WORLDLINE_REGISTRATION_DOCUMENT_2017

F

Risk Factors [GRI 102-15] and [GRI 102-11] Financial market risks

The Group’s revenue from the sale of services to merchants that accept Visa and MasterCard cards are dependent upon the Group’s continued registration with Visa and MasterCard. In order to provide its Visa, MasterCard and other payment schemes transaction processing services, the Group must be a member (commercial acquirer), and be registered as a processor, of Visa, MasterCard and other payment schemes in the territories where the Group provides such services. If the Group is unable to maintain its membership as a commercial acquirer or registration as processor of such payment schemes, which may be due to none-compliance with the payment schemes’ rules or guidelines (including major security or fraud incidents) resulting in the suspension or cancellation of the Group’s registration, the Group may no longer be able to provide acquiring or processing services to the affected customers, which would have a material adverse effect on the Group’s business, financial condition and results of operations. Changes in the regulation of interchange fees could have a material adverse effect on the Group’s revenue. The European Regulation No.°2015/735 of April 29, 2015 on interchange fees (the “Regulation”) for card-based payment transactions came into effect on December 9, 2015 and the majority of provisions relating to business rules on June 9, 2016. As a general rule, the regulation set a cap on interchange fees at 0.2% of the transaction value for consumer debit cards and at

0.3% for consumer credit cards. As well as capping interchange fees, the IFR also aims to improve transparency and competition in the card market by removing barriers to entry IFR could have a significant impact on the structure of card payments market in Europe, including card acceptance, cross-border acquiring, domestic versus international card schemes and issuing business models concerning profitability, increased competition and the ability to launch new products. The adopted Regulation will have material adverse effect on the amount of fees collected by card issuers and payment schemes operators. Accordingly, such issuers or operators might seek to pass on these fee decreases through corresponding increases in scheme membership costs, which could have a material adverse effect on the Group’s business, financial condition and results of operations. As 4-party-schemes Visa Europe and MasterCard will fall within the scope of the Regulation and need to adapt their business models, fee models and offer portfolios within the given timelines accordingly. Consequently, the Group would be obliged to align with the International Card Schemes’ requirements in particular for Commercial Acquiring, i.e. adapt its merchant service charges to the levels of its competitors (leading to a reduced or negative margin) and re-position itself as a pan-European acquirer, which could have a material adverse effect on the Group’s business, financial condition, and results of operations.

Financial market risks F.4

Exchange Rate Risk

F.4.1

The bulk of the Group’s revenue, expenses and obligations are denominated in euro. In 2017, 81.3% of the Group’s revenue was generated in euro-zone countries whereas 18.7% was generated in non-euro zone countries, including 6.8% in pounds sterling. Since the Group’s financial statements are denominated in euros, its revenue are affected by the relative value of the euro versus the currency of the non-euro zone countries in which it generates revenue (currency translation exposure). In terms of currency transaction exposure (i.e., a mismatch between the currencies in which revenue is generated and costs are incurred), the Group considers it exposure to be limited as its costs in the euro zone are generally incurred in euros and its revenue is generated in euros and in non-eurozone countries it generally makes its sales and incurs the majority of its operating expenses in the local currency.

The intercompany reinvoicing of Central costs are labelled in Euros. The variation of the balances linked to exchange rate fluctuations are booked in financial statements of each subsidiary and may impact positively or negatively the financial result of the Group. The Group maintains a policy for managing its foreign exchange position if and to the extent it enters into commercial or financial transactions denominated in currencies that differ from the relevant local currencies. Pursuant to this policy, any material foreign exchange rate exposure must be hedged as soon as it occurs using various financial instruments, including, principally, forward contracts and foreign currency swaps. As of December 31, 2017, the Group did not have any material foreign exchange rate exposure and did not have any such hedging instruments in place.

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Worldline 2017 Registration Document