Visa 2009 Annual Report Download - page 24

Table of Contents
Merchants are pursuing litigation and supporting regulatory proceedings relating to the costs associated with payment card acceptance and are
negotiating incentive arrangements, including pricing discounts, all of which may increase our costs and materially and adversely affect our
profitability.
We rely in part on merchants and their relationships with our customers to maintain and expand the acceptance of our payment cards. We believe that
consolidation in the retail industry is producing a set of larger merchants that are having a significant impact on all participants in the global payments
industry. The emphasis merchants are placing on the costs associated with payment card acceptance may lead to additional regulation and litigation, which
would not be covered by our retrospective responsibility plan and which could impair our revenues, operating results, prospects for future growth and overall
business.
We, along with our customers, negotiate pricing discounts and other incentive arrangements with certain large merchants to increase acceptance of our
payment cards. If merchants continue to consolidate, our customers and we may have to increase the incentives provided to certain larger merchants, which
could materially and adversely affect our revenues, operating results, prospects for future growth and overall business.
Certain financial institutions have exclusive, or nearly-exclusive, relationships with our competitors to issue payment cards, and these relationships
may adversely affect our ability to maintain or increase our revenues.
Certain financial institutions have long-standing exclusive, or nearly-exclusive, relationships with our competitors to issue payment cards, and these
relationships may make it difficult or cost-prohibitive for us to do material amounts of business with them in order to increase our revenues. In addition, these
financial institutions may be more successful and may grow faster than the financial institutions that primarily issue our cards, which could put us at a
competitive disadvantage.
Failure to maintain relationships with our customers and other third parties and failure of customers to provide services on our behalf could
materially and adversely affect our business.
We depend and will continue to depend significantly on relationships with our customers and their relationships with cardholders and merchants to
support our programs and services. We do not issue cards, extend credit to cardholders or determine the interest rates (if applicable) or other fees charged to
cardholders using cards that carry our brands. Each issuer determines these and most other competitive card features. In addition, we do not generally solicit
merchants to accept our cards and we do not establish the discount rates merchants are charged for card acceptance, which are the responsibility of acquirers.
As a result, the success of our business significantly depends on the continued success and competitiveness of our customers and the strength of our
relationships with them.
In many countries outside of the United States our customers or other processors authorize, clear and settle most domestic (as opposed to cross-border)
transactions using our payment cards without involving our processing systems. We depend on our close working relationships with our customers to
effectively manage the processing of transactions involving our cards, because we do not provide domestic transaction processing services in these countries,
do not generally have direct relationships with merchants and never have direct relationships with cardholders. Our inability to control the end-to-end
processing on cards carrying our brands in these 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 third-party vendors fail to deliver services, our
business and reputation could be impaired.
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