Visa 2015 Annual Report Download - page 39

• The current economic environment could lead some clients to curtail or postpone near-term
investments in growing their card portfolios, limit credit lines, modify fees and loyalty
programs, or take other actions that adversely affect the growth of our volume and revenue
streams from these clients.
• Declines in stock prices or significant instability in the securities markets worldwide could
cause consumer spending to decline materially.
Any of these developments could harm our overall business.
A decline in non-U.S. and cross-border activity and in multi-currency transactions could
adversely affect our revenues and profitability.
• We generate a significant amount of our revenues from cross-border transactions, and our
clients pay us fees in connection with them. Cross-border transactions arise when the
country of origin of the issuer is different from that of the merchant. Some of these cross-
border transaction fees vary depending on the transaction currency and whether the
transaction currency is different than the account holder’s billing currency as provided to Visa
by his or her issuer. Additionally, adverse changes in exchange rates could reduce the
number of cross-border transactions which may harm our revenues.
• In addition, Visa derives revenue from foreign currency exchange activities that result when
our clients settle transactions in different currencies. A reduction in multi-currency
transactions may reduce the need for foreign currency exchange activities and adversely
affect our revenues. Limitations or changes in our ability to set foreign currency exchange
rates for multi-currency transactions as a result of regulation, changes to tax policy, litigation,
competitive pressures, reduced volatility in currency markets or other reasons may also
adversely affect our revenues.
• Cross-border travel may be adversely affected by global geopolitical, economic, social and
other conditions. These include the threat of terrorism, social or political instability, natural
disasters, effects of climate change and outbreaks of flu, viruses and other diseases. The
need for conversion of currencies declines as cross-border travel is impacted.
• Moreover, if our financial institution clients decide to change practices (e.g., prohibit certain
transactions or increase account holder fees associated with cross-border transactions),
there could be a decline in account holder spending because the value proposition to the
consumer could be reduced.
Transactions outside the U.S. represent an increasingly important part of our strategy, which we
hope will continue to grow. However, a decline in non-U.S. and cross-border activity and multi-currency
transactions would decrease the number of cross-border transactions we process and our revenues
and profitability may be materially and adversely affected as a consequence.
We risk loss or insolvency if our clients fail to fund settlement obligations for which we have
provided indemnifications.
We indemnify issuers and acquirers for any settlement loss they suffer due to the failure of another
issuer or acquirer to fund its settlement obligations in accordance with the Visa Rules. In certain
instances, we may indemnify issuers or acquirers even in situations in which a transaction is not
processed by our system. This indemnification creates settlement risk for us due to the difference in
timing between the date of a payment transaction and the date of subsequent settlement. While the
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