Visa 2010 Annual Report Download - page 42

Table of Contents
ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operations
This management's discussion and analysis provides a review of the results of operations, financial condition and the liquidity and capital resources of
Visa Inc. and its subsidiaries ("Visa," "we," "our" and the "Company") on a historical basis and outlines the factors that have affected recent earnings, as
well as those factors that may affect future earnings. The following discussion and analysis should be read in conjunction with the consolidated financial
statements and related notes included in Item 8.
Overview
Visa is a global payments technology company that connects consumers, businesses, banks and governments around the world, enabling them to use
digital currency instead of cash and checks. We provide financial institutions with payment processing platforms that encompass consumer credit, debit,
prepaid and commercial payments. We facilitate global commerce through the transfer of value and information among financial institutions, merchants,
consumers, businesses and government entities. Each of these constituencies has played a key role in the ongoing worldwide migration from paper-based to
electronic forms of payment, and we believe that this transformation continues to yield significant growth opportunities, particularly outside the United States.
We continue to explore additional opportunities to enhance our competitive position by expanding the scope of payment services to benefit our existing
clients and to position Visa to serve more and different constituencies.
Overall economic conditions and regulatory environment. Our business is affected by overall economic conditions and consumer spending. We
continue to monitor the progress of the global economic recovery, which has shown signs of slow but gradual improvement. We expect consumer and
commercial spending, and our payments volume to continue to increase in the near term if the economic recovery maintains momentum.
The Wall Street Reform and Consumer Protection Act enacted in the U.S. in July 2010 includes provisions that will establish regulation and oversight
of debit interchange rates and certain other network industry practices in the U.S. While the legislation does not directly regulate the network fees we charge,
except to ensure that fees are not used to evade the new regulation of interchange rates, it may give retailers greater ability to route debit transactions onto
competitive networks, which can reduce the processing fees we currently earn on debit transactions. Because the implementation details for this new
legislation will be determined over the next year, the expected impact on our consolidated financial statements is unknown at this time. However, we expect to
see the impacts of the legislation beginning in the fourth quarter of fiscal 2011.
Other regulatory measures previously enacted in the U.S. became effective in the second quarter of fiscal 2010. These regulatory measures primarily
impacted our clients, but have not resulted in any notable impact to our payments volumes.
We continue to believe that our broad platform of payment products provides substantial value to both retailers and consumers, and that the continuing
worldwide secular shift to digital currency, will buffer the impacts of our current regulatory environment, as reflected in our overall payments volume growth,
and in particular payments volume growth outside the U.S.
Funding of the litigation escrow account. During May 2010 and subsequently in October 2010, after our fiscal year end, we deposited $500 million and
$800 million, respectively, into the escrow account previously established under the retrospective responsibility plan, or the plan. Under the terms of the plan,
when Visa funds the escrow account, the shares of class B common stock retained by our
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