Visa 2010 Annual Report Download - page 31

Table of Contents
• Our clients may default on their settlement obligations.
• Our business and prospects, as well as our revenue and profitability, could be materially and adversely affected by consolidation of our clients.
In addition, regulatory bodies may seek to impose rules and price controls on certain aspects of our business and the payments industry.
Any of these developments could have a material adverse impact on our prospects, growth, revenue, profitability and overall business.
A decline in non-U.S. and cross-border activity and in multi-currency transactions could adversely affect our revenues and profitability, as we
generate a significant portion of our revenue from such transactions.
We generate a significant amount of our revenues from cross-border transactions. Our clients pay us fees in connection with cross-border transactions.
Some of those fees may differ if conversion from the merchant's currency to the cardholder's billing currency is required. Thus, revenue from processing
cross-border transactions for our clients fluctuates with cross-border travel and the need for transactions to be converted into a different currency. Cross-
border travel may be adversely affected by world geopolitical, economic and other conditions. These include the threat of terrorism, natural disasters, the
effects of climate change and outbreaks of diseases. A decline in cross-border travel could adversely affect our revenues and profitability. A decline in the
need for conversion of currencies might also adversely affect our revenues and profitability.
In addition, Visa derives revenue from foreign currency exchange activities that result from our clients' settlement in different currencies. A reduction in
multi-currency transactions may reduce the need for foreign currency exchange activities and adversely affect our revenues.
Transactions outside the United States represent an increasingly important part of our strategy. In order to continue to grow in those areas, we will need
to ensure that we maintain consistency in the types of products we provide, the quality of our service and the viability of our brand. If we cannot employ our
organizational resources effectively, we will be unable to do so.
Finally, because we are domiciled in the United States, a negative perception of the United States arising from its political or other positions could harm
the perception of our company and our brand. Any of these factors could materially and adversely affect our revenues, operating results, prospects for future
growth and overall business.
We risk loss or insolvency if our clients fail to fund settlement obligations we have guaranteed.
We indemnify issuers and acquirers for any settlement loss they suffer due to the failure of another issuer or acquirer to fund its daily settlement
obligations. In certain instances, we may indemnify issuers or acquirers even in situations in which a transaction is not processed by our system. This
indemnification creates settlement risk for us due to the difference in timing between the date of a payment transaction and the date of subsequent settlement.
The term and amount of our indemnification obligations are unlimited.
Concurrent settlement failures involving more than one of our largest clients or several of our smaller clients may exceed our available financial
resources, as could systemic operational failures lasting more than a single day. Any such failure could materially and adversely affect our business, financial
condition and results of operations. In addition, even if we have sufficient liquidity to cover a
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