Visa 2008 Annual Report Download - page 58

Table of Contents
Data processing fees are primarily driven by the number, size and type of transactions processed and represent fees for processing transactions that
facilitate the following services:
• Authorization. Fees to route authorization requests to the issuer when a merchant, through its acquirer, requests approval of a cardholder's
transaction.
• Clearing and settlement. Fees for determining and transferring transaction amounts due between acquirers and issuers.
• Single Message System, or SMS, switching. Fees for use of the SMS for determining and transferring transaction amounts between acquirers and
issuers.
• Member processing. Fees for use of the debit processing service, which provides processing and support for Visa debit products and services.
• Processing guarantee. Fees charged for network operations and maintenance necessary for ongoing system availability.
• Other products and services. Fees for miscellaneous services that facilitate transaction and information management among Visa members.
International transaction fees
International transaction fees are assessed to customers on transactions where an issuer is domiciled in one country and a merchant's acquirer is located
in another country. International transaction fees are generally driven by cross-border payments volume, which includes single currency transactions, and
currency conversion activities for transactions involving more than one currency. International transaction fees are influenced in large part by levels of travel
and the extent to which Visa-branded products are utilized for travel purposes. These fees are recognized as revenues in the same period the related
transactions occur or services are performed.
Other revenues
Other revenues consist primarily of optional service or product enhancements, such as extended cardholder protection and concierge services,
cardholder services and fees for licensing and certification. Other revenues also include licensing and other service related fees from Visa Europe under the
framework agreement entered into as part of the reorganization. Other revenues are recognized in the same period the related transactions occur or services
are rendered.
Volume and support incentives
Volume and support incentives are contracts with financial institution customers, merchants and other business partners for various programs designed
to build payments volume, increase card issuance and product acceptance and increase Visa-branded transactions. These contracts, which range in term from
one to 13 years, provide incentives based on payments volume growth or card issuance, or provide marketing and program support based on specific
performance requirements. We provide cash and other incentives to certain customers in exchange for their commitment to generate certain payments volume
using Visa-branded products for an agreed period of time.
Pricing varies among our different geographies and may be modified on a customer-by-customer basis through volume and support incentive
arrangements. In this regard, volume and support incentives represent a form of price reduction to these customers. Accordingly, we record these
arrangements as a reduction to operating revenues. Certain incentives are estimated based on projected performance criteria and may change when actual
performance varies from projections, resulting in adjustments to volume and support incentives. Management regularly reviews volume and
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