operating rules regulate, among other things, interoperability of payment processing, brand maintenance and investment, standards for products and services,
risk management, disputes between members and acceptance standards for merchants. After the reorganization, Visa Europe, unlike Visa U.S.A., Visa
International and Visa Canada, did not become our subsidiary. As a result, Visa Europe is no longer subject to the same global operating rules as our
subsidiaries and customers.
Our relationship with Visa Europe is now governed by a framework agreement and a subset of operating rules that we have agreed to with Visa Europe
and that we have limited ability to change in the future. Although the agreement seeks to ensure that Visa Europe operates in a manner that is acceptable to us,
the contractual arrangement is untested and may not be effective in achieving this result. Visa Europe is responsible for designing its own plans to ensure that
it is in compliance with the global rules, interoperability, integrity of the system and trademark usage. While we have the right to request changes to these
plans, we have no right to audit their compliance with these requirements or examine their books and records in connection with the framework agreement or
the put option. The agreement provides Visa Europe with very broad latitude to operate the Visa business and use our brands and technology within Visa
Europe's region and provides us limited controls over the operation of the Visa business in their region. Visa Europe is not required to spend any minimum
amount promoting and building the Visa brand in its region, and the strength of the Visa global brand is contingent, in part, on the efforts of Visa Europe to
maintain product and service recognition and quality in Europe. Visa Europe may develop, among other things, new brands, payment processing
characteristics, products, services, risk management standards, processes for resolving disputes among its members or merchant acceptance profiles that are
inconsistent with the operating rules that we apply in the rest of the world.
If we want to change a global rule or require Visa Europe to implement certain changes that would not have a positive return for Visa Europe and its
members, then Visa Europe is not required to implement such rule or change unless we agree to pay for the implementation costs and expenses that Visa
Europe and its members will incur as a consequence of the implementation to the extent necessary to return Visa Europe and its members to a neutral
financial condition. We cannot terminate the framework agreement even in the event of Visa Europe's material uncured breach, and we can only exercise our
call right to purchase Visa Europe under extremely limited circumstances. Our remedies under this agreement, if Visa Europe fails to meet its obligations, are
limited. Our inability to terminate and other features of the licenses granted under the agreement may also raise issues concerning the characterization of the
licenses for purposes of determining our tax treatment with respect to entering into the licenses and receiving payments thereunder. Any inconsistency in the
payment processing services and products that we are able to provide could negatively affect cardholders from Visa Europe using cards in our regions or our
cardholders using cards in Visa Europe's region.
We have granted to Visa Europe the right to require us to purchase all of the outstanding shares of Visa Europe's capital stock. If Visa Europe
exercises this option, we will incur a substantial financial obligation. In addition, we are required to record any change in the fair value of the put
option on a quarterly basis, which will impact our net income.
We have granted Visa Europe a put option, which, if exercised, will require us to purchase all of the outstanding shares of capital stock of Visa Europe
from its members. Visa Europe may exercise the put option at any time following March 25, 2009. The purchase price of the Visa Europe shares
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