Visa 2009 Annual Report Download - page 27

Table of Contents
sensitive cardholder data and account information are stored could lead to fraudulent activity involving our cards, reputational damage and claims against us.
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 or more 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.
Failure to maintain interoperability between Visa Inc.'s and Visa Europe's authorization and clearing and settlement systems could damage the
business and global perception of the Visa brand.
With the completion of the deployment of Visa Europe's own authorization and clearing and settlement systems expected in fiscal 2010, it is incumbent
upon both service providers, Visa Inc. and Visa Europe, to ensure their systems can process every transaction regardless of where it originates. The
increasingly independent payments system operations of Visa Europe could present challenges to our business due to the heightened difficulty of maintaining
the interoperability of our respective systems as they diverge over time. Failure to authorize or clear and settle transactions in a timely and accurate manner
could impair the global perception of the Visa brand.
Material changes in our customers' performance compared to our estimates could have a material and adverse impact on our results of operations.
In certain instances, we offer our customers financial incentives, which are typically tied to their payments volume or transaction messages processed,
often under particular programs. These financial incentives are typically recorded as a reduction of revenues. We generally make estimates of our customers'
performance under these programs (sometimes over several years) in order to derive our estimates of the financial incentives that we will pay them. The
reduction of revenues that we record each quarter under volume and support agreements is based on these estimates. Material differences between our
customers' performance and our estimates could have a material adverse impact on our results of operations. For example, if a customer performs better than
expected, we may be required to reduce future period revenues to account for the fact that we did not reduce revenues enough in prior periods. On the other
hand, if a customer performs worse than expected, we may conclude that we reduced revenues by too much in previous period.
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