Visa 2012 Annual Report Download - page 25

Table of Contents
already engage in many co-branding efforts, in which we contract with the merchant, who directly receives incentive funding. We
also engage with merchants and merchant acquirers and processors to provide funding to promote routing and acceptance growth.
As these and other relationships take on a greater importance for both merchants and us, our success will increasingly depend on
our ability to sustain and grow these relationships.
In many countries outside the United States, our clients or other processors authorize, clear and settle most domestic
transactions using our payment cards without involving our processing systems. This pattern is increasing with a rise in new
systems endorsed by governments. In addition, we historically have not generally had direct relationships with merchants there,
and shifting technology and development may further increase such activity. We do not have direct relationships with cardholders.
Consequently, we depend on our close working relationships with our clients to effectively manage the processing of transactions
involving our cards. Our inability to control the end-to-end processing for cards carrying our brands in these countries may put us at
a competitive disadvantage by limiting our ability to ensure the quality of the services supporting our brands.
In addition, we depend on third parties to provide various services on our behalf, and to the extent that third-party vendors fail
to deliver services, our business and reputation could be impaired.
The perception of our company in the marketplace may affect our brands and reputation, which are key assets of our
business.
Our brands and their attributes are key assets of our business. The ability to attract and retain consumer cardholders and
corporate clients to Visa-branded products depends highly upon the external perceptions of our company and our industry. Our
business may be affected by actions taken by our clients that change the perception of our brands. From time to time, our clients
may take actions that we do not believe to be in the best interests of our brands, such as creditor practices that may be subject to
challenge, which may materially and adversely affect our business. Further, Visa Europe has very broad latitude to operate the Visa
business in and use our brands and technology within Visa Europe's region, in which we have only limited control over the
operation of the Visa business. Visa Europe is not required to spend any minimum amount of money promoting or building the Visa
brands in its region, and the strength of the Visa global brands depends in part on the efforts of Visa Europe to maintain product
and service recognition and quality in Europe. Adverse developments with respect to our industry may also, by association, impair
our reputation or result in greater regulatory or legislative scrutiny. 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.
Unprecedented economic events in financial markets around the world have and are likely to continue to affect our
clients, merchants and cardholders, resulting in a material and adverse impact on our prospects, growth, profitability,
revenue and overall business.
Unprecedented economic events that began in 2008 continue to affect the financial markets around the world. These include
decreased consumer spending; increased unemployment; deflation; increased savings; decreased consumer debt; excess housing
inventory; lowered government spending; decreased export activity; continued challenges in the credit environment; continued
equity market volatility; additional government intervention; bank instability; downgrades of sovereign, bank and commercial debt;
political issues affecting the handling of national debt; and the uncertainty arising from new government policies. This economic
turmoil has affected the economies of Europe, the United States and other mature economies in particular.
The fragility of the current situation would be exacerbated if additional negative economic developments were to arise. These
include defaults on government debt, exhaustion of U.S. and other national economic stimulus packages, significant increases in oil
prices, tax increases, a significant decline in the commercial real estate market, and policy missteps. Most recently, the economic
situation in Europe has been particularly unstable, arising from the real prospect of a default by Greece, Portugal, Spain and other
nations on their debt obligations. If such a default occurs, or if the measures taken to avert such a default create their own
instability, economic turmoil is likely to result, and the impact is likely to be global and highly significant. In addition, the so-called
“fiscal cliff” in the United States—the combination of expiring tax cuts and mandatory reductions in federal spending at the end of
2012—has the potential to have an impact on the economy and the stock market.
The severity of the economic environment and the response by financial institutions and governments may create new risks or
increase the impact of existing ones. These include the following:
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Depressed consumer and business confidence may continue to decrease cardholder spending.