Visa 2013 Annual Report Download - page 22

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competitors’ closed-loop payments systems with direct connections to both merchants and consumers.
In addition, we believe some issuers are charging new or higher fees to consumers. In some instances,
this makes Visa-branded cards and payment products less desirable and reduces our transaction
volumes and profitability. Some acquirers elect to charge higher discount rates to merchants,
regardless of the level of Visa interchange reimbursement rate, leading merchants not to accept Visa-
branded cards or payment products for payment or to steer account holders to alternate payment
systems. In addition, some issuers and acquirers have obtained, and may continue to obtain,
incentives from us and reductions in the rates that we charge in an effort to reduce the expense of their
card programs. For these reasons, additional regulation of interchange reimbursement rates may have
a material, adverse impact on our financial condition, revenues, results of operations, prospects for
future growth and overall business.
Additional regulations that prohibit us from contracting with clients or requiring them to use
only our network, or that deny them the option of selecting only our network, may decrease the
number of transactions we process, and materially and adversely affect our financial condition,
revenues, results of operations, prospects for future growth and overall business.
In order to provide account holders a consistent experience and transparency into the network
processing their transactions, we promote certain practices to ensure that Visa-branded cards are
processed over our network. We have historically had agreements with some issuers under which they
agree to issue certain payment cards that use only the Visa network or receive incentives if they do so.
In addition, certain issuers of some products have historically chosen to include only our network. We
refer to these various practices as network exclusivity.
In addition, certain network or issuer rules or practices may be viewed as limiting the routing
options of merchants when multiple debit networks co-reside on Visa debit cards. For example, Visa’s
rules require that an acquirer must process authorizations for all international transactions through
VisaNet and that a member must clear international transactions through VisaNet. These are
commonly referred to as routing rules.
The Dodd-Frank Act already limits our and issuers’ ability to adopt network exclusivity and
preferred routing in the debit area. See —The Dodd-Frank Act may continue to have a material,
adverse impact on our financial condition, revenues, results of operations, prospects for future growth
and overall business. Additional regulations like the Dodd-Frank Act in the United States and
elsewhere could materially decrease the number of transactions we process. In order to retain that
transaction volume, we would have to reduce the fees we charge to issuers or acquirers or increase
the payments and other incentives we provide to issuers, acquirers or merchants. Any of these
eventualities could have a material, adverse effect on our financial condition, revenues, results of
operations, prospects for future growth and overall business.
The Dodd-Frank Act may continue to have a material, adverse impact on our financial
condition, revenues, results of operations, prospects for future growth and overall business.
As of October 1, 2011, in accordance with the Dodd-Frank Act, the Federal Reserve capped the
maximum U.S. debit interchange reimbursement rate charged by large financial institutions at twenty-
one cents plus five basis points, before applying an interim fraud adjustment up to an additional one
cent. This amounted to a significant reduction from the average system-wide fees charged previously.
The Federal Reserve also issued regulations requiring issuers to make at least two unaffiliated
networks available for processing debit transactions on each debit card. The rules also prohibit us and
issuers from restricting a merchant’s ability to direct the routing of electronic debit transactions over
any of the networks that an issuer has enabled to process those transactions.
14