Visa 2015 Annual Report Download - page 30

payments industry, and in some cases have already designated certain payment systems as
“systemically important payment systems” or “critical infrastructure.” For example, Visa
Europe was recently designated as systematically important by the Bank of England. Any
such oversight may lead to additional regulations by central banks and other government
regulators. These could include new settlement procedures, cyber security requirements or
other policies or operational rules to address settlement and operational risks. Increased
central bank oversight could also include new criteria for financial institution client
participation and merchant or other non-bank access to our payments system. For example,
in China, draft cyber security legislation may prevent companies like Visa from bringing
international best practice standards for fraud and risk management when the market is
open.
•Safety and soundness regulation. Banking regulations enacted in the U.S. and elsewhere
may make some financial institutions less likely to become an issuer of Visa-branded cards
because they may be subject to increased risk management or higher capital requirements.
•Regulation of Internet and mobile transactions. Legislation in various jurisdictions may make
it less desirable or more costly to complete Internet transactions using Visa-branded cards
by affecting the legality of those transactions, the laws that govern the transactions, their
taxation or the allocation of various intellectual property rights. In addition, new mobile
regulatory requirements could impact our business practices, for instance in China where
new regulation may prevent companies like Visa from introducing new technologies when
the market opens to them.
•Money transfer regulations. As we expand our product offerings, we may become subject to
U.S. federal and state money transfer regulations, international payments laws and other
existing, new or evolving regulations which could increase our regulatory oversight and
compliance costs.
Complying with these and other regulations increases our costs and can reduce our revenue
opportunities. Our programs and policies are designed to comply with anti-money laundering, anti-
terrorism, anti-corruption and sanctions regulations and other laws, and we continue to enhance them.
But, as regulations continue to evolve and regulatory oversight continues to increase, we cannot
guarantee that our programs and policies will be deemed compliant by all applicable regulatory
authorities. In the event our controls should fail or we are found to be out of compliance for other
reasons, we could be subject to monetary damages, civil and criminal money penalties, litigation and
damage to our global brand reputation. The impact of such regulations on our clients and on us may
increase compliance costs and reduce the volume of payments we process. Moreover, such
regulations can limit the types of products and services that we offer, the countries in which Visa-
branded cards are used and the types of account holders and merchants who can obtain or accept
Visa-branded cards, thereby harming our overall business.
Litigation Risks
Our U.S. retrospective responsibility plan may not adequately insulate us from the impact of
settlements or final judgments.
Our U.S. retrospective responsibility plan addresses monetary liabilities from settlements of, or
final judgments in, the U.S. covered litigation, which is described in Note 3—U.S. Retrospective
Responsibility Plan and Potential Visa Europe Liabilities to our consolidated financial statements
included in Item 8 of this report. The U.S. retrospective responsibility plan consists of several related
mechanisms to fund settlements or judgments in the U.S. covered litigation. These include an escrow
account funded with a portion of the net proceeds of our IPO and any subsequent offerings of our
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