Visa 2015 Annual Report Download - page 28

on debit cards or demand deposit account relationships. Many merchants have used the routing
regulations to redirect transactions or steer account holders to other debit networks based on lower
cost or other factors. Other clients and merchants are likely to take similar actions in the future.
Some elements of the Dodd-Frank Act lack definition and create the potential for networks to
pursue different strategies subject to their interpretation of the rules. Our interpretation may result in a
pursuit of strategies that may be less effective than those of our competitors. Overall, the regulations
and developments arising from the Dodd- Frank Act could harm our overall business.
New laws or regulations in one jurisdiction or of one product offering may lead to new laws or
regulations in other jurisdictions or of other product offerings.
Regulators around the world increasingly note each other’s approaches to the regulation of the
payments industry. Consequently, a development in one country, state or region may influence
regulatory approaches in another. The Dodd-Frank Act and the European Union interchange regulation
are developments with such potential. See Note 20—Legal Matters to our consolidated financial
statements included in Item 8 of this report.Similarly, new laws and regulations involving one product
offering may cause lawmakers there to extend the regulations to other product offerings. For example,
regulations affecting debit payments could eventually spread to credit payments.
The risks created by a new law or regulation have the potential to be replicated and to negatively
affect our business in another region or in other product offerings. We may face differing rules and
regulations in matters like interchange reimbursement rates, preferred routing, domestic processing
requirements, currency conversion, point of sale transaction rules and practices, privacy, and data use
or protection. As a result, the Visa Rules may differ from country to country or by product offering.
If widely varying regulations come into existence worldwide, we may have difficulty rapidly
adjusting our product offerings, services and fees, and other important aspects of our business in the
various regions. In addition, adverse developments, regulations and litigation with respect to our
industry or another industry may also, by association, negatively impact our reputation and result in
greater regulatory and legislative scrutiny or litigation against us. Any of these factors could harm our
overall business.
Government actions may prevent us from competing effectively against providers of domestic
payments services in certain countries.
Governments in some countries provide resources to or protection for 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. In
China, for example, UnionPay continues to enjoy advantages over international networks, remains the
sole processor of domestic transactions and operates the sole domestic acceptance mark. Though the
Chinese State Council has announced that international schemes, such as Visa, would be able to
participate in the domestic market and be eligible to apply for a license to operate a Bank Card
Clearing Institution (BCCI) in China, legislation and implementation guidelines for BCCI’s have yet to
be published and finalized. Meanwhile in Russia, National Payment Legislation has effectively
prevented Visa from processing in the domestic market and has mandated that Visa migrate its
domestic processing business to the state owned NSPK, which is the only entity allowed to process
domestically. National laws that mandate domestic processing may increase our costs and decrease
the number of Visa-branded cards issued or processed in those regions. 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 and in other countries that may adopt similar practices.
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
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