16 / 354
4
Risk Factors
Risks related to the Group’s business and industry
16
Worldline
2016 Registration Document
activities.
the Group’s merchant clients or others engage in fraudulent
chargebacks resolved in favor of their customers, and when
Commercial Acquiring business refuse or cannot reimburse
The Group incurs liability when its merchant clients in its
cardholder. In the context of the Group’s Commercial Acquiring
purchase price is credited or otherwise refunded to the
transaction is normally “charged back” to the merchant and the
merchant is not resolved in favor of the merchant, the
In the event that a dispute between a cardholder and a
operations, particularly with respect to its e-Commerce services.
on the Group’s business, financial condition and results of
by the Group’s merchants could have a material adverse effect
chargebacks in the future. Any increase in chargebacks not paid
cardholder. The Group may experience significant losses from
Group bears the loss for the amount of the refund paid to the
any other reason, to reimburse the Group for a chargeback, the
the merchant refuses or is unable, due to closure, bankruptcy or
the merchant’s account or reserve account (if applicable), or if
business, if the Group is unable to collect such amounts from
approved by the Group are not paid.
services, the Group pays indemnities to customers when checks
Similarly, in the context of the Group’s check processing
fraud could increase in the future.
to incur other liabilities. Moreover, it is possible that incidents of
clients and card management organizations, or cause the Group
Group’s reputation and jeopardize its relationships with its bank
could increase the Group’s chargeback liability, damage the
and fraud. Failure to effectively manage risk and prevent fraud
methods to engage in illegal activities such as counterfeiting
services sold. Criminals are using increasingly sophisticated
invalid card, or intentionally fails to deliver the merchandise or
credentials to record a false sales or credit transaction, uses an
counterfeit credit or debit card, card number, or other
a merchant or other party knowingly uses a stolen or
merchants or others. Examples of merchant fraud include when
electronic payment transactions or credits initiated by
Additionally, the Group has potential liability for fraudulent
assurances can be given that insurance coverage to protect
business, results of operations and financial condition. No
obligations could have a material adverse effect on the Group’s
Defaults by the Group’s merchants on their reimbursement
business, financial condition, results of operations and prospects.
merchants could have a material adverse effect on the Group’s
future. Any increase in chargebacks not paid by the Group’s
may experience significant losses from chargebacks in the
requesting collateral and setting caps for monthly processing, it
merchant-related credit risk by establishing reserve accounts,
against certain such losses will be effective and adequate.
Although the Group has put in place policies to manage
financial condition and results of operations.
have a materially adverse effect on the Group’s business,
respect to the payment processing industry in general could
mechanism for consumers or adverse developments with
A decline in the use of credit or debit cards as a payment
cards and other payment forms which is adverse to the Group, it
change in the mix of payments between cash, credit and debit
payment mechanism for their transactions or if there is a
If consumers do not continue to use credit or debit as a
the Group’s revenue could be significantly affected. Also, if
payments effected through digital and data processing services,
outstrips or occurs faster than the increase in the market for
card-based payment market decreases and such decrease
digital and data processing areas. To the extent that the overall
to cashless payments by means other than cards using other
A smaller, but growing, portion of the Group’s business is linked
the Group’s business is linked to credit and debit card payments.
financial condition and results of operations. A substantial part of
could have a material adverse effect on the Group’s business,
operations and prospects may be adversely affected.
do business, the Group’s business, financial condition, results of
regulation that makes it more difficult for the Group’s clients to
payments industry in general, such as new legislation or
absorbed. Moreover, if there is an adverse development in the
higher maturity levels and the initial development expenses are
profitability could decrease, at least temporarily until they reach
margins are lower in these new areas, then the Group’s
terms could harm the Group’s business, particularly in
Failure to renew agreements with customers on acceptable
high.
segments of its business where customer concentration is
to provide the same or similar services or cease outsourcing the
increase or decrease its scope, seek out the Group’s competitors
choice to either renegotiate their contract with the Group,
years. At the end of a contract’s term, the Group’s clients have a
public sector clients in Latin America have terms of up to 10
length from three to five years, while certain of its contracts with
Group’s business. The Group’s client contracts typically vary in
Failure to renew client contracts could negatively impact the
adversely affected.
business, results of operations and financial condition may be
rates and contract terms that are favorable to it, the Group’s
customer. If the Group is unsuccessful in retaining high renewal
economic needs or pressures being experienced by the
agreed with the Group due to pricing competition or other
Further, certain clients may seek to lower prices previously
clients’ business experiences significant volume changes.
Group when seeking to renew or extend contracts, or when the
relevant activity. Customers may seek price reductions from the