Visa 2008 Annual Report Download - page 68

Table of Contents
These increases are offset by the absence of data processing revenues previously earned from Visa International regions and Visa Canada. Upon the
reorganization, Visa U.S.A., Visa International and Visa Canada became direct or indirect subsidiaries of Visa Inc. and these fees are eliminated in
consolidation. As noted above, our rate of future revenue growth may be impacted by ongoing consolidation in the financial sector. We also expect that
current turbulence in the financial and credit markets will moderate discretionary spending, and the rate of payments volume and transaction growth, in the
near term.
International transaction fees
The increase in international transaction fees during fiscal 2008 is primarily due to the inclusion of international transaction fees of acquired regions
upon the reorganization on October 1, 2007, which represents an increase of $1.1 billion, or 233%. Further increases were due to double digit growth in cross-
border payments volume reflecting more cross-border transactions and continued expansion in the use of electronic payments for travel purposes. In addition,
growth in international transaction fees reflects modifications to pricing structures for certain international transactions in April 2008. As noted above, we
expect that current worldwide turbulence in the financial and credit markets will moderate discretionary spending, and the rate of cross-border business and
leisure travel, in the near term.
Other revenues
The increase in other revenues during fiscal 2008 reflects inclusion of other revenues from acquired regions upon the reorganization on October 1,
2007, which represents an increase of $217 million, or 78%. License fees and fees for other services provided under the framework agreement with Visa
Europe, which became effective at the time of the reorganization, represented an increase of $176 million. Growth in other revenues also reflects increased
fees related to the Visa Extras loyalty platform in which enrolled Visa cardholders earn reward points toward qualifying purchases. Visa earns revenues from
its financial institution customers for administrative and rewards fulfillment services performed in support of the Visa Extras platform. Growth in other
revenues was also impacted by increases in fines associated with our Cardholder Information Security Program for acquirers whose merchants have not yet
met compliance standards. During fiscal 2008, these increases were offset by the absence of $160 million in project revenues previously earned for services
provided to Visa International regions and Visa Canada in fiscal 2007.
Volume and support incentives
The inclusion of volume and support incentives from the acquired regions upon the reorganization on October 1, 2007 contributed to the increase in
volume and support incentives by $236 million, or 47%.
The remainder of the increase in volume and support incentives in the current period was primarily attributable to unusually lower levels of contra
revenue recorded in fiscal 2007. The lower volume and support incentives in fiscal 2007 were primarily driven by significant performance adjustments
recorded in the period. In addition, fiscal 2008 incentives reflect the accounting impacts of: (i) conforming accounting policies of the acquired regions to that
of the accounting acquirer; and (ii) the retirement of certain issuer programs in the prior fiscal year. Further detail of these and other factors are provided
below.
• We recorded downward adjustments of $81 million related to U.S. based volume and support in fiscal 2007 as compared to $15 million in fiscal
2008, resulting in a year-over-year increase of $66 million.
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