What changed in this filing

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Item 1A. Risk Factors

2022-02-18 compared with 2021-02-19 · 100 added, 106 removed, 284 unchanged (42% of the section changed)

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The risks identified below are not all encompassing but should be considered in establishing an opinion of our future operations.

If any of the events contemplated by the following discussion of risks should occur, our business, results of operations, financial condition and cash flows could suffer significantly.

If any of the events contemplated by the following discussion of risks should occur, our business, financial condition, results of operations and cash flows could suffer significantly.

As a result, the market price of our common stock could decline and you may lose all or part of your investment in our common stock.

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As a result, we follow a defense-in-depth model for cybersecurity, meaning we proactively seek to employ multiple methods at different layers to defend our systems against intrusion and attack and to protect the data we collect.

However, we cannot be certain that these measures will be successful and will be sufficient to counter all current and emerging technology threats.

However, we cannot be certain that these measures will be successful or will be sufficient to counter all current and emerging technology threats.

Our computer systems and/or our associated third parties’ computer systems could be subject to penetration, and our data protection measures may not prevent unauthorized access.

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Any misuse or compromise of personal information or failure to adequately enforce these contractual requirements could result in liability, protracted and costly litigation and, with respect to misuse of personal information of our customers, lost revenue and reputational harm.

Any type of security breach, attack or misuse of data described above or otherwise, whether experienced by us or an associated third party, could harm our reputation and deter existing and prospective customers from using our services or from making electronic payments generally, increase our operating expenses in order to contain and remediate the incident, expose us to unanticipated or uninsured liability, disrupt our operations (including potential service interruptions), distract our management, increase our risk of litigation or regulatory scrutiny, result in the imposition of penalties and fines under state, federal and foreign laws or by the card networks, and adversely affect our continued card network registration or membership

and financial institution sponsorship.

Any type of security breach, attack or misuse of data described above or otherwise, whether experienced by us or an associated third party, could harm our reputation and deter existing and prospective customers from using our services or from making digital payments generally, increase our operating expenses in order to contain and remediate the incident, expose us to unanticipated or uninsured liability, disrupt our operations (including potential service interruptions), distract our management, increase our risk of litigation or regulatory scrutiny, result in the imposition of penalties and fines under state, federal and foreign laws or by the card networks, and adversely affect our continued card network registration or membership and financial

institution sponsorship.

Our removal from networks' lists of Payment Card Industry Data Security Standard compliant service providers could mean that existing customers, sales partners or other third parties may cease using or referring our services.

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Our services are based on software and computing systems that often encounter development delays, and the underlying software may contain undetected errors, viruses or defects.

Defects in our software services and errors or delays in our processing of electronic transactions could result in additional development costs, diversion of technical and other resources from our other development efforts, loss of credibility with current or potential customers, harm to our reputation and exposure to liability claims.

Defects in our software services and errors or delays in our processing of digital transactions could result in additional development costs, diversion of technical and other resources from our other development efforts, loss of credibility with current or potential customers, harm to our reputation and exposure to liability claims.

In addition, we rely on technologies and software supplied by third parties that may also contain undetected errors, viruses or defects that could have a material adverse effect on our business, financial condition, results of operations and cash flows.

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Many of our contractual agreements with financial institutions and certain other customers require the payment of penalties if we do not meet certain operating standards.

Our systems and operations or those of our third-party providers could be exposed to damage or interruption from, among other things, fire, natural disaster, power loss, telecommunications failure, terrorist acts, war, unauthorized entry, human error, and computer viruses or other defects.

Our systems and operations or those of our third-party providers could be exposed to damage or interruption from, among other things, fire, climate-related events, including extreme weather events, natural disasters, pandemics, power loss, telecommunications failure, terrorist acts, war, unauthorized entry, human error, and computer viruses or other defects.

Defects in our systems or those of third parties, errors or delays in the processing of payment transactions, telecommunications failures, or other difficulties (including those related to system relocation) could result in loss of revenues, loss of customers, loss of merchant and cardholder data, harm to our business or reputation, exposure to fraud losses or other liabilities, negative publicity, additional operating and development costs, fines and other sanctions imposed by card networks, and/or diversion of technical and other resources.

The payments technology industry is highly competitive, and some of our competitors are larger and have greater financial and operational resources than we do, which may give them an advantage with respect to the pricing of services offered to customers and the ability to develop new technologies.

We operate in the payments technology industry, which is highly competitive.

In this industry, our primary competitors include other independent payment processors, credit card processing firms, as well as financial institutions, ISOs, prepaid programs managers and, potentially, card networks.

We compete with many larger companies that have greater financial and operational resources than we have.

There is also a risk that third-party suppliers of hardware and infrastructure required to support our employee productivity or our vendors could be affected by supply chain disruptions, such as manufacturing and shipping delays.

An extended supply chain disruption could also affect the delivery of our services.

The payments technology industry is highly competitive and highly innovative, and some of our competitors have greater financial and operational resources than we do, which may give them an advantage with respect to the pricing of services offered to customers and the ability to develop new and disruptive technologies.

We operate in the payments technology industry, which is highly competitive and highly innovative.

In this industry, our primary competitors include other independent payment processors, credit card processing firms, third-party card processing software institutions, as well as financial institutions, ISOs, prepaid programs managers and, potentially, card networks.

Some of our current and potential competitors may be larger than we are and have greater financial and operational resources or brand recognition than we have.

Our competitors that are financial institutions or subsidiaries of financial institutions do not incur the costs associated with being sponsored by a direct member for participation in the card networks, as we do in certain jurisdictions, and may be able to settle transactions more quickly for merchants than we can.

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These attributes may provide them with a competitive advantage in the market.

Additionally, the market for prepaid cards, demand deposit accounts and alternative financial services is similarly highly competitive and competition is increasing as more companies endeavor to address the needs of underbanked consumers.

We anticipate increased competition from alternative financial services providers who are often well positioned to service the underbanked and who may wish to develop their own prepaid card or demand deposit account programs.

We also face strong price competition.

To stay competitive, we may have to increase the incentives that we offer to our distributors and reduce the prices of our services, which could adversely affect our financial position, operating results and cash flows.

Furthermore, we are facing increasing competition from nontraditional competitors, including new entrant technology companies, who offer certain innovations in payment methods.

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In addition, some nontraditional competitors, such as private companies or startup companies, may be less risk averse than we are and, therefore, may be able to respond more quickly to market demands.

These competitors may compete in ways that minimize or remove the role of traditional card networks, acquirers, issuers and processors in the electronic payments process.

If these nontraditional competitors gain a greater share of total electronic payments transactions, it could have a material adverse effect on our business, financial condition, results of operations and cash flows.

These competitors may compete in ways that minimize or remove the role of traditional card networks, acquirers, issuers and processors in the digital payments process.

If these nontraditional competitors gain a greater share of total digital payments transactions, it could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Additionally, the market for prepaid cards, demand deposit accounts and alternative financial services is similarly highly competitive, and competition is increasing as more companies endeavor to address the needs of underbanked consumers.

We also face strong price competition.

In order to remain competitive and to continue to increase our revenues and earnings, we must continually and quickly update our services, a process that could result in higher costs and the loss of revenues, earnings and customers if the new services do not perform as intended or are not accepted in the marketplace.

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Furthermore, as the market for alternative payment processing services evolves, it may develop too rapidly or not rapidly enough for us to recover the costs we have incurred in developing new services targeted at this market.

In addition, certain of the services we deliver to the payments technology markets are designed to process very complex transactions and deliver reports and other information on those transactions, all at very high volumes and processing speeds.

In addition, certain of the services we deliver to the payments technology market are designed to process very complex transactions and deliver reports and other information on those transactions, all at very high volumes and processing speeds.

Any failure to deliver an effective and secure product or any performance issue that arises with a new product or service could result in significant processing or reporting errors or other losses.

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If we fail to comply with the applicable requirements of the card networks, the card networks could seek to fine us, suspend us or terminate our registrations or membership.

The termination of our registrations or our membership or our status as a service provider or a merchant processor, or any changes in card association or other network rules or standards, including interpretation and implementation of the rules or standards, that increase the cost of doing business or limit our ability to provide transaction processing services to our customers, could have a material adverse effect on our business, financial

condition, results of operations and cash flows.

If a merchant or an ISO customer fails to comply with the applicable requirements of the card associations and networks, we or the merchant or ISO could be subject to a variety of fines or penalties that may be levied by the card associations or networks.

If a merchant or an ISO customer fails to comply with the applicable

requirements of the card associations and networks, we or the merchant or ISO could be subject to a variety of fines or penalties that may be levied by the card associations or networks.

If we cannot collect or pursue collection of such amounts from the applicable merchant or ISO, we may have to bear the cost of such fines or penalties, resulting in lower earnings for us.

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Increased merchant, referral partner or ISO attrition could cause our financial results to decline.

We experience attrition in merchant credit and debit card processing volume resulting from several factors, including business closures, transfers of merchants accounts to our competitors, unsuccessful contract renewal negotiations and account closures that we initiate for various reasons, such as heightened credit risks or contract breaches by merchants.

We experience attrition in merchant credit and debit card processing volume resulting from several factors, including business closures, transfers of merchant accounts to our competitors, unsuccessful contract renewal negotiations and account closures that we initiate for various reasons, such as heightened credit risks or contract breaches by merchants.

Our referral partners are a significant source of new business.

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As part of our strategy to achieve this expansion, we look for acquisition opportunities, investments and alliance relationships with other businesses that will allow us to increase our market penetration, technological capabilities, product offerings and distribution capabilities.

We may not be able to successfully identify suitable

acquisition, investment and alliance candidates in the future, and if we do, they may not provide us with the value and benefits we anticipate.

We may not be able to successfully identify suitable acquisition, investment and alliance candidates in the future, and if we do, they may not provide us with the value and benefits we anticipate.

Our expansion into new markets is also dependent upon our ability to apply our existing technology or to develop new applications to meet the particular service needs of each new market.

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We may also face increased scrutiny from governmental authorities as a result of increasing the size of our business.

There may be a decline in the use of cards and other electronic payments as a payment mechanism for consumers or other adverse developments with respect to the card industry in general.

If consumers do not continue to use credit, debit or GPR prepaid debit cards or other electronic payment methods of the type we process as a payment mechanism for their transactions or if there is a change in the mix of payments between cash, checks, credit cards and debit or GPR prepaid debit cards, which is adverse to us, it could have a material adverse effect on our business, financial condition, results of operations and cash flows.

There may be a decline in the use of cards and other digital payments as a payment mechanism for consumers or other adverse developments with respect to the card industry in general.

While the COVID-19 pandemic has accelerated the digitization in payments, if consumers do not continue to use credit, debit or GPR prepaid debit cards or other digital payment methods of the type we process as a payment mechanism for their transactions or if there is a change in the mix of payments between cash, checks, credit cards and debit or GPR prepaid debit cards, which is adverse to us, it could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Consumer credit risk may make it more difficult or expensive for consumers to gain access to credit facilities such as credit cards.

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If we do not renew or renegotiate our agreements on favorable terms with our customers within the Issuer Solutions segment, our business will suffer.

The timing of the conversions or deconversions of card portfolio may also affect our revenues and expenses.

The timing of the conversions or deconversions of card portfolios may also affect our revenues and expenses.

A significant amount of our Issuer Solutions segment revenues is derived from long-term contracts with large financial institutions and other financial service providers.

The financial position of these customers and their willingness to pay for our services are affected by general market positions, competitive pressures and operating margins within their industries.

When our long-term contracts expire, the time of renewal or renegotiation presents our customers with the opportunity to consider other providers, transition all or a portion of the services we provide in-house or seek lower rates for our services.

When our long-term contracts near expiration, the renewal or renegotiation of the contract presents our customers with the opportunity to consider other providers, transition all or a portion of the services we provide in-house or seek lower rates for our services.

Additionally, as we modernize the technology platform we use to deliver services, some Issuer Solutions customers may not be agreeable to our modernization effort, and may choose to end their contracts prematurely, or not renew their contracts, as a result.

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In addition, the timing of the conversion of card portfolios of new payment processing customers to our processing systems and the deconversion of existing customers to other systems affects our revenues and expenses.

Due to a variety of factors, conversions and deconversions may not occur as scheduled and this may have a material adverse effect on our financial position and results of operations.

Due to a variety of

factors, conversions and deconversions may not occur as scheduled and this may have a material adverse effect on our financial position and results of operations.

We incur chargeback losses when our merchants refuse or cannot reimburse us for chargebacks resolved in favor of their customers.

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Fraud by merchants, prepaid cardholders or others and losses from overdrawn cardholder accounts could have an adverse effect on our financial condition, results of operations and cash flows.

We have potential liability for fraudulent electronic payment transactions or credits initiated by merchants or others, and our prepaid card programs expose us to threats involving the misuse of cards, collusion, fraud and identity theft.

We have potential liability for fraudulent digital payment transactions or credits initiated by merchants or others, and our prepaid card programs expose us to threats involving the misuse of cards, collusion, fraud and identity theft.

Criminals are using increasingly sophisticated methods to engage in illegal activities such as counterfeiting and fraud.

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Increases in chargebacks or other liabilities could have a material adverse effect on our financial condition, results of operations and cash flows.

Additionally, COVID-19 has negatively affected the financial viability and operations of certain merchants.

Additionally, the COVID-19 pandemic, as well as macroeconomic conditions such as rising inflation and increased costs for labor and supplies, has negatively affected or may continue to affect the financial viability and operations of certain merchants.

These consolidated financial statements reflect management’s estimates and assumptions related to allowances for transaction and credit losses utilizing the most currently available information.

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The integration and conversion of our acquired operations or other future acquisitions, if any, could result in increased operating costs if the anticipated synergies of operating these businesses as one are not achieved, a loss of strategic opportunities if management is distracted by the integration process, and a loss of customers if our service levels drop during or following the integration process.

The acquisition, integration, and conversion of businesses and the formation or operation of alliances, such as the Merger or joint ventures and other partnering arrangements, involve a number of risks.

The acquisition, integration, and conversion of businesses and the formation or operation of alliances or joint ventures and other partnering arrangements involve a number of risks.

Core risks are in the area of valuation (negotiating a fair price for the business based on sometimes limited diligence) and integration and conversion (managing the complex process of integrating the acquired company's people, services, information security and technology and other assets to realize the projected value of the acquired company and the synergies projected to be realized in connection with the acquisition).

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enforcement of intellectual property rights in some foreign countries;

difficulty entering new foreign markets due to,

among other things, customer acceptance and business knowledge of those new markets;

difficulty entering new foreign markets due to, among other things, customer acceptance and business knowledge of those new markets;

and general economic and political conditions.

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Any new implementation of or changes made to laws, regulations or other industry standards affecting our business in any of the geographic regions in which we operate may require significant development efforts or have an unfavorable effect on our financial results and our cash flows.

Our business is affected by laws and regulations and examinations that affect us and our industry in the countries in which we operate.

As a payments technology company, our business is affected by laws and complex regulations and examinations that affect us and our industry in the countries in which we operate.

Regulation and proposed regulation of the payments industry has increased significantly in recent years.

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Any such designation would result in increased regulatory burdens on our business, which increases our risk profile and may have an adverse effect on our business, financial condition, results of operations and cash flows.

All persons offering or providing financial services or products to consumers, directly or indirectly, can be subject to prohibitions against unfair, deceptive, or abusive acts or practices under the Dodd-Frank Act.

More generally, all persons engaged in commerce, including, but not limited to, us and our merchant and financial institution customers, are also subject to Section 5 of the Federal Trade Commission ("FTC") Act prohibiting unfair or deceptive acts or practices ("UDAP").

In addition, there are other laws, rules and or regulations, including the Telemarketing Sales Act, that may directly affect us or the activities of our merchant customers and in some cases may subject us to investigations, fees, fines and disgorgement of funds in the event we are deemed to have aided and abetted or otherwise provided the means and instrumentalities to facilitate the illegal activities of the merchant through our payment processing services.

Various federal and state regulatory enforcement agencies, including the FTC, the CFPB and the states’ attorneys general have the authority to take action against nonbanks that engage in UDAP or violate other laws, rules or regulations and, to the extent we are in violation of these laws, rules or

regulations or processing payments for a merchant that may be in violation of these laws, rules or regulations, we may be subject to enforcement actions and as a result may incur losses and liabilities.

In many countries, we are legally or contractually required to comply with the anti-money laundering laws and regulations, such as, in the United States, the Bank Secrecy Act and similar laws of other countries, which require that customer identifying information be obtained and verified.

In some countries, we are directly subject to these requirements;

in other countries, we have contractually agreed to assist our financial institution customers with their obligation to comply with anti-money laundering requirements that apply to them.

In addition, we and our sponsor financial institutions are subject to the laws and regulations enforced by OFAC, which prohibit U.S.

Because we directly or indirectly offer or provide financial services or products to consumers, we are subject to prohibitions against unfair, deceptive, or abusive acts or practices under the Dodd-Frank Act.

More generally, all persons engaged in commerce, including, but not limited to, us and our merchant and financial institution customers, are subject to Section 5 of the Federal Trade Commission ("FTC") Act prohibiting unfair or deceptive acts or practices ("UDAP").

We also have businesses that are subject to credit reporting and debt collection laws and regulations in the U.S.

Various federal and state regulatory enforcement agencies, including the FTC, the CFPB and the states’ attorneys general, have the authority to take action against nonbanks that engage in UDAP or violate other laws, rules or regulations and, to the extent we are in violation of these laws, rules or regulations or processing payments for a merchant that may be in violation of these laws, rules or regulations, we may be subject to enforcement actions and as a result may incur losses and liabilities.

Certain of our subsidiaries are subject to, among others, privacy, anti-money laundering and debt collection regulations.

In addition, we and our sponsor financial institutions are subject to the laws and regulations enforced by OFAC, which prohibit

persons from engaging in transactions with certain prohibited persons or entities.

Similar requirements apply in other countries.

Our failure to comply with any of these contractual requirements or laws could adversely affect our business, financial credit results of operations and cash flows.

We are also subject to a variety of foreign and domestic laws, and their implementing regulations, which establish requirements for the collection, processing, storage, use and disclosure of personal information, require notice to individuals of privacy practices, and provide individuals with certain rights to prevent use and disclosure of protected information.

For example, we are subject to applicable privacy and information security regulations in the regions where we operate;

the Payment Services Directive in Europe;

General Data Protection Regulation;

The Code of Conduct for the Credit and Debit Card Industry in Canada (issued by Canada's Department of Finance);

the California Consumer Protection Act;

the Housing Assistance Tax Act of 2008 in the United States;

HIPAA and other health privacy regulations and a myriad of U.S.

federal and state consumer protection laws and state escheat regulations.

In addition, the U.K.

Payment Systems Regulator has increased its oversight of the card acquiring industry.

We are also subject to examination by the FFIEC as a result of our provision of data processing services to financial institutions.

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Compliance with these laws and regulations can be costly and time consuming, adding a layer of complexity to business practices and innovation.

As with other regulatory schemes, our failure to comply could result in public or private enforcement action and accompanying litigation costs, losses, fines and penalties.

Portions of our business may be subject to the FDCPA, the FCRA and similar state laws.

These debt collection laws are designed to eliminate abusive, deceptive and unfair debt collection practices and may require licensing at the state level.

If we fail to comply with any of these laws, to the extent they are applicable to us, we may be subject to fines, penalties and litigation.

As with other regulatory schemes, our failure to comply could result in public or private enforcement action and accompanying litigation costs, losses, fines and penalties, which could adversely affect our business, financial condition, results of operations and cash flows.

With respect to our Business and Consumer Solutions segment, because each distributor offers prepaid cards, reload services and/or money remittance services as an agent of Business and Consumer Solutions, or another third party, we do not believe that the distributors themselves are required to become licensed as money transmitters in order to engage in such activity.

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Even an inadvertent failure to comply with laws and regulations, as well as rapidly evolving social expectations of corporate fairness, could damage our business or our reputation.

If varying or conflicting regulations come into existence across the jurisdictions in which we operate, we may have difficulty aligning our operations to comply with all applicable laws.

New or revised tax regulations, unfavorable resolution of tax contingencies or changes to enacted tax rates could adversely affect our tax expense.

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Accordingly, our risk management policies and procedures may not be fully effective to identify, monitor and manage our risks.

If our policies and procedures are not fully effective or if we are not always successful in identifying and mitigating all risks to which we are or may be exposed, we may suffer uninsured liability, harm to our reputation or be subject to litigation or regulatory actions that could have a material adverse effect on our business, financial condition, results of operations and cash flows.

If our policies and procedures are not fully effective or if we are not always

successful in identifying and mitigating all risks to which we are or may be exposed, we may suffer uninsured liability, harm to our reputation or be subject to litigation or regulatory actions that could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Financial Risks

We are subject to risks associated with changes in interest rates or currency exchange rates, which could adversely affect our business, financial position, results of operations and cash flows, and we may not effectively hedge against these risks.

A portion of our current indebtedness bears interest at a variable rate, and we may incur additional variable-rate indebtedness in the future.

A portion of our indebtedness bears interest at a variable rate, and we may incur additional variable-rate indebtedness in the future.

Increases in interest rates will reduce our operating cash flows and could hinder our ability to fund our operations, capital expenditures, acquisitions, share repurchases or dividends.

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A downgrade in the ratings of our debt could restrict our ability to access the debt capital markets and increase our interest costs.

We currently maintain investment credit ratings with Moody's Investors Service and Standard & Poor's Ratings Services.

We currently maintain investment credit ratings with nationally recognized statistical rating organizations.

Unfavorable changes in the ratings that rating agencies assign to our debt may ultimately negatively affect our access to the debt capital markets and increase the costs we incur to borrow funds.

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Additionally, our credit facilities include an increase in interest rates if the ratings for our debt are downgraded.

The alteration or replacement of the London Interbank Offered Rate ("LIBOR") benchmark interest rate could adversely affect our business, financial condition, results of operations and cash flows.

A portion of our current indebtedness bears interest at a variable rate based on LIBOR, and we may incur additional variable indebtedness based on LIBOR.

The transition away from the London Interbank Offered Rate ("LIBOR") benchmark interest rate and the adoption of alternative benchmark reference rates could adversely affect our business, financial condition, results of operations and cash flows.

A portion of our indebtedness bears interest at a variable rate based on LIBOR.

Furthermore, we have entered into hedging instruments to manage our exposure to fluctuations in the LIBOR benchmark interest rate.

In July 2017, the United Kingdom’s Financial Conduct Authority ("FCA"), a regulator of financial services firms and financial markets in the United Kingdom, stated that they will plan for a phase out of regulatory oversight of LIBOR interest rates indices.

The FCA has indicated they will support the LIBOR indices through 2021, to allow for an orderly transition to an alternative reference rate.

It is possible that the ICE Benchmark Administration Limited (formerly NYSE Euronext Rate Administration Limited) and the panel banks which contribute to LIBOR could continue to produce LIBOR on the current basis after 2021.

The ICE Benchmark Administration Limited recently announced that it will consult on its intention to extend the publication of most tenors LIBOR to June 30, 2023.

The Alternative Reference Rates Committee has proposed the Secured Overnight Financing Rate ("SOFR") as its recommended alternative to LIBOR, and the Federal Reserve Bank of New York began publishing SOFR rates in April 2018.

At this time, it is not possible to predict when LIBOR will be replaced as the reference rate in the agreements governing the Company’s indebtedness and hedging agreements or the effect any discontinuance, modification or other reforms to LIBOR, or the establishment of alternative reference rates such as SOFR, or any other reference rate, will have on the Company.

However, if LIBOR ceases to exist or if the methods of calculating LIBOR change from their current form, the Company’s borrowing costs may be adversely affected.

Effective January 1, 2022, the publication of LIBOR on a representative basis ceased for the one-week and two-month USD LIBOR settings and all sterling, yen, euros, and swiss franc LIBOR settings.

All other remaining USD LIBOR settings will cease July 1, 2023.

As described in "Note 1 — Basis of Presentation and Summary of Significant Accounting Policies" in the notes to the accompanying consolidated financial statements, to facilitate an orderly transition from LIBOR to alternative benchmark rates, the Company established an initiative led by internal subject matter experts to assess and mitigate risks associated with the discontinuance of LIBOR.

In connection with the sunset of certain LIBOR reference rates occurring at the end of 2021, we amended the Unsecured Revolving Credit Agreement in December 2021 to replace LIBOR as administered by the ICE Benchmark Administration with the Sterling Overnight Index Average Reference Rate and the Euro Interbank Offered Rate for

any extension of credit denominated in sterling or euros, respectively.

We continue to monitor developments related to the upcoming transition from USD LIBOR to an alternative benchmark reference rate after June 30, 2023.

The Alternative Reference Rates Committee has proposed the Secured Overnight Financing Rate ("SOFR") as its recommended alternative to USD LIBOR, and the Federal Reserve Bank of New York began publishing SOFR rates in April 2018.

At this time, the effects of the phase out of USD LIBOR and the adoption of alternative benchmark rates have not been fully determined.

A failure to properly transition away from USD LIBOR could adversely affect the Company’s borrowing costs or expose the Company to various financial, operational and regulatory risks, which could affect the Company’s results of operations and cash flows.

Failure to maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act could have a material adverse effect on our business.

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In our rapidly developing legal framework, we rely on a combination of contractual rights and copyright, trademark, patent and trade secret laws to establish and protect our proprietary technology.

Despite our efforts to protect our intellectual

property, third parties may infringe or misappropriate our intellectual property or may develop software or technology that competes with ours.

Despite our efforts to protect our intellectual property, third parties may infringe or misappropriate our intellectual property or may develop software or technology that competes with ours.

Our competitors may independently develop similar technology, duplicate our services or design around our intellectual property rights.

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Our level of debt and the covenants to which we agreed could have negative consequences on us, including, among other things, (1) requiring us to dedicate a large portion of our cash flow from operations to servicing and repayment of the debt;

(2) limiting funds available for strategic initiatives and opportunities, working capital and other general corporate needs, and (3) limiting our ability to incur certain kinds or amounts of additional indebtedness, which could restrict our flexibility to react to changes in our business, our industry and economic conditions.

(2) limiting funds available for strategic

initiatives and opportunities, working capital and other general corporate needs, and (3) limiting our ability to incur certain kinds or amounts of additional indebtedness, which could restrict our flexibility to react to changes in our business, our industry and economic conditions.

We may not be able to raise additional funds to finance our future capital needs.

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The extent to which we pay dividends on our common stock and repurchase our common stock in the future is at the discretion of our board of directors and will depend on, among other factors, our results of operations, financial condition, capital requirements and such other factors as our board of directors deems relevant.

No assurance can be given that we will be able to or will choose to pay any dividends or repurchase any shares in the foreseeable future.

No assurance can be given that we will be able to or will choose to continue to pay any dividends or repurchase any shares in the foreseeable future.

Risks related to the COVID-19 pandemic

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The COVID-19 pandemic continues to adversely affect global commercial activity and has contributed to significant volatility in the financial markets.

We experienced revenue declines in fiscal 2020 related to COVID-19 due to a reduction in spending and closures of or slowdowns of certain of our customer businesses throughout North America, Europe and Asia Pacific.

While we expect the COVID-19 pandemic will continue to have an adverse effect on our revenues and earnings in 2021, we do expect a steady and progressive economic recovery throughout the year.

Since early 2020, our financial results were affected by decreased spending and transaction volumes, due to closures of or slowdowns of certain of our customer businesses throughout North America, Europe and Asia Pacific.

While we have seen and continue to see signs of economic recovery, which has positively affected our financial results in 2021 compared to the prior year, the rate of recovery on a global basis has been and may continue to be affected by additional developments related to COVID-19.

We have experienced and may continue to experience adverse effects due to a number of operational factors, including but not limited to:

• Third-party disruptions due to COVID-19, including potential outages and service effects at network providers, call centers and other suppliers due to restrictions or closures imposed in relation to the pandemic;

• Increased cyber and payment fraud risk related to COVID-19, as cybercriminals attempt to profit from the disruption, given increased online banking, e-commerce, remote work and other online activity;

• Challenges to the availability and reliability of our solutions and services due to changes to operations, including the possibility of one or more clusters of COVID-19 cases occurring at our facilities, affecting key employees or a significant portion of our workforce or third parties on which we depend.

• Increased operational, business continuity and cybersecurity risk resulting from the significant increase in the number of our employees working remotely as a result of the pandemic.

Additionally, COVID-19 could require new or modified processes, procedures and controls to respond to changes in our business environment.

Any of these developments may remain prevalent for a significant period of time and may continue to adversely affect our business, results of operations, financial condition and cash flows even after the COVID-19 pandemic has subsided.

The full effects of the COVID-19 pandemic on our business, results of operations, financial condition and cash flows will depend on future developments, which are highly uncertain and are difficult to predict at this time.

Such developments include, but are not limited to, the ultimate severity, scope and duration of the pandemic and the preventative measures implemented to help limit the spread of the illness, the availability and effectiveness of treatments or vaccines and how soon and to what extent normal economic conditions, operations and demand for our services can resume.

The continued spread of COVID-19 has caused an economic slowdown and recession in the United States and other markets in which we operate, and it is possible that it could cause a global recession.

It may also affect financial markets and corporate credit markets which could adversely affect our access to financing or the terms of any such financing.

• Increased cyber and payment fraud risk related to COVID-19, as malicious third parties attempt to profit from the disruption, given increased online banking, e-commerce, remote work and other online activity;

• Increased operational, business continuity and cybersecurity risk resulting from a number of our employees working remotely as a result of the pandemic;

• Workforce effects, such as difficulty recruiting, retaining, training, motivating and developing employees due to evolving health and safety requirements and protocols, changing worker expectations and talent marketplace variability regarding flexible work models.

Although the immediate effects of the COVID-19 pandemic have been assessed, the long-term effects of the COVID-19 pandemic on our business, results of operations, financial condition, cash flows and stock price will depend on future developments, which are highly uncertain and are difficult to predict at this time.

Such developments include, but are not limited to, the ultimate severity, scope and duration of the pandemic and the preventative measures implemented to help limit the spread of the illness, vaccine administration rates and efficacy, resurgence of COVID-19 cases and emergence of new more contagious or vaccine-resistant virus variants that may cause people to self-quarantine or governments to shut down nonessential businesses again and how soon and to what extent normal economic conditions, operations and demand for our services can resume.

The continued COVID-19 pandemic has caused an economic slowdown in the U.S.

and other markets in which we operate.

It may also continue to affect financial markets and corporate credit markets which could adversely affect our access to financing or the terms of any such financing.

Moreover, the global macroeconomic effects of the pandemic may persist for an indefinite period, even after the pandemic has subsided.

Accordingly, the ultimate effects on our operations, financial condition and cash flows cannot be determined at this time.

In addition, many of the other risk factors described herein are heightened by the effects of the COVID-19 pandemic and related economic conditions, which in turn could materially adversely affect our business, financial condition, access to financing, results of operations and liquidity.

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We are exposed to general economic conditions that affect consumer confidence, spending, and discretionary income and changes in consumer purchasing habits.

A sustained deterioration in general economic conditions in the markets in which we operate or increases in interest rates may adversely affect our financial performance by reducing the number or average purchase amount of transactions made using electronic payments.

A sustained deterioration in general economic conditions in the markets in which we operate, supply chain disruptions, inflationary pressure or interest rate fluctuations may adversely affect our financial performance by reducing the number or average purchase amount of transactions made using digital payments.

A reduction in the amount of consumer spending could result in a decrease in our revenues and profits.

If our merchants make fewer sales to consumers using electronic payments or consumers using electronic payments spend less per transaction, we will have fewer transactions to process or lower transaction amounts, each of which would contribute to lower revenues.

Additionally, credit card issuers may reduce credit limits and

become more selective in their card issuance practices.

If our merchants make fewer sales to consumers using digital payments or consumers using digital payments spend less per transaction, we will have fewer transactions to process or lower transaction amounts, each of which would contribute to lower revenues.

Additionally, credit card issuers may reduce credit limits and become more selective in their card issuance practices.

Any of these developments could have a material adverse effect on our financial position and results of operations.

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Changes in economic conditions could also adversely affect our future revenues and profits and cause a materially adverse effect on our business, financial condition, results of operations and cash flows.

Reject losses arise from the fact that, in most markets, we collect our fees from our merchants on the first day after the monthly billing period.

Credit losses arise from the fact that, in most markets, we collect our fees from our merchants on the first day after the monthly billing period.

This results in the build-up of a substantial receivable from our customers.

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or action by the United States or foreign governments that may restrict our ability to transact business in a foreign country or with certain foreign individuals or entities.

A possible slowdown in global trade caused by increasing tariffs or other restrictions could decrease consumer or corporate confidence and reduce consumer, government and corporate spending in countries inside or outside the United States, which could adversely affect our operations.

On January 31, 2020, the United Kingdom ceased to be a member state of the European Union ("Brexit"), with a transition period that ended on December 31, 2020.

During the transition period, existing arrangements between the U.K.

remained in place.

Following the transition period, the U.K.

is no longer a part of the E.U.

single market.

In December 2020, the U.K and E.U.

announced they had entered into a post-Brexit deal on certain aspects of trade and other strategic and political issues.

This new agreement could potentially avoid some of the anticipated disruption of the U.K.’s exit from the E.U.

which could adversely affect our operations.

Climate-related events, including extreme weather events and natural disasters and their effect on critical infrastructure in the U.S.

or internationally, could have similar adverse effects on our operations, customers or third-party suppliers.

Furthermore, shareholders, customers and other stakeholders have begun to consider how corporations are addressing ESG issues.

Government regulators, investors, customers and the general public are increasingly focused on ESG practices and disclosures, and views about ESG are diverse and rapidly changing.

These shifts in investing priorities may result in adverse effects on the trading price of the Company's common stock if investors determine that the Company has not made sufficient progress on ESG matters.

We could also face potential negative ESG-related publicity in traditional media or social media if shareholders or other stakeholders determine that we have not adequately considered or addressed ESG matters.

We have been the recipient of proposals from shareholders to promote their governance positions.

Such proposals may not be in the long-term interests of the Company or our stockholders and may divert management’s attention away from operational matters or create the impression that our practices are inadequate.

Shareholders are increasingly submitting proposals related to a variety of ESG issues to public companies, and we may receive other such proposals in the future.

The U.K.'s withdrawal from the European Union could have an adverse effect on our business and financial results.

In January 2020, the U.K.

formally withdrew from the EU in an action commonly known as Brexit.

It remains possible that the level of economic activity in this region will be adversely affected by Brexit and that there will be increased regulatory and legal complexities, including those relating to tax, trade, data transfers, security and employees.

Such changes could be costly and potentially disruptive to our operations and business relationships in these markets.

Economic uncertainty related to Brexit, including volatility in global stock markets and currency exchange rates, could adversely affect our business.

While we have not experienced significant adverse effects on our U.K.

business and its financial condition, results of operations and cash flows to date as a result of the new deal, no assurance can be given regarding the potential future effects of the agreed Brexit trade deal, and our U.K.

business and its financial condition, results of operations and cash flows to date, no assurance can be given regarding the potential future effects of Brexit, and our U.K.

business and our financial conditions, results of operations and cash flows may be adversely affected.

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In addition, we must develop our personnel to fulfill succession plans capable of maintaining continuity in the midst of the inevitable unpredictability of human capital.

However, the market for qualified personnel is competitive, and we may not succeed in recruiting additional personnel or may fail to effectively replace current personnel who depart with qualified or effective successors.

We cannot assure that key personnel, including executive officers, will continue to be employed or that we will be able to attract and retain qualified personnel in the future.

However, the market for qualified personnel is extremely competitive, and we may not succeed in recruiting additional personnel or may fail to effectively replace current personnel who depart with qualified or effective successors.

We cannot be assured that key personnel, including executive officers, will continue to be employed or that we will be able to attract and retain qualified personnel in the future.

Failure to retain or attract key personnel could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Failure to retain, develop or attract key personnel, to meet our goals related to fostering an inclusive and diverse culture, including increasing the proportion of our workforce in the U.S.

that is composed of women and minorities, or to design and successfully implement flexible work models that meet the expectations of employees and prospective employees, could disrupt our operations and adversely affect our business and future success.

The costs and effects of pending and future litigation, investigations or similar matters, or adverse facts and developments related thereto, could materially affect our business, financial position, results of operations and cash flows.

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Furthermore, there is no guarantee that we will be successful in defending ourselves in pending or future litigation or similar matters under various laws.

Should the ultimate judgments or settlements in any pending litigation or future litigation or investigation significantly exceed our insurance coverage, they could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Should the ultimate judgments or settlements in any pending litigation or future litigation or investigation significantly exceed our insurance coverage, such judgments could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors