Visa 2010 Annual Report Download - page 27

Table of Contents
revenue. Continued pressure on our fees could prevent us from entering into such agreements in the future on favorable terms. We may also have to modify
existing agreements in order to maintain relationships or comply with regulations. Finally, increased pricing pressure enhances the importance of cost
containment and productivity initiatives in areas other than those surrounding client incentives, and we may not succeed in these efforts.
Our business, financial condition and results of operations may suffer because of intense competition in our industry.
The global payments industry is intensely competitive. Our payment programs compete against all forms of payment. These include cash, checks and
electronic transactions, such as wire transfers and automatic clearinghouse payments. In addition, our payment programs compete against the card-based
payments systems of our competitors, such as MasterCard, American Express, Discover and private-label cards issued by merchants.
Some of our competitors may develop substantially greater financial and other resources than we have. They may offer a wider range of programs and
services than we do. They may use advertising and marketing strategies that are more effective than ours, achieving broader brand recognition and merchant
acceptance than we do. They may develop better security solutions or more favorable pricing arrangements than we have. They may also introduce more
innovative programs and services than we provide.
Certain of our competitors operate with different business models, have different cost structures or participate selectively in different market segments.
These include domestic networks in the United States, China, Canada, Australia and other countries and regions. They may ultimately prove more successful
or more adaptable to new regulatory, technological and other developments. In many cases, these competitors have the support of government mandates that
prohibit, limit or otherwise hinder our ability to compete for or otherwise secure transactions within those countries and regions.
Our clients can reassess their commitments to us at any time or develop their own competitive services. This is especially so given the recent U.S. Wall
Street Reform and Consumer Protection Act, which restricts our ability to require network exclusivity in the debit sector. Most of our larger client
relationships are not exclusive. These include those with our largest clients, JPMorgan Chase and Bank of America. In certain circumstances, our clients may
terminate these relationships, sometimes on relatively short notice, and in many cases subject to significant early termination fees. Because a significant
portion of our operating revenues is concentrated among our largest clients, our operating revenues would decline significantly if we lost one or more of them.
This could have a material adverse impact on our business, financial condition and results of operations. See Note 15—Enterprise-wide Disclosure and
Concentration of Business to our consolidated financial statements included in Item 8 in this report.
We expect there to be changes in the competitive landscape in the future. For example:
• Competitors, clients and others may develop products that compete with or replace the value-added services we provide to support our
transaction processing;
• Parties that process our transactions in certain countries may try to eliminate our position in the payments value chain;
• Participants in the payments industry may merge, form joint ventures or enter into other business combinations that strengthen their existing
business propositions or create new, competing payment services; or
• Competition may increase from alternative types of payment services, such as mobile payments services, online payment services and services
that permit direct debit of consumer checking accounts or ACH payments.
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