Visa 2013 Annual Report Download - page 24

industry or another industry may also, by association, negatively impact our reputation, or result in
greater regulatory or legislative scrutiny or litigation against us. Any of these factors could materially
and adversely affect our business, financial condition and results of operations.
Government actions may prevent us from competing effectively against providers of domestic
payments services in certain countries, which may materially and adversely affect our ability to
maintain or increase our revenues and extend our global brands.
Governments in some countries provide resources or protection to select their domestic payment
card networks, brands and processors. These governments may impose regulatory requirements that
favor domestic providers or that mandate domestic payments processing be done entirely in that country.
For example, China UnionPay continues to enjoy advantages over international networks, remains the
sole processor of domestic transactions and operates the sole domestic acceptance mark in China.
These actions could impede us from utilizing our global processing capabilities for our financial institution
clients in those countries and substantially restrict our activities there. These actions could also force us
to leave countries where we presently have activity and keep us from entering new markets. Although we
are trying to effect change in these countries, we may not succeed. This could adversely affect our ability
to maintain or increase our revenues and extend our global brands.
Regulation in the areas of consumer privacy and data use and security could decrease the
number of Visa-branded cards issued, our payments volume and our revenues.
Privacy, data use and security continue to receive heightened legislative and regulatory focus in
the United States and elsewhere. For example, in many jurisdictions consumers must be notified in the
event of a data breach and those jurisdictions who have these laws are continuing to increase the
circumstances and the breadth of these notices. These measures may increase our and our clients’
costs. They may also decrease the number of Visa-branded cards our clients issue. This would
materially and adversely affect our profitability. In addition, our failure or the failure of our clients to
comply with these laws and regulations could result in fines, sanctions, litigation and damage to our
global reputation and our brands.
Evolving and increased global regulatory focus on the payments industry may result in costly
new compliance burdens on our clients and on us, leading to increased costs and decreased
payments volume and revenues.
Regulation of the payments industry has evolved and increased significantly. Examples include:
•Data protection and information security. Aspects of our operations and business are subject
to privacy and data protection regulation in the United States and elsewhere. Our financial
institution clients in the United States are subject to similar requirements under the guidelines
issued by the federal banking agencies. In addition, many U.S. states have enacted legislation
requiring consumer notification in the event of a security breach.
•Regulatory compliance. We are subject to anti-money laundering laws and regulations, including
the Bank Secrecy Act, as amended, including the USA PATRIOT Act of 2001. In addition, we
are also subject to the economic and trade sanctions programs administered by OFAC that
prohibit or restrict dealings with certain countries, their governments and, in certain
circumstances, their nationals, as well as with specifically-designated individuals and entities
such as narcotics traffickers, terrorists and terrorist organizations. Some of our clients located
outside of the United States may not be subject to these same laws, regulations and sanctions,
and, as a result, may initiate transactions that, while permissible in their countries, are not
permissible in the United States. We have policies, procedures, systems and controls in place to
identify and address potentially impermissible transactions but in the event these controls should
fail, we could be subject to penalties, reputational damage and loss of business.
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