Visa 2013 Annual Report Download - page 35

in the event that the Cheque is not honored by its issuing institution. Additionally, from time to time, we
review and revise our risk management methodology and inputs as necessary. See Note 11—Settlement
Guarantee Management to our consolidated financial statements included in Item 8 of this report.
Some of our clients are composed of groups of financial institutions. Some of these clients have
elected to limit their responsibility for settlement losses arising from the failure of their constituent
financial institutions in exchange for managing their constituent financial institutions in accordance with
our credit risk policy. To the extent that any settlement failure resulting from a constituent financial
institution exceeds the limits established by our credit risk policy, we would have to absorb the cost of
such settlement failure, which could materially and adversely affect our cash flow.
If we cannot keep pace with rapid technological developments to provide new and innovative
payment programs and services or with new laws and regulations, the use of our products, our
revenues and net income could decline.
Rapid, significant technological changes continue to confront the payments industry. These
include developments in smart cards, eCommerce, mobile, and radio frequency and proximity payment
devices, such as contactless cards. We cannot predict the effect of technological changes on our
business. In addition to our own initiatives and innovations, we rely in part on third parties, including
some of our competitors, for the development of and access to new technologies. We expect that new
services and technologies applicable to the payments industry will continue to emerge. These new
services and technologies may be superior to, or render obsolete, the technologies we currently use in
our products and services. In addition, our ability to adopt new services and technologies that we
develop may be inhibited by industry-wide standards, new laws and regulations, resistance to change
from clients or merchants or third parties’ intellectual property rights. Our success will depend in part
on our ability to develop new technologies and adapt to technological changes and evolving industry
standards.
If our transaction processing systems are disrupted or compromised, the perception of our
brands, and our revenues or operating results could be materially and adversely affected.
Our transaction processing systems may experience service interruptions or degradation because
of processing or other technology malfunctions, fires, natural disasters, power losses, disruptions in
long-distance or local telecommunications access, fraud, military or political conflicts, terrorist attacks,
effects of climate change or other catastrophic events.
In addition, our visibility in the global payments industry may attract terrorists and hackers to
conduct physical or computer-based attacks. The latter could include computer viruses, worms or other
destructive or disruptive software, process breakdowns, denial-of-service attacks, malicious social
engineering or other malicious activities, or any combination of the foregoing. Any of these incidents
could result in a degradation or disruption of our services or damage to our properties, equipment and
data. They could also compromise data security. See —Account data breaches involving card or other
data processed, stored or transmitted by third parties or by us could adversely affect our reputation and
revenues. If such attacks are not detected immediately, their effect could be compounded. Finally,
potential and actual attacks could also result in increased costs, both for recovery and for prevention
against future attacks.
Additionally, we rely on service providers for the timely transmission of information across our
global data network. If a service provider fails to provide the communications capacity or services we
require because of a natural disaster, operational disruption, terrorism or any other reason, the failure
could interrupt our services. Because of the centrality of our processing systems to our business, any
interruption or degradation could adversely affect the perception of our brands’ reliability and materially
reduce our revenues or profitability.
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