Visa 2013 Annual Report Download - page 30

• new players and intermediaries in the value chain may direct the payment decision-making or
impair the value of the services we provide.
Our failure to compete effectively in light of any such developments could materially and adversely
affect our business, financial condition, revenues, results of operations and prospects for future growth.
Disintermediation from the payments value chain would harm our business.
Our position in the payments value chain is key to our business. Some of our competitors,
including American Express, Discover, private-label card networks and certain alternate payments
systems, operate closed-loop payments systems, with direct connections to both merchants and
consumers without any intermediaries. These competitors seek to derive competitive advantages from
this business model. Regulatory actions such as the Dodd-Frank Act may provide them with increased
opportunity to do so. In addition, although other competitors are pursuing similar lines of business or
adopting similar commercial models, they have not attracted the same level of legal or regulatory
scrutiny of their pricing and business practices as operators of multi-party payments systems such as
ours.
We also run the risk of disintermediation by virtue of increasing bilateral agreements between
entities that would rather not use a payment network for processing payments. For example,
merchants could process transactions directly with issuers, or processors could process transactions
directly between issuers and acquirers.
Additional consolidation in the banking industry could result in us losing business and create
pressure on the fees we charge our clients, which could materially and adversely affect our
business, revenues, results of operations and prospects for future growth.
Additional consolidation in the banking industry may result in the acquisition of one or more of our
largest clients by an institution with a strong relationship with one of our competitors or with one of our
competitors directly. This could result in the acquired financial institution’s Visa business shifting to a
competitor, resulting in a substantial loss of business to us.
Additional consolidation in the banking industry could also reduce the overall number of new and
existing clients and could increase their negotiating power. This consolidation could lead new financial
institution clients to seek greater pricing discounts or other incentives with us. In addition, more
consolidation could prompt our existing clients to seek to renegotiate their pricing agreements with us
to obtain more favorable terms. We may also be adversely affected by price compression should one
of our clients absorb another financial institution and qualify for higher volume-based discounts on the
combined volumes of the merged businesses. Pressure on the fees we charge our clients caused by
such consolidation could materially and adversely affect our business, revenues, results of operations
and prospects for future growth.
Merchants’ continued focus on the costs associated with payment card acceptance may result
in more litigation, regulation, regulatory enforcement, incentive arrangements and other
initiatives.
We rely in part on merchants and their relationships with our clients to maintain and expand the
acceptance of Visa-branded payment cards. Consolidation in the retail industry is producing a group of
larger merchants that is having a significant impact on all participants in the global payments industry.
Some merchants have sought to reduce their costs associated with payment card acceptance by
lobbying for new legislation and regulatory enforcement and by filing lawsuits. If they continue, we may
face increased compliance and litigation expenses.
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