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If we fail to maintain a sufficient digital security infrastructure, address security vulnerabilities and new threats, or deploy adequate technologies to secure our systems against attack, we may be subject to security breaches that compromise confidential information, adversely affect our ability to operate our business, damage our reputation and business, adversely affect our results of operations and financial condition, and expose us to liability.
−Removed: We rely on industry-standard encryption, network, and Internet security systems, most of which we license from third parties, to provide the security and authentication necessary to effect secure transmission of data and to prevent unauthorized access to our computer networks, systems, and data.
−Removed: A security failure by one of these third parties could expose our information systems to interruption of operations and security vulnerabilities.
−Removed: We also use third-party vendors to store and process data for us and they face similar risks.
+Added: We rely on third parties for various business purposes, and these third parties face similar security risks.
+Added: A security failure by one of these third parties could expose our data or subject our information systems to interruption of operations and security vulnerabilities.
Our services and infrastructure are increasingly reliant on the internet.
−Removed: Computer networks and the Internet are vulnerable to unauthorized access, computer viruses and other disruptive problems such as denial of service attacks or other cyber-attacks carried out by cyber criminals or state-sponsored actors.
−Removed: Other potential attacks include attempts to obtain unauthorized access to confidential information or destroy data, often through the introduction of computer viruses, ransomware or malware, cyber-attacks, and other means, which are constantly evolving and difficult to detect.
−Removed: Although none of these types of attacks have had a material effect on our business or operations to date, we anticipate that attempts to attack our systems, services, and infrastructure, and those of our customers and vendors, may grow in frequency and sophistication.
−Removed: Those same parties may also attempt to fraudulently induce employees, customers, vendors, or other users of our systems through phishing schemes or other methods to disclose sensitive information in order to gain access to our data or that of our customers or clients.
+Added: Computer networks and the Internet are vulnerable to disruptive problems such as denial of service attacks or other cyber-attacks carried out by cyber criminals or state-sponsored actors.
+Added: Other potential attacks include attempts to obtain unauthorized access to confidential information or destroy data, often through the
+Added: introduction of computer viruses, ransomware or malware, cyber-attacks, and other means, which are constantly evolving and at times difficult to detect.
+Added: Those same parties may also attempt to fraudulently induce employees, customers, vendors, or other users of our systems through phishing schemes or other social engineering methods to disclose sensitive information in order to gain access to our data or that of our customers.
We are also subject to the risk that our employees may intercept and transmit unauthorized confidential or proprietary information or that employee corporate-owned computers are stolen, or customer data media is lost in shipment.
An interception, misuse or mishandling of personal, confidential, or proprietary information being sent to or received from a customer or third party could result in legal liability, remediation costs, regulatory action, and reputational harm, any of which could adversely affect our results of operations and financial condition.
−Removed: Under state, federal, and foreign laws requiring consumer notification of security breaches, the costs to remediate security breaches can be substantial.
−Removed: Although we believe our security controls and infrastructure are adequate to protect our systems and data, we cannot be certain that these efforts will be sufficient to combat all current and future technological risks and threats.
+Added: We anticipate that attempts to attack our systems, services, and infrastructure, and those of our customers and vendors, may grow in frequency and sophistication.
+Added: We cannot be certain that our security controls and infrastructure will be adequate to continue to protect our systems and data and our efforts may not be sufficient to combat all current and future technological risks and threats.
Advances in computer capabilities, new discoveries in the field of cryptography, or other events or developments may render our security measures inadequate.
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In the event of a security breach, we may need to spend substantial additional capital and resources alleviating problems caused by such breach.
+Added: Under state, federal, and foreign laws requiring consumer notification of security breaches, the costs to remediate security breaches can be substantial.
Addressing security problems may result in interruptions, delays, or cessation of service to users, any of which could harm our business.
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We direct the settlement of funds on behalf of financial institutions, other businesses, and consumers, and receive funds from clients, card issuers, payment networks, and consumers on a daily basis for a variety of transaction types.
−Removed: Transactions facilitated by us include debit card, credit card, electronic bill payment transactions, Automated Clearing House (“ACH”) payments, real-time payments through faster payment networks, and check clearing that support consumers, financial institutions, and other businesses.
+Added: Transactions facilitated by us include debit card, credit card, electronic bill payment transactions, Automated Clearing House (“ACH”) payments, real-time payments through faster payment networks (such as Zelle, RTP, and FedNow), and check clearing that support consumers, financial institutions, and other businesses.
If the continuity of operations, integrity of processing, or ability to detect or prevent fraudulent payments were compromised in connection with payments transactions, we could suffer financial as well as reputational loss.
−Removed: In addition, we rely on various third parties to process transactions and provide services in support of the processing of transactions and funds settlement for certain of our products and services that we cannot provide ourselves.
+Added: In addition, we rely on various third parties to
+Added: process transactions and provide services in support of the processing of transactions and funds settlement for certain of our products and services that we cannot provide ourselves.
If we are unable to obtain such services in the future or if the price of such services becomes unsustainable, our business, financial position, and results of operations could be materially and adversely affected.
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As we continue to move more computing, storage, and processing services out of our data centers and facilities and into third-party hosting environments, our reliance on these providers and their systems will increase.
+Added: This reliance is further concentrated as we use certain third-party vendors to provide large portions of our hosting needs.
While we have selected these third-party vendors carefully, we do not control their actions.
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Third parties perform significant operational services on our behalf.
−Removed: These third-party vendors are subject to similar risks as us including, but not limited to, compliance with applicable laws and regulations, hardware and software defects, breakdowns or malfunctions, cybersecurity incidents, human error, power losses, disruptions in telecommunications services, computer viruses or other malware, natural disasters or severe weather events, or other events.
+Added: These third-party vendors are subject to similar risks as us including, but not limited to, compliance with applicable laws and regulations, hardware and software defects, breakdowns or malfunctions, cybersecurity incidents, human error, failures in internal controls, power losses, disruptions in telecommunications services, computer viruses or other malware, natural disasters or severe weather events, or other events.
One or more of our vendors may experience a cybersecurity event or operational disruption and, if any such event does occur, it may not be adequately addressed, either operationally or financially, by the third-party vendor.
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Competition may result in decreased demand or require price reductions or other concessions to customers, which could result in lower margins and reduce income.
−Removed: We vigorously compete with a variety of software vendors and service providers in all of our major product lines.
+Added: We vigorously compete with a variety of software vendors and service providers in all our major product lines.
We compete on the basis of product quality, reliability, performance, ease of use, quality of support and services, integration with other products, and pricing.
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Such failures could require significant expenditures to correct and could negatively affect our ability to retain customers and obtain new customers.
−Removed: In addition, existing laws, regulations, and policies could be amended or interpreted differently by regulators in a manner that imposes additional costs and has a negative impact on our existing operations or that limits our future
−Removed: growth or expansion.
+Added: In addition, existing laws, regulations, and policies could be amended or interpreted differently by regulators in a manner that imposes additional costs and has a negative impact on our existing operations or that limits our future growth or expansion.
New regulations could require additional programming or other costly changes in our processes or personnel.
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Regulatory agencies, Congress, and state legislatures are considering numerous regulatory and statutory proposals to protect the interests of consumers and to require compliance with standards and policies that have not been defined.
−Removed: This includes rules enacted by the New York Department of Financial Services that require covered financial institutions to have a cybersecurity program along with other compliance requirements and the California Consumer Privacy Act.
+Added: The number of state privacy and cybersecurity laws and regulations has grown tremendously over the past several years, creating an increasingly complex patchwork of data privacy and security requirements.
+Added: This includes industry-specific rules such as those enacted by the New York Department of Financial Services that require covered financial institutions to have a cybersecurity program along with other compliance requirements as well as comprehensive consumer data privacy rules such as the California Consumer Privacy Act, the Iowa Consumer Data Protection Act, and the Virginia Consumer Data Protection Act.
+Added: Though several privacy concepts are common across the laws, each state requires compliance with standards and policies that are not cohesive with other laws and are often further amended by regulatory action.
The unique data protection regulations issued by multiple agencies have created a fragmented series of requirements that makes it increasingly complex to comply with all the mandates in an efficient manner and may increase costs to deliver affected products and services as those requirements are established.
Failure to comply or readily address compliance and regulatory rule changes made by payment card networks could adversely affect our business.
−Removed: We are subject to card association and network compliance rules governing the payment networks we serve, including Visa, MasterCard, Zelle, and The Clearing House’s RTP network, and all rules governing the Payment Card Data Security Standards.
−Removed: If we fail to comply with these rules and standards, we could be fined or our certifications could be suspended or terminated, which could limit our ability to service our customers and result in reductions in revenues and increased costs of operations.
+Added: We are subject to card association and network compliance rules governing the payment networks we serve, including Visa, MasterCard, Zelle, FedNow, and The Clearing House’s RTP network, and all rules governing the Payment Card Data Security Standards.
+Added: If we fail to comply with these rules and standards, we could be fined or our certifications could be suspended or terminated, which could limit our
+Added: ability to service our customers and result in reductions in revenues and increased costs of operations.
Changes made by the networks, even when complied with, may result in reduction in revenues and increased costs of operations.
Economic Conditions Risks
−Removed: A widespread public health crisis could adversely affect our results of operations.
−Removed: The widespread outbreak of a communicable illness or disease, such as the COVID-19 outbreak, or other public health crises, including government mandates in response to such events, can result in significant economic disruptions and uncertainties and could adversely affect our business, results of operation, and financial condition.
+Added: Natural disasters, public health crises, wars, acts of terrorism, other armed conflict, and workforce shortages could adversely affect our results of operations.
+Added: The occurrence of, or threat of, natural disasters, widespread public health crises, political unrest, war, acts of terrorism, other armed conflicts involving the United States or foreign countries, or general workforce shortages can result in significant economic disruptions and uncertainties and could adversely affect our business, results of operation, and financial condition.
The conditions caused by such events may affect the rate of spending by our customers and their ability to pay for our products and services, delay prospective customers’ purchasing decisions, interfere with our employees’ ability to support our business function, disrupt the ability of third-party providers we rely upon to deliver services, adversely impact our ability to provide on-site services or installations to our customers, or reduce the number of transactions we process, all of which could adversely affect our results of operation and financial position.
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We derive most of our revenue from products and services we provide to the financial services industry.
−Removed: If the general economic environment worsens, or if conditions or regulatory requirements within the financial services industry change, such as if financial institutions are required to increase reserve amounts, customers may be less willing or able to pay the cost of our products and services, and we could face a reduction in demand from current and potential clients for our products and services, which could have a material adverse effect on our business, results of operations, and financial condition.
+Added: If the general economic environment worsens, including if inflation or interest rates continue to increase or remain at higher than recent historical levels, or if conditions or regulatory requirements within the financial services industry change, such as if financial institutions are required to increase reserve amounts or become subject to new regulatory assessments, customers may be less willing or able to pay the cost of our products and services, and we could face a reduction in demand from current and potential clients for our products and services, which could have a material adverse effect on our business, results of operations, and financial condition.
In addition, a growing portion of our revenue is derived from transaction processing fees, which depend heavily on levels of consumer and business spending.
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Acquisitions subject us to risks and may be costly and difficult to integrate.
−Removed: On August 5, 2022, we entered into an Agreement and Plan of Merger to acquire 100% of the equity interests of Payrailz, LLC, which offers digital payment capabilities, including real-time person-to-person ("P2P") payments.
−Removed: The acquisition is anticipated to close on August 31, 2022, subject to the satisfaction of customary closing conditions.
−Removed: Acquisitions, including the Payrailz acquisition, are difficult to evaluate, and our due diligence may not identify all potential liabilities or valuation issues.
+Added: Acquisitions are difficult to evaluate, and our due diligence may not identify all potential liabilities or valuation issues.
We may also be subject to risks related to cybersecurity incidents or vulnerabilities of the acquired company and the acquired systems.
−Removed: We may not be able to successfully integrate Payrailz or any other acquired companies.
+Added: We may not be able to successfully integrate acquired companies.
We may encounter problems with the integration of new businesses, including:
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and significant depreciation and amortization expenses related to acquired assets.
−Removed: To finance the Payrailz acquisition or other future acquisitions, we may have to increase our borrowing or sell equity or debt securities to the public.
+Added: To finance future acquisitions, we may have to increase our borrowing or sell equity or debt securities to the public.
If we fail to integrate our acquisitions, our business, financial condition, and results of operations could be materially and adversely affected.
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We do not have employment agreements with any of our executive officers.
−Removed: Further, we are facing an increasingly competitive market for hiring and retaining skilled employees, which is exacerbated by the effects of the COVID-19 pandemic and increased acceptance of hiring remote working employees by our competitors and other companies.
+Added: Further, we continue to face a competitive market for hiring and retaining skilled employees.
Difficulties in hiring and retaining skilled employees may restrict our ability to adequately support our business needs and/or result in increased personnel costs.
There is no assurance that we will be able to attract and retain the personnel necessary to maintain the Company’s strategic direction.
+Added: Unfavorable future tax law changes could adversely affect our tax expense.
+Added: Our income tax positions result in a significant net deferred income tax liability on our consolidated balance sheet.
+Added: Unfavorable future tax law changes, including increasing U.S.
+Added: corporate tax rates, could increase this net liability and negatively impact our provision for income taxes and net income.
The impairment of a significant portion of our goodwill and intangible assets would adversely affect our results of operations.
−Removed: Our balance sheet includes goodwill and intangible assets that represent a significant portion of our total assets at June 30, 2022.
+Added: Our balance sheet includes goodwill and intangible assets that represent a significant portion of our total assets as of June 30, 2023.
On an annual basis, and whenever circumstances require, we review our goodwill and intangible assets for impairment.
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Although our debt borrowing levels have historically been low, we may require additional or increased borrowings in the future under existing or new debt facilities to support operations, finance acquisitions, or fund stock repurchases.
−Removed: Our current revolving credit facility bears interest at a variable rate.
+Added: Our current credit facilities bear interest at variable rates.
Increases in interest rates on variable-rate debt would increase our interest expense, which could negatively impact our results of operations.
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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.