Visa 2013 Annual Report Download - page 31

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We also face competitive pressures on pricing. We and our clients negotiate pricing discounts and
other incentive arrangements with certain large merchants to increase acceptance and usage of Visa-
branded payment cards. If merchants continue to consolidate, we and our clients may have to increase
the incentives provided to certain larger merchants. Some merchants also continue to invest in their
own payment solutions, using both traditional and new technology platforms. Examples include closed-
loop payment systems that are specific to a single merchant or multi-merchant solutions like the
Merchant Customer Exchange, which is designed for a mobile platform and has many merchant
participants. Such programs may offer unique or specialized benefits to consumers, including
discounts or customized offers. If merchants are able to drive broad consumer adoption and usage, it
could adversely impact our transaction volume.
All of these factors could materially and adversely affect our revenues, results of operations,
prospects for future growth and overall business. Competitive and regulatory pressures on pricing
could make it difficult to offset the cost of these incentives.
Certain financial institutions have exclusive, or nearly exclusive, relationships with our
competitors to issue payment cards, and these relationships may adversely affect our ability to
maintain or increase our revenues.
Certain financial institutions have longstanding exclusive, or nearly exclusive, relationships with
our competitors to issue payment cards. These relationships may make it difficult or cost-prohibitive for
us to conduct material amounts of business with them. In addition, these financial institutions may be
more successful and may grow more quickly than our existing clients, which could put us at a
competitive disadvantage and prevent us from growing our business and revenues.
Failure to maintain relationships with issuers, acquirers, merchants and account holders, and
the failure of our financial institution clients to provide services on our behalf could materially
and adversely affect our business.
We depend and will continue to depend significantly on relationships with our financial institution
clients and on their relationships with account holders and merchants to support and to compete
effectively for our programs and services. We do not issue cards, extend credit to account holders or
determine the interest rates or other fees charged to account holders using cards that carry our
brands. Each issuer determines these competitive card features for their customers.
In the wake of the Dodd-Frank Act’s changes to the network exclusivity rules, we have engaged
and will continue to engage in significantly more discussions with merchants, acquirers and
processors. We already engage in many co-branding efforts, in which we contract with merchants, who
directly receive incentive funding from us. We also engage with merchants, acquirers and processors
to provide funding to promote routing and acceptance growth. As these and other relationships
become more prevalent and take on a greater importance to our business, our success will
increasingly depend on our ability to sustain and grow these relationships.
Outside the United States, some governments only permit their domestic processing, which prohibits
us from overseeing the end-to-end processing of the transactions. Therefore, we depend on our close
working relationships with our clients in these regions to effectively manage the processing of
transactions involving Visa-branded cards. Our inability to oversee the end-to-end processing for cards
carrying our brands in these countries may put us at a competitive disadvantage by limiting our ability to
ensure the quality of the services supporting our brands.
In addition, we depend on third parties to provide various services associated with our payments
network on our behalf, and to the extent that such third-party vendors fail to perform or deliver
adequate services, our business and reputation could be impaired.
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