Visa 2013 Annual Report Download - page 48

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Results of Operations
Operating Revenues
Our operating revenues are primarily generated from payments volume on Visa-branded cards
and payment products for purchased goods and services, as well as the number of transactions
processed on our network. We do not earn revenues from, or bear credit risk with respect to, interest
or fees paid by account holders on Visa-branded cards or payment products. Our issuing clients have
the responsibility for issuing cards and other payment products, and determining the interest rates and
fees paid by account holders. We generally do not earn revenues from the fees that merchants are
charged for acceptance by the acquirers, including the merchant discount rate. Our acquiring clients
are generally responsible for soliciting merchants, and establishing and earning these fees.
The following sets forth the components of our operating revenues:
Service revenues consist mainly of revenues earned for providing financial institution clients with
support services for the delivery of Visa-branded payment products and solutions. Current quarter
service revenues are primarily assessed using a calculation of current pricing applied to the prior
quarter’s payments volume. Service revenues also include assessments designed to support ongoing
acceptance and volume growth initiatives, which are recognized in the same period the related volume
is transacted.
Data processing revenues are earned for authorization, clearing, settlement, network access and
other maintenance and support services that facilitate transaction and information processing among
our financial institution clients globally and with Visa Europe. Data processing revenues are also
earned for transactions processed by CyberSource’s online payment gateway platform. Data
processing revenues are recognized in the same period the related transactions occur or services are
rendered.
International transaction revenues are earned for cross-border transaction processing and
currency conversion activities. Cross-border transactions arise when the country of origin of the issuer
is different from that of the merchant. International transaction revenues are primarily generated by
cross-border payments and cash volume.
Other revenues consist mainly of license fees for use of the Visa brand, revenues earned from
Visa Europe in connection with the Visa Europe Framework Agreement, fees from account holder
services, licensing and certification, and other activities related to our acquired entities. Other revenues
also include optional service or product enhancements, such as extended account holder protection
and concierge services.
Client incentives consist of long-term contracts with financial institution clients and other business
partners for various programs designed to build payments volume, increase Visa-branded card and
product acceptance and win merchant routing transactions over our network. These incentives are
primarily accounted for as reductions to operating revenues.
Operating Expenses
Personnel includes salaries, incentive compensation, share-based compensation, fringe benefits
and contractor expense.
Network and processing mainly represents expenses for the operation of our processing network,
including maintenance, equipment rental and fees for other data processing services.
Marketing includes expenses associated with advertising and marketing campaigns, sponsorships
and other related promotions of the Visa brand.
40