Visa 2012 Annual Report Download - page 26

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Table of Contents
Some existing clients have been placed in receivership or under government administration. Many financial institutions are
facing increased regulatory and governmental influence, including potential changes in laws and regulations. Many of our clients,
merchants that accept our brands, and cardholders who use our brands have been directly and adversely affected. 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, and our clients pay us fees in connection
with them. Some of those fees differ when 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 activity and the need for
transactions to be converted into a different currency.
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. Limitations or changes in our ability to set foreign currency exchange rates for multi-currency transactions as
result of regulation, litigation, competitive pressures or other reasons may also adversely affect our revenues.
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.
Moreover, if our clients decide to increase cardholder fees associated with cross-border transactions, there could be a decline
in cardholder spending, since our value proposition to the consumer could be reduced.
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
24
• Uncertainty and volatility in the performance of our clients' businesses may reduce the accuracy of our estimates of our
revenues, rebates, incentives and realization of prepaid assets.
• Our clients may implement cost-reduction initiatives that reduce or eliminate payment card marketing or increase
requests for greater incentives or additional expense reductions, which may reduce our revenues.
• Our clients may decrease spending for optional or enhanced services, affecting our revenue and reducing cardholders'
desire to use these products.
• Our clients may increase cardholder fees as a cost-recovery initiative, or as a result of regulatory action, decreasing our
value proposition to consumers and reducing consumers' desire to use our products.
• Government intervention or investments in our clients may negatively affect our business with those institutions or
otherwise alter their strategic direction away from our products.
•
Tightening of credit availability could affect the ability of participating financial institutions to lend to us under the terms of
our credit facility.
• The trading markets for U.S. government securities may be adversely affected by changes in investor sentiment. This
could arise from a number of market forces, including, among others, the U.S. government's inability to meet its
obligations or a possible further downgrade in its debt rating. This in turn could adversely affect the liquidity of our
investments, a substantial portion of which are U.S. treasury and government securities.
• Our clients may default on their settlement obligations, including for reasons unrelated to payment card activity, such as
mortgage matters.
• Adverse fluctuations in foreign currency exchange rates could negatively affect the dollar value of our revenues and
payments in foreign currencies.
• The current economic environment could lead some clients to curtail or postpone near-
term investments in growing their
card portfolios, limit credit lines, modify fee and loyalty programs, or take other actions that adversely affect the growth
of our volume and revenue streams from these clients.
•
Declines in stock prices or significant instability could cause consumer spending to decline materially.