Visa 2009 Annual Report Download - page 41

Table of Contents
• International transaction revenues increased in fiscal 2009 despite an 11% decline in cross-border nominal payments volume, primarily due to
competitive pricing modifications made since fiscal 2008. International transaction revenues increased during fiscal 2008 compared to fiscal 2007
primarily reflecting 22% growth in cross-border nominal payments volume and modifications to pricing structures for certain transactions in
April 2008. We regularly review our pricing strategy to ensure that it competitively aligns with the value and growth opportunities provided to
our customers. We generally expect international transaction revenue to grow in line with increased cross-border transaction volume, although
economic downturns or other adverse international conditions would hinder this growth.
• Other revenues increased during fiscal 2009 and 2008 primarily due to growth in revenues related to the Visa Extras loyalty platform for
administrative and rewards fulfillment services performed in support of the platform. The increase in other revenues during fiscal 2008 also
reflects license and other service fees from Visa Europe following the reorganization, offset by the absence of project revenues previously earned
for services provided to Visa International and Visa Canada in fiscal 2007.
• Volume and support incentives increased primarily due to incentives incurred on initiation or early renewal of significant long term customer
contracts in fiscal 2009. These incentives were partially offset by the absence of a non-recurring charge related to a customer agreement executed
in fiscal 2008. In addition, fiscal 2008 incentives reflect the accounting impacts of: (i) conforming accounting policies upon reorganization; and
(ii) the retirement of certain issuer programs in fiscal 2007. We expect volume and support incentive to increase somewhat in fiscal 2010. The
actual amount of volume and support incentives will vary based on modifications to performance expectations for these contracts, amendments to
existing contracts or new contracts.
The net asset (liability) of volume and support incentives changed during the year as follows:
Fiscal 2009 Fiscal 2008
(in millions)
Beginning balance at October 1, net asset (liability)(1) $ 130 $ (87)
Provision
Current year provision (1,239) (1,167)
Performance adjustments(2) 41 15
Contractual adjustments(3) (36) (9)
Subtotal volume and support incentives (1,234) (1,161)
Payments 1,136 1,378
Ending balance at September 30, net asset(1) $ 32 $ 130
(1) Balance represents the net of the current and long term asset and current liability portions of volume and support incentives as presented in our
consolidated balance sheet.
(2) Amount represents downward adjustments in estimated obligations under incentive agreements resulting from management's refinement of its estimate
of projected sales performance as new information becomes available.
(3) Amount represents adjustments resulting from amendments to existing contractual terms.
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