Visa 2012 Annual Report Download - page 42

Download and view the complete annual report

Please find page 42 of the 2012 Visa annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 136

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136

Table of Contents
hedging program. We expect the impacts of our hedging program to continue to minimize the effect of exchange rate movements
during fiscal 2013 . See Note 13—Derivative Financial Instruments to our consolidated financial statements.
The following table sets forth the components of our total operating revenues:
Data processing revenues for fiscal 2012 also benefited from overall growth in processed transactions of 5% , which
reflected an anticipated decline in U.S. debit transactions processed as a result of certain provisions of the Dodd-Frank
Act becoming effective the third quarter of fiscal 2012. The deceleration in processed transaction growth was led by
Interlink, one of our lowest yielding products in the U.S., which decreased 51% in the second half of fiscal 2012
compared to the same prior year period. This negative impact was more than offset by solid growth in CyberSource
billable transactions, Visa transactions processed outside of the U.S., U.S. credit transactions and Visa Debit
transactions, which exclude Interlink.
Data processing revenues increased in fiscal 2011 primarily due to 12% growth in processed transactions and inclusion
of a full year of revenue attributable to CyberSource. This growth was partially offset by the effects of negotiated pricing
from certain client contracts and a change to present revenues and offsetting expenses associated with the processing of
non-Visa network transactions on a net basis instead of a gross basis.
40
Fiscal Year ended
September 30,
$ Change
% Change
(1)
2012
2011
2010
2012
vs.
2011
2011
vs.
2010
2012
vs.
2011
2011
vs.
2010
(in millions, except percentages)
Service revenues
$
4,872
$
4,261
$
3,497
$
611
$
764
14
%
22
%
Data processing revenues
3,975
3,478
3,125
497
353
14
%
11
%
International transaction revenues
3,025
2,674
2,290
351
384
13
%
17
%
Other revenues
704
655
713
49
(58
)
7
%
(8
)%
Client incentives
(2,155
)
(1,880
)
(1,560
)
(275
)
(320
)
15
%
21
%
Total Operating Revenues
$
10,421
$
9,188
$
8,065
$
1,233
$
1,123
13
%
14
%
(1)
Figures in the table may not recalculate exactly due to rounding. Percentage changes are calculated based on whole numbers,
not the rounded numbers presented.
• Service revenues increased in fiscal 2012 primarily due to 10% growth in nominal payments volume. The growth in
service revenues was greater than the growth in nominal payments volume primarily reflecting differences in geography-
specific pricing. Service revenues increased in fiscal 2011 primarily due to 16% growth in nominal payments volume
combined with benefits from competitive pricing actions.
• Data processing revenues increased in fiscal 2012 primarily as a result of the implementation of our strategy to mitigate
the negative impacts from the Dodd-Frank Act to some extent through pricing modifications and working with our clients
and other business partners to win merchant preference to route transactions over our network. This price restructuring
included the implementation of the Fixed Acquirer Network Fee, which was partially offset by reductions in certain
variable fees. While data processing fees benefited from the price restructuring that became effective in the third quarter
of fiscal 2012 , increased merchant and acquirer incentives executed as part of this strategy resulted in higher client
incentive levels, which partially offset this increase.
• International transaction revenues increased in fiscal 2012 and 2011 primarily reflecting 11% and 18% growth in nominal
cross-border volume, respectively.
• Other revenues increased in fiscal 2012 primarily due to an increase in license fees as a result of payments volume
growth. Other revenues decreased in fiscal 2011 primarily due to a change to present revenues and offsetting expenses
related to the Visa Extras rewards program on a net basis instead of a gross basis, and as a result of a large issuer that
converted away from the platform entirely in June 2010. The decrease was partially offset by increases in license fees
and the inclusion of revenue from our acquired entities.