Item 8. Financial Statements and Supplementary Data

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Item 8. Financial Statements and Supplementary Data

Index to Consolidated Financial Statements


			Page
Consolidated Statements of Income			46
Consolidated Statements of Comprehensive Income			47
Consolidated Balance Sheets			48
Consolidated Statements of Equity			49
Consolidated Statements of Cash Flows			50
Notes to Consolidated Financial Statements			51
Schedule II - Valuation and Qualifying Accounts			92
Report of Independent Registered Public Accounting Firm (PCAOB ID No. 34)			93

Fiserv, Inc.

Consolidated Statements of Income

(In millions, except per share data)


	Year Ended December 31,
	2023		2022		2021
Revenue:
Processing and services (1)	$	15,630	$	14,460	$	13,307
Product	3,463		3,277		2,919
Total revenue	19,093		17,737		16,226
Expenses:
Cost of processing and services	5,332		5,771		6,084
Cost of product	2,338		2,221		2,044
Selling, general and administrative	6,576		6,059		5,810
Net gain on sale of businesses and other assets	(167)		(54)		—
Total expenses	14,079		13,997		13,938
Operating income	5,014		3,740		2,288
Interest expense, net	(976)		(733)		(693)

Other (expense) income, net	(140)		(94)		71
Income before income taxes and (loss) income from investments in unconsolidated affiliates	3,898		2,913		1,666
Income tax provision	(754)		(551)		(363)
(Loss) income from investments in unconsolidated affiliates	(15)		220		100


Net income	3,129		2,582		1,403
Less: net income attributable to noncontrolling interests and redeemable noncontrolling interests	61		52		69
Net income attributable to Fiserv, Inc.	$	3,068	$	2,530	$	1,334

Net income attributable to Fiserv, Inc. per share:
Basic	$	5.02	$	3.94	$	2.01



Diluted	$	4.98	$	3.91	$	1.99



Shares used in computing net income attributable to Fiserv, Inc. per share:
Basic	611.7		642.3		662.6
Diluted	615.9		647.9		671.6

**(1)**Includes processing and other fees charged to related party investments accounted for under the equity method of $178 million, $201 million and $203 million for the years ended December 31, 2023, 2022 and 2021, respectively (see Note 19).

See accompanying notes to consolidated financial statements.

Fiserv, Inc.

Consolidated Statements of Comprehensive Income

(In millions)


	Year Ended December 31,
	2023		2022		2021
Net income	$	3,129	$	2,582	$	1,403
Other comprehensive income (loss):
Fair market value adjustment on derivatives	14		(15)		8
Reclassification adjustment for net realized losses (gains) on cash flow hedges included in cost of processing and services	4		2		(10)
Reclassification adjustment for net realized losses on cash flow hedges included in net interest expense	15		19		21
Tax impacts of derivatives	(8)		(2)		(5)
Unrealized gain (loss) on defined benefit pension plans	7		(78)		67
Tax impacts of defined benefit pension plans	(2)		18		(17)
Foreign currency translation	288		(421)		(497)
Reclassification adjustment for accumulated foreign currency translation impacts from the sale of foreign entities included in net gain on sale of businesses and other assets	10		56		—
Tax impacts of foreign currency translation	68		(73)		36
Total other comprehensive income (loss)	396		(494)		(397)
Comprehensive income	$	3,525	$	2,088	$	1,006
Less: net income attributable to noncontrolling interests and redeemable noncontrolling interests	61		52		69
Less: other comprehensive loss attributable to noncontrolling interests	(10)		(50)		(39)
Comprehensive income attributable to Fiserv, Inc.	$	3,474	$	2,086	$	976

See accompanying notes to consolidated financial statements.

Fiserv, Inc.

Consolidated Balance Sheets

(In millions)


	December 31,
	2023		2022
Assets
Cash and cash equivalents	$	1,204	$	902
Trade accounts receivable, less allowance for doubtful accounts	3,582		3,585
Prepaid expenses and other current assets	2,344		1,575
Settlement assets	27,681		21,482
Total current assets	34,811		27,544
Property and equipment, net	2,161		1,958
Customer relationships, net	7,075		8,424
Other intangible assets, net	4,135		3,991
Goodwill	37,205		36,811
Contract costs, net	968		905
Investments in unconsolidated affiliates	2,262		2,403
Other long-term assets	2,273		1,833
Total assets	$	90,890	$	83,869
Liabilities and Equity
Accounts payable and accrued expenses	$	4,355	$	3,883
Short-term and current maturities of long-term debt	755		468
Contract liabilities	761		625
Settlement obligations	27,681		21,482
Total current liabilities	33,552		26,458
Long-term debt	22,363		20,950
Deferred income taxes	3,078		3,602
Long-term contract liabilities	250		235
Other long-term liabilities	978		936
Total liabilities	60,221		52,181
Commitments and Contingencies (see Note 18)
Redeemable Noncontrolling Interests	161		161
Fiserv, Inc. Shareholders’ Equity:
Preferred stock, no par value: 25 million shares authorized; none issued	—		—
Common stock, $0.01 par value: 1,800 million shares authorized; 784 million shares issued	8		8
Additional paid-in capital	23,103		23,011
Accumulated other comprehensive loss	(783)		(1,189)
Retained earnings	20,444		17,376
Treasury stock, at cost, 190 million and 154 million shares, respectively	(12,915)		(8,378)
Total Fiserv, Inc. shareholders’ equity	29,857		30,828
Noncontrolling interests	651		699
Total equity	30,508		31,527
Total liabilities and equity	$	90,890	$	83,869

See accompanying notes to consolidated financial statements.

Fiserv, Inc.

Consolidated Statements of Equity

(In millions)


	Fiserv, Inc. Shareholders’ Equity

	Number of Shares		Amount
	Common Shares	Treasury Shares	Common Stock		Additional Paid-In Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Treasury Stock		Noncontrolling Interests		Total Equity
Balance at January 1, 2021	789	121	$	8	$	23,643	$	(387)	$	13,441	$	(4,375)	$	740	$	33,070
Net income (1)									1,334				25		1,359

Distributions paid to noncontrolling interests (2)													(6)		(6)
Change in redemption value of redeemable noncontrolling interest (see Note 13)					(18)										(18)
Other comprehensive loss							(287)						(39)		(326)
Prior period adjustment (see Note 9)							(71)		71						—
Share-based compensation					239										239
Shares issued under stock plans		(5)			(293)						212				(81)
Purchases of treasury stock		23									(2,565)				(2,565)
Retirement of treasury stock (see Note 19)	(5)	(5)			(588)						588				—

Balance at December 31, 2021	784	134	8		22,983		(745)		14,846		(6,140)		720		31,672
Net income (1)									2,530				24		2,554

Distributions paid to noncontrolling interests (2)													(8)		(8)

Other comprehensive loss							(444)						(50)		(494)

Share-based compensation					323										323
Shares issued under stock plans		(5)			(295)						262				(33)
Purchases of treasury stock		25									(2,500)				(2,500)





Capital contribution from noncontrolling interest													13		13
Balance at December 31, 2022	784	154	8		23,011		(1,189)		17,376		(8,378)		699		31,527
Net income (1)									3,068				35		3,103

Distributions paid to noncontrolling interests (2)													(8)		(8)
Acquisition of noncontrolling interest of consolidated subsidiary (3)					6								(65)		(59)

Other comprehensive income (loss)							406						(10)		396

Share-based compensation					342										342
Shares issued under stock plans		(4)			(256)						207				(49)
Purchases of treasury stock		40									(4,744)				(4,744)



Balance at December 31, 2023	784	190	$	8	$	23,103	$	(783)	$	20,444	$	(12,915)	$	651	$	30,508

(1)The total net income presented in the consolidated statements of equity for the years ended December 31, 2023, 2022 and 2021 is different than the amount presented in the consolidated statements of income due to the net income attributable to redeemable noncontrolling interests of $26 million, $28 million and $44 million, respectively, not included in equity.

(2)The total distributions presented in the consolidated statements of equity for the years ended December 31, 2023, 2022 and 2021 exclude $26 million, $34 million and $43 million, respectively, in distributions paid to redeemable noncontrolling interests, and for the year ended December 31, 2021, excludes $13 million in distributions related to the dissolution of the Banc of America Merchant Services joint venture, not included in equity.

(3)The Company acquired the remaining 49% ownership interest in European Merchant Services B.V., a Netherlands-based merchant acceptance business, during the year ended December 31, 2023. The Company previously held a majority controlling financial interest in this consolidated subsidiary.

See accompanying notes to consolidated financial statements.

Fiserv, Inc.

Consolidated Statements of Cash Flows

(In millions)


	Year Ended December 31,
	2023		2022		2021
Cash flows from operating activities:
Net income	$	3,129	$	2,582	$	1,403

Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and other amortization	1,479		1,320		1,158
Amortization of acquisition-related intangible assets	1,642		1,849		2,038
Amortization of financing costs and debt discounts	41		43		52

Share-based compensation	342		323		239

Deferred income taxes	(511)		(558)		(262)
Net gain on sale of businesses and other assets	(167)		(54)		—
Loss (income) from investments in unconsolidated affiliates	15		(220)		(100)
Distributions from unconsolidated affiliates	55		73		34


Non-cash impairment charges	—		14		15

Other operating activities	49		(10)		(48)
Changes in assets and liabilities, net of effects from acquisitions and dispositions:
Trade accounts receivable	23		(770)		(358)
Prepaid expenses and other assets	(790)		(253)		(248)
Contract costs	(246)		(290)		(269)
Accounts payable and other liabilities	(54)		511		303
Contract liabilities	155		58		77
Net cash provided by operating activities	5,162		4,618		4,034
Cash flows from investing activities:
Capital expenditures, including capitalized software and other intangibles	(1,388)		(1,479)		(1,160)
Net proceeds from sale of businesses and other assets	234		246		—
Payments for acquisition of businesses, net of cash acquired	(13)		(988)		(848)
Distributions from unconsolidated affiliates	136		138		115
Purchases of investments	(39)		(52)		(256)
Proceeds from sale of investments	5		23		519
Other investing activities	(3)		—		—
Net cash used in investing activities	(1,068)		(2,112)		(1,630)
Cash flows from financing activities:
Debt proceeds	5,567		1,624		6,435
Debt repayments	(3,015)		(3,315)		(7,881)
Net (repayments of) proceeds from commercial paper and short-term borrowings	(1,456)		1,837		1,741
Payments of debt financing costs	(38)		(10)		—
Proceeds from issuance of treasury stock	101		149		140
Purchases of treasury stock, including employee shares withheld for tax obligations	(4,827)		(2,677)		(2,786)

Settlement activity, net	(527)		(78)		711
Distributions paid to noncontrolling interests and redeemable noncontrolling interests	(34)		(42)		(62)
Payment to acquire noncontrolling interest of consolidated subsidiary	(56)		—		—
Payments of acquisition-related contingent consideration	(35)		(2)		(37)
Other financing activities	(36)		36		(2)
Net cash used in financing activities	(4,356)		(2,478)		(1,741)
Effect of exchange rate changes on cash and cash equivalents	33		(41)		(27)
Net change in cash and cash equivalents	(229)		(13)		636

Cash and cash equivalents, beginning balance	3,192		3,205		2,569
Cash and cash equivalents, ending balance	$	2,963	$	3,192	$	3,205

See accompanying notes to consolidated financial statements.

Fiserv, Inc.

Notes to Consolidated Financial Statements

1. Summary of Significant Accounting Policies

Description of the Business

Fiserv, Inc. and its subsidiaries (collectively, the “Company”) is a leading global provider of payments and financial services technology solutions, serving clients that include merchants, banks, credit unions, other financial institutions and corporate clients. The Company provides account processing and digital banking solutions; card issuer processing and network services; payments; e-commerce; merchant acquiring and processing; and the Clover® cloud-based point-of-sale (“POS”) and business management platform. The Company’s reportable segments are Merchant Acceptance (“Acceptance”), Financial Technology (“Fintech”) and Payments and Network (“Payments”).

Principles of Consolidation

The consolidated financial statements include the accounts of Fiserv, Inc. and its subsidiaries in which the Company holds a majority controlling financial interest. All intercompany transactions and balances between the Company and its subsidiaries have been eliminated in consolidation. Control is typically established when ownership and voting interests in an entity are greater than 50%. Investments in which the Company has significant influence but not control are accounted for using the equity method of accounting, for which the Company’s share of net income or loss is reported within (loss) income from investments in unconsolidated affiliates, and the related tax expense or benefit is reported within the income tax provision in the consolidated statements of income. Significant influence over an affiliate’s operations generally coincides with an ownership interest of between 20% and 50%; however, for partnerships and limited liability companies, an ownership interest of between 3% and 50% or board of director representation may also constitute significant influence.

The Company maintains a majority controlling financial interest in certain entities, mostly related to consolidated merchant alliances (see Note 19). Noncontrolling interests represent the minority shareholders’ share of the net income or loss and equity in consolidated subsidiaries. The Company’s noncontrolling interests presented in the consolidated statements of income include net income attributable to noncontrolling interests and redeemable noncontrolling interests. Noncontrolling interests are presented as a component of equity in the consolidated balance sheets. Noncontrolling interests that are redeemable upon the occurrence of an event that is not solely within the Company’s control are presented outside of equity and are carried at their estimated redemption value if it exceeds the initial carrying value of the redeemable interest (see Note 13).

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“U.S.”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ materially from those estimates.

Revenue Recognition

The Company generates revenue from the delivery of processing, service and product solutions. Revenue is measured based on consideration specified in a contract with a customer, and excludes any amounts collected on behalf of third parties. The Company recognizes revenue when it satisfies a performance obligation by transferring control over a product or service to a customer which may be at a point in time or over time. Additional information regarding the Company’s revenue recognition policies is included in Note 3 to the consolidated financial statements.

Cash and Cash Equivalents

Cash and cash equivalents consist of cash and investments with original maturities of 90 days or less and are stated at cost in the consolidated balance sheets, which approximates market value. Cash and cash equivalents that are restricted from use due to regulatory or other requirements are included in other long-term assets in the consolidated balance sheets. Cash and cash equivalents held on behalf of merchants and other payees are included in settlement assets in the consolidated balance sheets. The changes in settlement cash and cash equivalents are included in settlement activity, net within cash flows from financing activities in the consolidated statements of cash flows.

The following table provides a reconciliation between cash and cash equivalents on the consolidated balance sheets and the consolidated statements of cash flows:


	December 31,
(In millions)	2023		2022		2021
Cash and cash equivalents on the consolidated balance sheets	$	1,204	$	902	$	835
Cash and cash equivalents included in settlement assets (see Note 5)	1,756		2,283		2,361
Other restricted cash	3		7		9
Total cash and cash equivalents on the consolidated statements of cash flows	$	2,963	$	3,192	$	3,205

Allowance for Doubtful Accounts

The Company analyzes the collectability of trade accounts receivable by considering historical bad debts and issued client credits, client creditworthiness, current economic trends, changes in client payment terms and collection trends when evaluating the adequacy of the allowance for doubtful accounts. Any change in the assumptions used in analyzing a specific account receivable may result in an additional allowance for doubtful accounts being recognized in the period in which the change occurs. The allowance for doubtful accounts was $86 million and $52 million at December 31, 2023 and 2022, respectively.

Leases

The Company maintains certain leasing receivables associated with its POS terminal leasing businesses. Leasing receivables are included in prepaid expenses and other current assets and other long-term assets in the consolidated balance sheets. Interest income on the Company’s leasing receivables is recognized using the effective interest method, and is included within product revenue in the consolidated statements of income. Initial direct costs incurred to obtain operating leases and other sales-type leases, in which the fair value of the underlying asset is equal to its carrying amount at the lease commencement date, are deferred and recognized over the lease term. Initial direct costs to obtain a sales-type lease are expensed as incurred if the fair value of the underlying asset is different from its carrying amount at the lease commencement date. Additional information regarding the Company’s lease policies is included in Note 11 to the consolidated financial statements.

Prepaid Expenses and Other Current Assets

Prepaid expenses represent advance payments for goods and services to be consumed in the future, such as maintenance, postage and insurance, and totaled $423 million and $431 million at December 31, 2023 and 2022, respectively. Other current assets, including net income tax receivables, Clover Capital cash advances and settlement advance cash payments, totaled $1,921 million and $1,144 million at December 31, 2023 and 2022, respectively. The net income tax receivable balance, including receivables associated with transferable federal tax credits (see Note 17), was $534 million at December 31, 2023.

The Company offers merchants advance access to capital through its Clover Capital cash advance program. Under this program, merchants sell fixed amounts of their future credit card receivables to the Company in exchange for an up-front purchase price payment. Future credit card receivables purchased by the Company under the Clover Capital program were $281 million and $164 million at December 31, 2023 and 2022, respectively. The Company maintained a reserve of $12 million and $7 million at December 31, 2023 and 2022, respectively, based on an estimate of uncollectible amounts.

The Company also offers merchants within its international operations advance access to capital by providing them the opportunity to receive settlement cash payments in advance in exchange for their receivables from card issuers, including when the cardholders have elected to pay over time in installments. The Company maintains short-term lines of credit with foreign banks and alliance partners to fund such anticipated settlement activity (see Note 12). These local currency denominated arrangements are primarily associated with the Company’s operations in Latin America, the most significant of which are denominated in Argentine Peso and Brazilian Real. The Company’s outstanding cash advances from card issuers related to this settlement funding activity were $381 million and $264 million at December 31, 2023 and 2022, respectively.

Settlement Assets and Obligations

Settlement assets and obligations represent intermediary balances arising from the settlement process, which involves the transfer of funds among card issuers, payment networks, processors, merchants and consumers, and collateral amounts held to manage merchant credit risk, primarily associated with the Company’s merchant acquiring services. As a processor, the Company facilitates the clearing and settlement activity for the merchant and records settlement assets and obligations upon processing a payment transaction. Settlement assets represent cash received or amounts receivable from agents, payment

networks, bank partners, merchants or direct consumers. Settlement obligations represent amounts payable to merchants and payees.

Certain merchant settlement assets (included within settlement receivables) that relate to settlement obligations are held by partner banks to which the Company does not have legal ownership, but which the Company has the right to use, to satisfy the related settlement obligations. The Company records settlement obligations for amounts payable to merchants and for outstanding payment instruments issued to payees that have not yet been presented for settlement. Additional information regarding the Company’s settlement assets and obligations is included in Note 5 to the consolidated financial statements.

Allowance for Merchant Credit Losses

With respect to the Company’s merchant acquiring business, the Company’s merchant customers have the legal obligation to refund any charges properly reversed by the cardholder. However, in the event the Company is not able to collect the refunded amounts from the merchants, the Company may be liable for the reversed charges. The Company’s risk in this area primarily relates to situations where a cardholder has purchased goods or services to be delivered in the future. The Company requires cash deposits, guarantees, letters of credit or other types of collateral from certain merchants to mitigate this risk. Collateral held by the Company, or held by partner banks for the Company’s benefit, is classified within settlement assets, and the obligation to repay the collateral is classified within settlement obligations in the consolidated balance sheets. The Company also utilizes a number of systems and procedures to manage merchant credit risk. Despite these efforts, the Company experiences losses due to merchant defaults. The aggregate merchant credit loss expense, recognized by the Company within cost of processing and services in the consolidated statements of income, was $80 million, $62 million and $41 million for the years ended December 31, 2023, 2022 and 2021, respectively.

The Company maintains an allowance for merchant credit losses that are expected to exceed the amount of merchant collateral. The amount of merchant collateral available to the Company was $0.7 billion and $1.5 billion at December 31, 2023 and 2022, respectively. The allowance includes estimated losses from anticipated chargebacks and fraud events that have been incurred on merchants’ payment transactions that have been processed but not yet reported to the Company, which is recorded within accounts payable and accrued expenses in the consolidated balance sheets, as well as estimated losses on refunded amounts to cardholders that have not yet been collected from the merchants, which is recorded within prepaid expenses and other current assets in the consolidated balance sheets. The allowance is based primarily on the Company’s historical experience of credit losses and other factors such as changes in economic conditions or increases in merchant fraud. The aggregate merchant credit loss allowance was $36 million and $29 million at December 31, 2023 and 2022, respectively.

Property and Equipment

Property and equipment is reported at cost. Depreciation of property and equipment is computed primarily using the straight-line method over the shorter of the estimated useful life of the asset or the leasehold period, if applicable. Property and equipment consisted of the following:


		December 31,
(In millions)	Estimated Useful Lives	2023		2022
Land	—	$	48	$	47
Data processing equipment	3 to 5 years	3,630		3,025
Buildings and leasehold improvements	5 to 40 years	801		724
Furniture and equipment	5 to 8 years	365		370
		4,844		4,166
Less: Accumulated depreciation		(2,683)		(2,208)
Total		$	2,161	$	1,958

Depreciation expense for all property and equipment totaled $566 million, $555 million and $498 million for the years ended December 31, 2023, 2022 and 2021, respectively.

Intangible Assets

Customer related intangible assets represent customer contracts and relationships obtained as part of acquired businesses and are amortized using an accelerated amortization method which corresponds with the customer attrition rates used in the initial valuation of the intangibles over their estimated useful lives, generally ten to twenty years. Acquired software and technology represents software and technology intangible assets obtained as part of acquired businesses and is amortized using the straight-

line method over their estimated useful lives, generally four to ten years. Trade names are amortized using the straight-line method over their estimated useful lives, generally eight to twenty years. Non-compete agreements are amortized using the straight-line method over their estimated useful lives, generally four to five years.

Purchased software represents software licenses purchased from third parties and is amortized using the straight-line method over their estimated useful lives, generally five years.

The Company continually develops, maintains and enhances its products and systems. Product development expenditures represented approximately 7% of the Company’s total revenue for each of the years ended December 31, 2023, 2022 and 2021. Research and development costs incurred prior to the establishment of technological feasibility are expensed as incurred. Routine maintenance of software products, design costs and other development costs incurred prior to the establishment of a product’s technological feasibility are also expensed as incurred. Costs are capitalized commencing when the technological feasibility of the software has been established.

Capitalized software development costs represent the capitalization of certain costs incurred to develop new software or to enhance existing software which is marketed externally or utilized by the Company to process client transactions. Capitalized software development costs are amortized using the straight-line method over their estimated useful lives, generally five years.

The Company may, at its discretion, negotiate to pay an independent sales organization (“ISO”) an agreed-upon up-front amount in exchange for the ISO’s surrender of its right to receive commission payments from the Company related to future transactions of merchants referred by the ISO (“residual buyout”). The amount that the Company pays for these residual buyouts is capitalized and subsequently amortized using the straight-line method over the expected life of the merchant portfolios, generally five to nine years. The Company may also obtain residual buyouts as part of acquired businesses. Additional information regarding the Company’s identifiable intangible assets is included in Note 6 to the consolidated financial statements.

Goodwill

Goodwill represents the excess of purchase price over the fair value of identifiable assets acquired and liabilities assumed in a business combination. The Company evaluates goodwill for impairment on an annual basis, or more frequently if circumstances indicate possible impairment. Goodwill is tested for impairment at a reporting unit level, which is one level below the Company’s reportable segments. When assessing goodwill for impairment, the Company considers (i) the prior year’s amount of excess fair value over the carrying value of each reporting unit, (ii) the period of time since a reporting unit’s last quantitative test, (iii) the extent a reorganization or disposition changes the composition of one or more of the reporting units and (iv) other factors to determine whether or not to first perform a qualitative test. When performing a qualitative test, the Company assesses numerous factors to determine whether it is more likely than not that the fair value of its reporting units is less than their respective carrying values. Examples of qualitative factors that the Company assesses include its share price, its financial performance, market and competitive factors in its industry and other events specific to its reporting units. If the Company concludes that it is more likely than not that the fair value of a reporting unit is less than its carrying value, the Company performs a quantitative impairment test by comparing reporting unit carrying values to estimated fair values.

The Company elected to perform a quantitative test for certain reporting units, including those that changed in composition or where the prior year’s amount of excess fair value over carrying value was of a lower magnitude, and tested the remainder of its reporting units using a qualitative approach. The Company’s most recent annual impairment assessment of its reporting units in the fourth quarter of 2023 determined that its goodwill was not impaired as the estimated fair values exceeded the carrying values. However, it is reasonably possible that future developments related to the interest or currency exchange rate environments; a shift in strategic initiatives; a deterioration in financial performance within a particular reporting unit; or significant changes in the composition of, or assumptions used in, the quantitative test for certain of the Company’s reporting units (such as an increase in risk-adjusted discount rates) could have a future material impact on one or more of the estimates and assumptions used to evaluate goodwill impairment. Additionally, a significant change in a merchant alliance business relationship or operating performance could result in a material goodwill impairment charge. There is no accumulated goodwill impairment for the Company through December 31, 2023. Additional information regarding the Company’s goodwill is included in Note 7 to the consolidated financial statements.

Asset Impairment

The Company reviews property and equipment, lease right-of-use (“ROU”) assets, intangible assets and its investments in unconsolidated affiliates for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. The Company reviews capitalized software development costs for impairment at each reporting date. Recoverability of property and equipment, lease ROU assets, capitalized software development costs and other intangible assets is assessed by comparing the carrying amount of the asset to either the undiscounted future cash flows expected to be generated by the asset or the net realizable value of the asset, depending on the type of asset. The Company assesses lease ROU assets that are exited in advance of the non-cancellable lease terms by comparing the carrying values of the lease ROU assets to the discounted cash flows from estimated sublease payments. The Company’s investments in unconsolidated affiliates are assessed by comparing the carrying amount of the investments to their estimated fair values and are impaired if any decline in fair value is determined to be other than temporary. Measurement of any impairment loss is based on estimated fair value. The estimated fair values of the Company’s investments in unconsolidated merchant alliances assume a continuation beyond the existing contractual term. A renewal of certain of the merchant alliance agreements beyond the current contractual term is not solely within the Company’s control. A significant change in a merchant alliance business relationship could result in a material impairment charge to the carrying value of the equity method investment in such unconsolidated affiliate.

Fair Value Measurements

The Company applies fair value accounting for all assets and liabilities that are recognized or disclosed at fair value in its consolidated financial statements on a recurring basis. Fair value represents the amount that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities, the Company uses the hierarchy prescribed in Accounting Standards Codification (“ASC”) 820, Fair Value Measurements (“ASC Topic 820”), and considers the principal or most advantageous market and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability. The three levels in the hierarchy are as follows:

Level 1 – Quoted prices (unadjusted) for identical assets or liabilities in active markets that are accessible as of the measurement date.
Level 2 – Inputs other than quoted prices within Level 1 that are observable either directly or indirectly, including but not limited to quoted prices in markets that are not active, quoted prices in active markets for similar assets or liabilities and observable inputs other than quoted prices such as interest rates or yield curves.
Level 3 – Unobservable inputs reflecting management’s judgments about the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk.

Additional information regarding the Company’s fair value measurements is included in Note 10 to the consolidated financial statements.

Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses consisted of the following:


	December 31,
(In millions)	2023		2022
Trade accounts payable	$	449	$	652
Client deposits	931		871
Transferable federal tax credits (see Note 17)	804		—
Accrued compensation and benefits	344		279
Accrued taxes	203		432
Accrued interest	298		216
Accrued payment network fees	232		219
Operating lease liabilities	118		124
Accrued professional fees	96		108
Other accrued expenses	880		982
Total	$	4,355	$	3,883

Foreign Currency

The U.S. dollar is the functional currency of the Company’s U.S.-based and certain foreign-based businesses. Where the functional currency differs from the U.S. dollar, assets and liabilities are translated into U.S. dollars at the exchange rates in effect at the balance sheet date. Revenue and expenses are translated at the average exchange rates during the reporting period. Gains and losses from foreign currency translation are recorded as a separate component of accumulated other comprehensive loss. Gains and losses from foreign currency transactions are included in determining net income for the reporting period.

Financial statements of subsidiaries located in highly inflationary economies outside of the U.S. are remeasured into U.S. dollars, and the foreign currency gains and losses from the remeasurement of monetary assets and liabilities are reflected in the consolidated statements of income, rather than as foreign currency translation within accumulated other comprehensive loss in the consolidated balance sheets. The remeasurement of monetary assets and liabilities in highly inflationary economies, including Argentina, resulted in foreign currency exchange losses of $164 million, $52 million and $5 million during the years ended December 31, 2023, 2022 and 2021, respectively, which is included within other (expense) income, net within the consolidated statements of income.

To reduce exposure to changes in the value of the Company’s net investments in certain of its foreign currency-denominated subsidiaries due to changes in foreign currency exchange rates, the Company uses fixed-to-fixed cross-currency rate swap contracts and foreign currency-denominated debt as economic hedges of its net investments in such foreign currency-denominated subsidiaries. Foreign currency transaction gains or losses on the qualifying net investment hedge instruments are recorded as foreign currency translation, net of tax, within other comprehensive income (loss) in the consolidated statements of comprehensive income and will remain in accumulated other comprehensive loss within the consolidated balance sheets until the sale or complete liquidation of the underlying foreign subsidiaries.

Derivatives

Derivatives are entered into for periods consistent with related underlying exposures and are recorded in the consolidated balance sheets as either an asset or liability measured at fair value. If the derivative is designated as a cash flow hedge, changes in the fair value of the derivative are recorded as a component of accumulated other comprehensive loss and recognized in the consolidated statements of income when the hedged item affects earnings. If the derivative is designated as a net investment hedge, changes in the fair value of the derivative, net of tax, are recorded in the foreign currency translation component of other comprehensive income (loss) until the sale or complete liquidation of the underlying net investment. If the derivative is designated as a fair value hedge, changes in the fair value of the derivative are recorded in the same line item as the changes in the fair value of the hedged item and recognized in the consolidated statements of income. To the extent a derivative is not designated as a hedge, changes in fair value are recognized in the consolidated statements of income. The Company’s policy is to enter into derivatives with creditworthy institutions and not to enter into such derivatives for speculative purposes.

Employee Benefit Plans

The Company maintains frozen defined benefit pension plans covering certain employees in Europe and the U.S. The Company records actuarial gains/losses and prior service cost in the consolidated balance sheets and recognizes changes in these amounts during the year in which changes occurred through other comprehensive income (loss). Various assumptions were used when computing amounts relating to the Company’s defined benefit pension plan obligations and their associated expenses (including the discount rate and the expected rate of return on plan assets). Certain of these frozen defined benefit pension plans were terminated effective September 30, 2023. Additional information regarding the Company’s employee benefit plans is included in Note 15 to the consolidated financial statements.

Cost of Processing, Services and Product

Cost of processing and services consists of costs directly associated with providing services to clients and includes the following: personnel; equipment and data communication; infrastructure costs, including costs to maintain software applications; client support; certain depreciation and amortization; and other operating expenses.

Cost of product consists of costs directly associated with the products sold and includes the following: costs of materials and postage; software development; hardware costs (primarily POS devices); personnel; infrastructure costs; certain depreciation and amortization; and other costs directly associated with product revenue.

Selling, General and Administrative Expenses

Selling, general and administrative expenses primarily consist of: salaries, wages, commissions and related expenses paid to sales personnel, administrative employees and management; third-party commissions and payments to distribution partners; advertising and promotional costs; certain depreciation and amortization; and other selling and administrative expenses.

Interest Expense, Net

Interest expense, net consists of interest expense primarily associated with the Company’s outstanding borrowings and finance lease obligations, as well as interest income primarily associated with the Company’s investment securities. Interest expense, net consisted of the following:


	Year Ended December 31,
(In millions)	2023		2022		2021
Interest expense	$	(1,004)	$	(746)	$	(696)
Interest income	28		13		3
Interest expense, net	$	(976)	$	(733)	$	(693)

Income Taxes

Deferred tax assets and liabilities are recognized for the expected future tax consequences attributable to differences between financial statement carrying amounts of existing assets and liabilities and their respective tax basis, and net operating loss and tax credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. A valuation allowance is recorded against deferred tax assets if it is more likely than not that some portion or all of the deferred tax assets will not be realized.

Liabilities are established for unrecognized tax benefits, attributable to differences between a tax position taken or expected to be taken in a tax return and the benefit recognized in the financial statements. In establishing a liability for an unrecognized tax benefit, assumptions are made in determining whether, and the extent to which, a tax position will be sustained. A tax position is recognized only when it is more likely than not to be sustained upon examination by the relevant taxing authority, based on its technical merits. The amount of tax benefit recognized reflects the largest benefit the Company believes is more likely than not to be realized upon ultimate settlement. As additional information becomes available, the liability for unrecognized tax benefits is reevaluated and adjusted, as appropriate. Tax benefits ultimately realized can differ from amounts previously recognized due to uncertainties, with any such differences generally impacting the provision for income tax. Additional information regarding the Company’s income taxes is included in Note 17 to the consolidated financial statements.

Net Income Per Share

Net income per share attributable to Fiserv, Inc. in each year is calculated using actual, unrounded amounts. Basic net income per share is computed by dividing net income attributable to Fiserv, Inc. by the weighted-average number of common shares

outstanding during the year. Diluted net income per share is computed by dividing net income attributable to Fiserv, Inc. by the weighted-average number of common shares and common stock equivalents outstanding during the year. Common stock equivalents consist of outstanding stock options, unvested restricted stock units and unvested restricted stock awards, and are computed using the treasury stock method. The Company excluded 0.3 million, 1.7 million and 1.5 million weighted-average shares from the calculations of common stock equivalents for anti-dilutive stock options in 2023, 2022 and 2021, respectively. The computation of shares used in calculating basic and diluted net income per share is as follows:


	Year Ended December 31,
(In millions)	2023	2022	2021
Weighted-average common shares outstanding used for the calculation of net income attributable to Fiserv, Inc. per share – basic	611.7	642.3	662.6
Common stock equivalents	4.2	5.6	9.0
Weighted-average common shares outstanding used for the calculation of net income attributable to Fiserv, Inc. per share – diluted	615.9	647.9	671.6

Supplemental Cash Flow Information

Supplemental cash flow information consisted of the following:


	Year Ended December 31,
(In millions)	2023		2022		2021
Interest paid	$	879	$	703	$	648
Income taxes paid	1,219		709		666
Treasury stock purchases settled after the balance sheet date	29		6		—

Software obtained under financing arrangements	188		104		143

2. Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions (“ASU 2022-03”), which clarifies the guidance in ASC Topic 820, Fair Value Measurement, when measuring the fair value of an equity security subject to contractual restrictions that prohibit the sale of an equity security and introduces new disclosure requirements for equity securities subject to contractual sale restrictions that are measured at fair value in accordance with ASC Topic 820. For public entities, ASU 2022-03 is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. The provisions within ASU 2022-03 are to be applied prospectively with any adjustments from the adoption recognized in earnings and disclosed on the date of adoption. The Company adopted ASU 2022-03 effective January 1, 2024, and the adoption did not have a material impact on the Company’s consolidated financial statements.

In 2022, the FASB issued ASU No. 2022-02, Financial Instruments – Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures (“ASU 2022-02”), which among other items, requires that entities disclose current-period gross write-offs by year of origination for financing receivables and net investments in leases. For public entities, the provisions within ASU 2022-02 are to be applied prospectively and are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The Company adopted ASU 2022-02 effective January 1, 2023, and the adoption did not have a material impact on the Company’s financial statement disclosures for the year ended December 31, 2023.

Recently Issued Accounting Pronouncements

In 2023, the FASB issued ASU No. 2023-09*, Income Taxes (Topic 740) - Improvement to Income Tax Disclosures* (“ASU 2023-09”), which establishes new income tax disclosure requirements in addition to modifying and eliminating certain existing requirements. ASU 2023-09 requires entities to consistently categorize and provide greater disaggregation of information within the income tax reconciliation to enable users of financial statements to understand the nature and magnitude of factors contributing to the difference between the effective and statutory tax rates. For public entities, the provisions within ASU 2023-09 are effective for fiscal years beginning after December 15, 2024, and for interim periods of fiscal years beginning after

December 15, 2025. The Company is currently assessing the impact the adoption of ASU 2023-09 will have on its consolidated financial statement disclosures.

In 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280) - Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which enhances and expands the current annual and interim requirements on segment information disclosures. Under the new disclosure requirements, entities will be required to disclose, on an annual and interim basis: significant segment expense categories and amounts for each reportable segment that are included in the reported measure of segment profit or loss and regularly provided to the chief operating decision maker (“CODM”); an aggregate amount and qualitative description of other segment items included in each reported measure of segment profit or loss for each reportable segment; measures of a segment’s profit or loss that are used by the CODM to assess segment performance and decide how to allocate resources; and disclosure of the title and position of the individual or the name of the group identified as the CODM. For public entities, the provisions within ASU 2023-07 are to be applied retrospectively for all comparative periods and are effective for fiscal years beginning after December 15, 2023, and for interim periods of fiscal years beginning after December 15, 2024. The Company is currently assessing the impact the adoption of ASU 2023-07 will have on its consolidated financial statement disclosures.

3. Revenue Recognition

Significant Accounting Policy

ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”), outlines a single comprehensive model to use in accounting for revenue arising from contracts with customers. The core principle, involving a five-step process, of the revenue model is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

Revenue is measured based on consideration specified in a contract with a customer, and excludes any amounts collected on behalf of third parties. Taxes assessed by a governmental authority that are both imposed on and concurrent with a specific revenue-producing transaction, that are collected by the Company from a customer, are excluded from revenue. Shipping and handling activities associated with outbound freight after control over a product has transferred to a customer are accounted for as a fulfillment activity and recognized as revenue at the point in time at which control of the goods transfers to the customer. As a practical expedient, the Company does not adjust the transaction price for the effects of a significant financing component if, at contract inception, the period between customer payment and the transfer of goods or services is expected to be one year or less.

Nature of Goods and Services

The Company’s operations are comprised of the Acceptance segment, the Fintech segment and the Payments segment (see Note 20). The following is a description of principal activities from which the Company generates its revenue. Contracts with customers are evaluated on a contract-by-contract basis as contracts may include multiple types of goods and services as described below.

Processing and Services

Processing and services revenue is generated from account- and transaction-based fees for merchant transaction processing and acquiring, electronic billing and payment services, electronic funds transfer and debit/credit processing services; consulting and professional services; and software maintenance for ongoing client support.

The Company recognizes processing and services revenue in the period in which the specific service is performed unless they are not deemed distinct from other goods or services in which revenue would then be recognized as control is transferred of the combined goods and services. The Company’s arrangements for processing and services typically consist of an obligation to provide specific services to its customers on a when and if needed basis (a stand-ready obligation) and revenue is recognized from the satisfaction of the performance obligations in the amount billable to the customer. These services are typically provided under a fixed or declining (tier-based) price per unit based on volume of service; however, pricing for services may also be based on minimum monthly usage fees. Fees for the Company’s processing and services arrangements are typically billed and paid on a monthly basis.

Product

Product revenue is generated from print and card production, software license, and hardware (primarily POS device) sales.

For software license agreements that are distinct, the Company recognizes software license revenue upon delivery, assuming a contract is deemed to exist. Revenue for arrangements with customers that include significant customization, modification or

production of software such that the software is not distinct is typically recognized over time based upon efforts expended, such as labor hours, to measure progress towards completion. For arrangements involving hosted licensed software for the customer, a software element is considered present to the extent the customer has the contractual right to take possession of the software at any time during the hosting period without significant penalty and it is feasible for the customer to either operate the software on their own hardware or contract with another vendor to host the software. In certain instances, the Company may offer extended payment terms beyond one year. To the extent a significant financing component exists, it is calculated as the difference between the promised consideration and the present value of the software license fees utilizing a discount rate reflective of a separate financing transaction, and is recognized as interest income over the extended payment period. The cash selling price of the software license fee is recognized as revenue at the point in time when the software is transferred to the customer.

The Company sells or leases hardware (POS devices) and other peripherals as part of its contracts with customers. Hardware typically consists of POS terminals or Clover® devices. The Company does not manufacture hardware; rather, it purchases hardware from third-party vendors and holds such hardware in inventory until purchased by a customer. The Company accounts for sales of hardware as a separate performance obligation and recognizes the revenue at its standalone selling price when the customer obtains control of the hardware.

Significant Judgments in Application of the Guidance

The Company uses the following methods, inputs and assumptions in determining amounts of revenue to recognize:

Identification of Performance Obligations

To identify its performance obligations, the Company considers all of the goods or services promised in the contract regardless of whether they are explicitly stated or are implied by customary business practices. For multi-element arrangements, the Company accounts for individual goods or services as a separate performance obligation if they are distinct, the good or service is separately identifiable from other items in the arrangement and if a customer can benefit from it on its own or with other resources that are readily available to the customer. If these criteria are not met, the promised goods or services are accounted for as a combined performance obligation. Determining whether goods or services are distinct performance obligations that should be accounted for separately may require significant judgment.

Technology or service components from third parties are frequently embedded in or combined with the Company’s applications or service offerings. Whether the Company recognizes revenue based on the gross amount billed to a customer or the net amount retained involves judgment that depends on the relevant facts and circumstances, including the level of contractual responsibilities and obligations for delivering solutions to end customers, to determine whether control of goods and services is obtained prior to their transfer to a customer.

Determination of Transaction Price

The transaction price is determined based on the consideration to which the Company will be entitled in exchange for transferring products or services to the customer. The Company includes any fixed charges within its contracts as part of the total transaction price. To the extent that variable consideration is not constrained, the Company includes an estimate of the variable amount, as appropriate, within the total transaction price and updates its assumptions over the duration of the contract.

Assessment of Estimates of Variable Consideration

Many of the Company’s contracts with customers contain some component of variable consideration; however, the constraint will generally not result in a reduction in the estimated transaction price for most forms of variable consideration. The Company may constrain the estimated transaction price in the event of a high degree of uncertainty as to the final consideration amount owed because of an extended length of time over which fees may be adjusted.

Allocation of Transaction Price

The transaction price (including any discounts or rebates) is allocated between distinct goods and services in a multi-element arrangement based on their relative standalone selling prices. The standalone selling prices are determined based on the prices at which the Company separately sells each good or service. For items that are not sold separately, the Company estimates the standalone selling prices using available information such as market conditions and internally approved pricing guidelines. Judgment may be required to determine standalone selling prices for each performance obligation and whether it depicts the amount the Company expects to receive in exchange for the related good or service.

Contract Modifications

Contract modifications occur when the Company and its customers agree to modify existing customer contracts to change the scope or price (or both) of the contract or when a customer terminates some, or all, of the existing services provided by the Company. When a contract modification occurs, it requires the Company to exercise judgment to determine if the modification should be accounted for as (i) a separate contract, (ii) the termination of the original contract and creation of a new contract, or (iii) a cumulative catch up adjustment to the original contract. Further, contract modifications require the identification and evaluation of the performance obligations of the modified contract, including the allocation of consideration to the remaining performance obligations and the period of revenue recognition for each identified performance obligation.

Disaggregation of Revenue

The table below presents the Company’s revenue disaggregated by type of revenue, including a reconciliation with its reportable segments. The majority of the Company’s revenue is earned domestically, with revenue generated internationally comprising approximately 15%, 14% and 14% of total revenue for the years ended December 31, 2023, 2022 and 2021, respectively.


(In millions)	Reportable Segments
Type of Revenue	Acceptance		Fintech		Payments		Corporate and Other		Total
Year Ended December 31, 2023
Processing	$	6,942	$	1,671	$	4,902	$	23	$	13,538
Hardware, print and card production	978		60		1,091		—		2,129
Professional services	25		469		318		—		812
Software maintenance	—		531		40		—		571
License and termination fees	40		198		189		—		427
Output Solutions postage	—		—		—		1,071		1,071
Other	147		242		156		—		545
Total Revenue	$	8,132	$	3,171	$	6,696	$	1,094	$	19,093

Year Ended December 31, 2022
Processing	$	6,226	$	1,608	$	4,709	$	22	$	12,565
Hardware, print and card production	918		42		1,036		—		1,996
Professional services	21		484		278		—		783
Software maintenance	—		553		24		—		577
License and termination fees	69		252		114		—		435
Output Solutions postage	—		—		—		989		989
Other	58		231		101		2		392
Total Revenue	$	7,292	$	3,170	$	6,262	$	1,013	$	17,737

Year Ended December 31, 2021
Processing	$	5,511	$	1,544	$	4,497	$	32	$	11,584
Hardware, print and card production	830		44		913		—		1,787
Professional services	43		471		265		—		779
Software maintenance	—		557		11		—		568
License and termination fees	47		186		65		—		298
Output Solutions postage	—		—		—		860		860
Other	48		220		82		—		350
Total Revenue	$	6,479	$	3,022	$	5,833	$	892	$	16,226

Contract Balances

The following table provides information about contract assets and contract liabilities from contracts with customers:


	December 31,
(In millions)	2023		2022		2021
Contract assets	$	754	$	551	$	541
Contract liabilities	1,011		860		810

Contract assets, reported within other long-term assets in the consolidated balance sheets, primarily relate to customer discounts where revenue recognition and payment of consideration under the contract is contingent upon the transfer of services to a customer over the contractual period. Contract liabilities primarily relate to advance consideration received from customers (deferred revenue) for which transfer of control occurs, and therefore revenue is recognized, as services are provided. Contract balances are reported in a net contract asset or liability position on a contract-by-contract basis at the end of each reporting period.

During the years ended December 31, 2023 and 2022, contract assets and contract liabilities increased primarily due to customer discounts, customer prepaid maintenance and deferred conversion revenue associated with long-term contracts obtained during the respective year. The Company recognized $625 million and $585 million of revenue during the years ended December 31, 2023 and 2022, respectively, that was included in the contract liabilities balance at the beginning of the year.

Transaction Price Allocated to Remaining Performance Obligations

The following table includes estimated processing, services and product revenue expected to be recognized in the future related to performance obligations that were unsatisfied (or partially unsatisfied) at December 31, 2023:


(In millions)
Year Ending December 31,
2024	$	2,435
2025	1,876
2026	1,304
2027	837
Thereafter	799

The Company applies the optional exemption under ASC 606 and does not disclose information about remaining performance obligations for account- and transaction-based processing fees that qualify for recognition under the as-invoiced practical expedient. These multi-year contracts contain variable consideration for stand-ready performance obligations for which the exact quantity and mix of transactions to be processed are contingent upon the customer’s request. The Company also applies the optional exemptions under ASC 606 and does not disclose information for variable consideration that is a sales-based or usage-based royalty promised in exchange for a license of intellectual property or that is allocated entirely to a wholly unsatisfied performance obligation or to a wholly unsatisfied promise to transfer a distinct good or service in a series. The amounts disclosed above as remaining performance obligations consist primarily of fixed or monthly minimum processing fees and maintenance fees under contracts with an original expected duration of greater than one year.

Contract Costs

The Company incurs incremental costs to obtain a contract as well as costs to fulfill contracts with customers that are expected to be recovered. These costs consist of sales commissions incurred only if a contract is obtained, and customer conversion or implementation related costs. Capitalized sales commissions and conversion or implementation costs were as follows:


	December 31,
(In millions)	2023		2022
Capitalized sales commissions	$	496	$	485
Capitalized conversion or implementation costs	472		420

Capitalized contract costs are amortized based on the transfer of goods or services to which the asset relates. The amortization period also considers expected customer lives and whether the asset relates to goods or services transferred under a specific

anticipated contract. The amortization of capitalized sales commissions is included in selling, general and administrative expenses and amortization of capitalized conversion or implementation costs within cost of processing and services. These costs totaled $195 million, $173 million and $148 million during the years ended December 31, 2023, 2022 and 2021, respectively. Impairment losses recognized during the years ended December 31, 2023, 2022 and 2021 related to capitalized contract costs were not significant.

4. Acquisitions and Dispositions

Acquisitions were accounted for as business combinations using the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations. Purchase price was allocated to the respective identifiable assets acquired and liabilities assumed based on the estimated fair values at the date of acquisitions. The results of operations for the following acquired and divested businesses are included in the consolidated results of the Company from the respective dates of acquisition and through the respective dates of disposition. Pro forma information for these acquired businesses is not provided because they did not have a material effect, individually or in the aggregate, on the Company’s consolidated results of operations.

Acquisitions

Acquisition of Merchant One

On December 20, 2022, the Company acquired Merchant One, Inc. (“Merchant One”), an independent sales organization focused on acquiring merchants in the restaurant, retail and e-commerce industries using an innovative mix of direct and digital marketing strategies, for $302 million, net of $1 million of acquired cash. Merchant One is included within the Acceptance segment and enhances the Company’s merchant distribution and sales force channels.

During the year ended December 31, 2023, the Company identified and recorded measurement period adjustments to the preliminary Merchant One purchase price allocation, including refinements to valuations of acquired intangible assets, which were the result of additional analysis performed and information identified based on facts and circumstances that existed as of the acquisition date. These measurement period adjustments resulted in an increase to goodwill of $61 million and a corresponding decrease in identifiable intangible assets, including customer relationships. Such measurement period adjustments did not have a material impact on the Company’s consolidated statement of income. The allocation of the purchase price was finalized in the second quarter of 2023 and resulted in the recognition of identifiable intangible assets of $118 million, goodwill of $179 million and other net assets of $6 million. Goodwill, which is deductible for tax purposes, is primarily attributed to the anticipated value created by expanding the reach of the Clover® cloud-based POS and business management platform, and select value-added services that enable the Company to deliver new and innovative capabilities to Merchant One’s clients.

The amounts allocated to identifiable intangible assets are as follows:


(In millions)	Gross Carrying Amount		Weighted-Average Useful Life
Residual buyouts	$	83	9 years
Customer relationships	35		10 years
Total	$	118	9 years

Acquisition of Finxact

On April 1, 2022, the Company acquired a remaining ownership interest in Finxact, Inc. (“Finxact”), a developer of cloud-native banking solutions powering digital transformation throughout the financial services sector, for $645 million, net of $27 million of acquired cash. The Company previously held a noncontrolling equity interest in Finxact, which was accounted for under the equity method. The remeasurement of the Company’s previously held equity interest to its acquisition-date fair value resulted in the recognition of a pre-tax gain of $110 million, included within income from investments in unconsolidated affiliates in the consolidated statement of income during the year ended December 31, 2022. Finxact is included within the Fintech segment and advances the Company’s digital banking strategy, expanding its account processing, digital, and payments solutions.

The allocation of purchase price recorded for Finxact was finalized in the fourth quarter of 2022 as follows:


(In millions)
Cash	$	27
Other net assets	1
Intangible assets	105
Goodwill	670
Total consideration	$	803
Less: Fair value of previously held equity interest	(131)
Total purchase price	$	672

Goodwill, which is not deductible for tax purposes, is primarily attributed to the anticipated value created by the combined scale, core platform modernization, and accelerated delivery of enhanced digital banking solutions offered to financial institutions of all sizes. The amounts allocated to identifiable intangible assets were as follows:


(In millions)	Gross Carrying Amount		Weighted-Average Useful Life
Acquired software and technology	$	90	6 years
Trade name	9		5 years
Customer relationships	6		8 years

Total	$	105	6 years

Acquisition of BentoBox

On November 22, 2021, the Company acquired BentoBox CMS, Inc (“BentoBox”), a digital marketing and commerce platform that helps restaurants connect with their guests, for $317 million, net of $24 million of acquired cash. BentoBox is included within the Acceptance segment and expands the Company’s Clover® dining solutions and commerce and business management capabilities.

During the year ended December 31, 2022, the Company identified and recorded measurement period adjustments to the preliminary BentoBox purchase price allocation, including refinements to valuations of acquired intangible assets, which were the result of additional analysis performed and information identified based on facts and circumstances that existed as of the acquisition date. These measurement period adjustments resulted in an increase to goodwill of $62 million, with offsetting amounts to the change in goodwill attributable to a decrease in identifiable intangible assets, including acquired software and technology, of $84 million and deferred tax adjustments of $22 million. Such measurement period adjustments did not have a material impact on the Company’s consolidated statement of income. The allocation of purchase price was finalized in the second quarter of 2022 and resulted in the recognition of identifiable intangible assets of $52 million, goodwill of $266 million and other net assets of $23 million. Goodwill, which is not deductible for tax purposes, is primarily attributed to the anticipated value created by the enhanced strength of the Company’s omnichannel platform to drive increased operational efficiencies for restaurants, enabling operators to deliver seamless and distinct hospitality experiences for their diners.

The amounts allocated to identifiable intangible assets were as follows:


(In millions)	Gross Carrying Amount		Weighted-Average Useful Life
Acquired software and technology	$	25	6 years
Customer relationships and other	27		4 years
Total	$	52	5 years

Acquisition of Pineapple Payments

On May 4, 2021, the Company acquired Pineapple Payments Holdings, LLC (“Pineapple Payments”), an independent sales organization that provides payment processing, proprietary technology, and payment acceptance solutions for merchants, for $207 million, net of $6 million of acquired cash, and including earn-out provisions estimated at a fair value of $30 million. Pineapple Payments is included within the Acceptance segment and expands the reach of the Company’s payment solutions through its technology- and relationship-led distribution channels.

The allocation of purchase price was finalized in the fourth quarter of 2021 and resulted in the recognition of identifiable intangible assets of $127 million, goodwill of $79 million and other net assets of $7 million. Goodwill, of which $59 million is deductible for tax purposes, is primarily attributed to the anticipated value created by the accelerated delivery of new and innovative capabilities to merchant clients.

The amounts allocated to identifiable intangible assets were as follows:


(In millions)	Gross Carrying Amount		Weighted-Average Useful Life
Customer relationships	$	90	17 years
Residual buyouts	20		8 years
Acquired software and technology	6		7 years
Non-compete agreements and other	11		5 years

Total	$	127	14 years

Acquisition of Ondot

On January 22, 2021, the Company acquired a remaining ownership interest in Ondot Systems, Inc. (“Ondot”), a digital experience platform provider for financial institutions, for $271 million, net of $13 million of acquired cash and cash equivalents. The Company previously held a noncontrolling equity interest in Ondot, which was accounted for at cost. The remeasurement of the Company’s previously held equity interest to its acquisition-date fair value resulted in the recognition of a pre-tax gain of $12 million, included within other (expense) income, net in the consolidated statement of income during the year ended December 31, 2021. Ondot is included within the Payments segment and expands the Company’s digital capabilities, enhancing its suite of integrated payments, banking and merchant solutions.

The allocation of purchase price recorded for Ondot was finalized in the third quarter of 2021 as follows:


(In millions)
Cash and cash equivalents	$	13
Receivables and other assets	9
Intangible assets	142
Goodwill	173
Payables and other liabilities	(31)
Total consideration	$	306
Less: Fair value of previously held equity interest	(22)
Total purchase price	$	284

Goodwill, which is not deductible for tax purposes, is primarily attributed to the anticipated value created by the combined scale of integrated digital solutions to consumers, merchants, acquirers, networks and card issuers. The amounts allocated to identifiable intangible assets were as follows:


(In millions)	Gross Carrying Amount		Weighted-Average Useful Life
Acquired software and technology	$	90	6 years
Customer relationships	35		6 years
Non-compete agreements and other	17		4 years
Total	$	142	6 years

Other Acquisitions

On October 9, 2023, the Company acquired Skytef Solucões em Captura de Transações Ltda (“Skytef”), a distributor for independent software vendor partners and merchants of the Company’s Electronic Funds Transfer payments software. Skytef is included within the Acceptance segment and expands the Company’s distribution network and POS applications. On November 1, 2023, the Company acquired Sled S.A. (“Sled”), a provider of instant payment solutions. Sled is included within the

Acceptance segment and expands the Company’s direct payment service capabilities. The Company acquired these businesses in Latin America for an aggregate purchase price, including hold-backs, of approximately $17 million.

On December 29, 2022, the Company acquired OrangeData S.A. (“Yacaré”), an Argentina-based payment service provider that enables customers to transact at merchant locations using QR codes. Yacaré is included within the Acceptance segment and enhances the Company’s instant payment transaction capabilities. On September 1, 2022, the Company acquired NexTable, Inc. (“NexTable”), a provider of cloud-based reservation and table management solutions for restaurants. NexTable is included within the Acceptance segment and expands the Company’s end-to-end restaurant solutions. On June 1, 2022, the Company acquired The LR2 Group, LLC (“City POS”), an independent sales organization that promotes payment processing services and facilitates the sale of POS equipment for merchants. City POS is included within the Acceptance segment and expands the Company’s merchant services business. The Company acquired these businesses for an aggregate purchase price of $44 million, including earn-out provisions estimated at a fair value of $6 million (see Note 10). The allocation of purchase price for these acquisitions resulted in the recognition of identifiable intangible assets of $23 million, goodwill of $22 million and other net assumed liabilities of $1 million. The purchase price allocations for the CityPOS and NexTable acquisitions were finalized in the third and fourth quarters of 2022, respectively. The purchase price allocation for the Yacaré acquisition was finalized in the second quarter of 2023. Measurement period adjustments did not have a material impact on the Company’s consolidated statement of income. Goodwill for these acquisitions, of which $17 million is deductible for tax purposes, is primarily attributed to the value created by expanding the reach of the Company’s payment solutions and enhancing omnichannel capabilities.

The amounts allocated to identifiable intangible assets for other acquisitions acquired in 2022 were as follows:


(In millions)	Gross Carrying Amount		Weighted-Average Useful Life
Acquired software and technology	$	12	7 years
Customer relationships	11		10 years
Total	$	23	9 years

On November 15, 2021, the Company acquired a remaining ownership interest in NetPay Solutions Group (“NetPay”), a multi-channel payment service provider offering a range of onboarding, customer lifecycle, risk management and settlement capabilities to businesses of all sizes. The Company previously held a noncontrolling equity interest in NetPay, which was accounted for under the equity method and approximated acquisition-date fair value. NetPay is included within the Acceptance segment and expands the Company’s merchant services business. On October 1, 2021, the Company acquired Integrity Payments, LLC (“AIP”), an independent sales organization that promotes payment processing services for merchants, which is included within the Acceptance segment. On June 14, 2021, the Company acquired Spend Labs Inc. (“SpendLabs”), a mobile-native, cloud-based software provider of commercial card payment solutions. SpendLabs is included within the Payments segment and expands the Company’s digital capabilities across mobile and desktop devices for small and mid-sized businesses. On March 1, 2021, the Company acquired Radius8, Inc. (“Radius8”), a provider of a platform that uses consumer location and other information to drive incremental merchant transactions. Radius8 is included within the Acceptance segment and enhances the Company’s ability to help merchants increase sales, expand mobile application registration and improve one-to-one target marketing. The Company acquired these businesses for an aggregate purchase price of $87 million, net of the fair value of the Company’s previously held noncontrolling equity interest in NetPay of $14 million and including earn-out provisions estimated at a fair value of $4 million (see Note 10). The allocation of purchase price for these acquisitions resulted in the recognition of identifiable intangible assets of $47 million, goodwill of $61 million and net assumed liabilities of $7 million. The purchase price allocation for the Radius8 acquisition was finalized in the third quarter of 2021 and for SpendLabs in the fourth quarter of 2021. The purchase price allocations for the NetPay and AIP acquisitions were finalized in the first quarter of 2022. Measurement period adjustments did not have a material impact on the consolidated statements of income. Goodwill for these acquisitions, of which $14 million is deductible for tax purposes, is primarily attributed to synergies, the anticipated value created by advancing digital capabilities to the Company’s clients, and selling the Company’s products and services to the acquired businesses’ existing client base.

The amounts allocated to identifiable intangible assets for other acquisitions acquired in 2021 were as follows:


(In millions)	Gross Carrying Amount		Weighted-Average Useful Life
Acquired software and technology	$	31	6 years
Customer relationships	9		10 years
Residual buyouts	7		5 years
Total	$	47	7 years

Dispositions

Disposition of Financial Reconciliation Business

On July 25, 2023, the Company sold its financial reconciliation business, which was reported within the Fintech segment, for cash proceeds of $235 million. The Company recognized a pre-tax gain of $172 million on the sale, recorded within net gain on sale of businesses and other assets, with a related tax expense of $48 million recorded within the income tax provision, in the consolidated statement of income for the year ended December 31, 2023. The pre-tax gain was comprised of the difference between the consideration received and the net carrying amount of the business, including $38 million of allocated goodwill, $15 million of other net assets, primarily consisting of trade accounts receivable and capitalized software, and $10 million of accumulated foreign currency translation losses which were reclassified from accumulated other comprehensive loss.

Disposition of Fiserv Costa Rica and Systems Integration Services

On October 17, 2022, the Company sold Fiserv Costa Rica, S.A. and its Systems Integration Services (“SIS”) operations, which provides information technology engineering services in the U.S. and India, to a single buyer, for an aggregate sales price of $49 million. The Company recognized a pre-tax gain of $44 million on the sales, recorded within net gain on sale of businesses and other assets, with a related tax expense of $8 million recorded within the income tax provision, in the consolidated statement of income for the year ended December 31, 2022. The Company recognized a pre-tax loss of $3 million, recorded within net gain on sale of businesses and other assets during the year ended December 31, 2023, associated with final working capital adjustments related to the disposition of Fiserv Costa Rica, S.A. Both Fiserv Costa Rica, S.A. and SIS were reported primarily within the Fintech segment.

Disposition of Korea Operations

On September 30, 2022, the Company sold its Korea operations, which were reported within the Acceptance segment, for total consideration of $50 million, consisting of $43 million in net cash and an equity interest in the buyer of $7 million. The Company recognized a pre-tax loss of $127 million on the sale, recorded within net gain on sale of businesses and other assets in the consolidated statement of income for the year ended December 31, 2022. The pre-tax loss was comprised of the difference between the consideration received and the net carrying amount of the business, including $40 million of allocated goodwill, $48 million of customer relationship net intangible assets and $56 million of accumulated foreign currency translation losses, which were reclassified from accumulated other comprehensive loss.

5. Settlement Assets and Obligations

Settlement assets and obligations represent intermediary balances arising from the settlement process, which involves the transfer of funds between card issuers, payment networks, merchants and consumers, and collateral amounts held to manage merchant credit risk, primarily associated with the Company’s merchant acquiring services. The Company records settlement assets and obligations upon processing a payment transaction. Settlement assets represent amounts receivable from agents, payment networks, bank partners, merchants or direct consumers for submitted merchant transactions, and funds received by the Company in advance of paying to merchants or payees. Settlement obligations represent the unpaid amounts that are due to merchants and payees for their payment transactions and collateral deposits.

The principal components of the Company’s settlement assets and obligations were as follows:


	December 31,
(In millions)	2023		2022
Settlement assets
Cash and cash equivalents	$	1,756	$	2,283
Receivables	25,925		19,199
Total settlement assets	$	27,681	$	21,482
Settlement obligations
Payment instruments outstanding	$	733	$	650
Card settlements and collateral deposits due to merchants	26,948		20,832
Total settlement obligations	$	27,681	$	21,482

6. Intangible Assets

Identifiable intangible assets consisted of the following:


	Gross Carrying Amount		Accumulated Amortization		Net Book Value
(In millions)
December 31, 2023
Customer relationships	$	14,669	$	7,594	$	7,075
Acquired software and technology	2,148		1,148		1,000
Trade names	641		356		285
Purchased software	1,087		520		567
Capitalized software and other intangibles	3,356		1,073		2,283
Total	$	21,901	$	10,691	$	11,210

December 31, 2022
Customer relationships	$	14,795	$	6,371	$	8,424
Acquired software and technology	2,510		1,234		1,276
Trade names	633		295		338
Purchased software	1,146		595		551
Capitalized software and other intangibles	2,601		775		1,826
Total	$	21,685	$	9,270	$	12,415

Gross software development costs capitalized for new products and enhancements to existing products totaled $870 million, $807 million and $613 million for the years ended December 31, 2023, 2022 and 2021, respectively. Amortization expense associated with the above identifiable intangible assets was $2,360 million, $2,441 million and $2,548 million for the years ended December 31, 2023, 2022 and 2021, respectively.

The Company estimates that annual amortization expense with respect to intangible assets recorded at December 31, 2023 will be as follows:


(In millions)
Year Ending December 31,
2024	$	2,276
2025	2,007
2026	1,759
2027	1,395
2028	1,047
Thereafter	2,726
Total	$	11,210

7. Goodwill

The following table presents changes in goodwill during the years ended December 31, 2023 and 2022.


	Reportable Segments
(In millions)	Acceptance		Fintech		Payments		Total
Goodwill - December 31, 2021	$	21,382	$	2,039	$	13,012	$	36,433
Acquisitions and valuation adjustments	202		670		—		872
Dispositions	(40)		(5)		—		(45)


Foreign currency translation	(344)		(2)		(103)		(449)
Goodwill - December 31, 2022	21,200		2,702		12,909		36,811
Acquisitions and valuation adjustments	66		—		—		66
Dispositions	—		(38)		—		(38)

Foreign currency translation	302		2		62		366
Goodwill - December 31, 2023	$	21,568	$	2,666	$	12,971	$	37,205

8. Investments in Unconsolidated Affiliates

The Company maintains investments in various affiliates that are accounted for as equity method investments, the most significant of which are related to the Company’s merchant alliances. The Company’s share of net income or loss from these investments is reported within (loss) income from investments in unconsolidated affiliates and the related tax expense or benefit is reported within the income tax provision in the consolidated statements of income.

Merchant Alliances

The Company maintains ownership interests in various merchant alliances. A merchant alliance is an agreement between the Company and a financial institution that combines the processing capabilities and management expertise of the Company with the visibility and distribution channel of the financial institution. A merchant alliance acquires credit and debit card transactions from merchants. The Company provides processing and other services to the alliance and charges fees to the alliance based on contractual pricing (see Note 19). The Company’s investment in its merchant alliances was $1.9 billion and $2.1 billion at December 31, 2023 and 2022, respectively, and is reported within investments in unconsolidated affiliates in the consolidated balance sheets.

Other Equity Method Investments

The Company maintains noncontrolling ownership interests in Sagent M&C, LLC (“Sagent”) and defi SOLUTIONS Group, LLC (collectively the “Lending Joint Ventures”), which are accounted for under the equity method. In March 2022, Sagent completed a transaction with a third party for the contribution from and the sale by such third party to Sagent of certain intangible and tangible personal property rights, resulting in a dilution of the Company’s ownership interest in Sagent. As a result of the transaction, the Company recognized a net pre-tax gain of $80 million within (loss) income from investments in unconsolidated affiliates, with related tax expense of $19 million recorded through the income tax provision, in the consolidated statement of income for the year ended December 31, 2022. The Company’s remaining noncontrolling ownership interest in

Sagent continues to be accounted for as an equity method investment. The Company’s net investment in the Lending Joint Ventures was $55 million and $72 million at December 31, 2023 and 2022, respectively, and is reported within investments in unconsolidated affiliates in the consolidated balance sheets. In addition, the Company maintains other strategic investments accounted for under the equity method. The Company's aggregate investment in such entities was $254 million and $257 million at December 31, 2023 and 2022, respectively, and is reported within investments in unconsolidated affiliates in the consolidated balance sheets.

The Lending Joint Ventures maintain, as amended in April 2022, variable-rate term loan facilities with aggregate outstanding borrowings of $437 million in senior unsecured debt at December 31, 2023 and variable-rate revolving credit facilities with an aggregate borrowing capacity of $83 million with a syndicate of banks, which mature in April 2027. There were $24 million of aggregate outstanding borrowings on the revolving credit facilities at December 31, 2023. The Company has guaranteed the debt of the Lending Joint Ventures and does not anticipate that the Lending Joint Ventures will fail to fulfill their debt obligations (see Note 10).

In February 2021, in connection with a third-party merger transaction that resulted in a dilution of the Company’s equity ownership interest in InvestCloud Holdings, LLC (“InvestCloud”), the Company made an additional capital contribution of $200 million into the combined entity and recognized a pre-tax gain of $28 million within (loss) income from investments in unconsolidated affiliates in the consolidated statement of income, with related tax expense of $6 million recorded through the income tax provision, during the year ended December 31, 2021. In June 2021, the Company sold its entire ownership interest in InvestCloud for $466 million, resulting in a pre-tax gain of $33 million, recorded within (loss) income from investments in unconsolidated affiliates in the consolidated statement of income, with related tax expense of $8 million recorded through the income tax provision, during the year ended December 31, 2021.

The Company classifies distributions from its investments accounted for using the equity method in the consolidated statements of cash flows using the cumulative earnings approach. Under this approach, distributions received from unconsolidated affiliates are classified as cash flows from operating activities to the extent that the cumulative distributions do not exceed the cumulative earnings on the investment. To the extent the current period distribution exceeds the cumulative earnings on the investment, the distribution is considered a return of investment and is classified as cash flows from investing activities. The Company received cash distributions from unconsolidated affiliates of $191 million, $211 million and $149 million, of which $136 million, $138 million and $115 million were recorded as cash flows from investing activities in the Company’s consolidated statements of cash flows for the years ended December 31, 2023, 2022 and 2021, respectively.

Other Equity Investments

The Company also maintains investments, of which it does not have significant influence, in various equity securities without a readily determinable fair value. Such investments totaled $156 million and $135 million at December 31, 2023 and 2022, respectively, and are included within other long-term assets in the consolidated balance sheets. The Company reviews these investments each reporting period to determine whether an impairment or observable price change for the investment has occurred. To the extent such events or changes occur, the Company evaluates the fair value compared to its cost basis in the investment. Gains or losses from a sale of these investments or a change in fair value are included within other (expense) income, net in the consolidated statements of income for the period. During the year ended December 31, 2021, the Company remeasured its equity interest in Ondot to fair value upon the acquisition of the remaining ownership interest, resulting in the recognition of a pre-tax gain of $12 million (see Note 4). Other adjustments made to the values recorded for certain equity securities and gains and losses from sales of equity securities during the years ended December 31, 2023, 2022 and 2021 were not significant.

9. Derivatives and Hedging Instruments

In order to limit exposure to risk, the Company maintains derivative instruments with creditworthy institutions to hedge against changing interest rates and foreign currency rate fluctuations. The Company utilizes forward exchange contracts, fixed-to-fixed cross-currency rate swap contracts and other non-derivative hedging instruments to manage such risk. The Company has designated these instruments as cash flow hedges, net investment hedges, or fair value hedges, as further described below. Derivative instruments maintained by the Company are measured on a recurring basis and are recorded at fair value either as an asset or liability in the consolidated balance sheets (see Note 10).

Cash Flow Hedges

The Company maintains forward exchange contracts, designated as cash flow hedges, to hedge foreign currency exposure to the Indian Rupee. The notional amount of these derivatives was $443 million and $346 million at December 31, 2023 and 2022, respectively. Based on the amounts recorded in accumulated other comprehensive loss at December 31, 2023, the Company

estimates that it will recognize gains of approximately $2 million in cost of processing and services during the next twelve months as foreign exchange forward contracts settle.

The Company previously entered into treasury lock agreements (“Treasury Locks”), designated as cash flow hedges to manage exposure to fluctuations in benchmark interest rates in anticipation of the issuance of fixed rate debt in connection with the acquisition and refinancing of certain indebtedness of First Data Corporation (“First Data”) and its subsidiaries. In 2019, concurrent with the issuance of U.S dollar-denominated senior notes, the Treasury Locks were settled resulting in a loss, net of income taxes, and recorded in accumulated other comprehensive loss that is being amortized to earnings over the terms of the originally forecasted interest payments. The unamortized balance recorded in accumulated other comprehensive loss related to the Treasury Locks was $116 million and $130 million at December 31, 2023 and 2022, respectively. Based on the amounts recorded in accumulated other comprehensive loss at December 31, 2023, the Company estimates that it will recognize approximately $14 million in net interest expense during the next twelve months related to settled interest rate hedge contracts.

Net Investment Hedges

At December 31, 2023, aggregate notional fixed-to-fixed cross-currency rate swaps of 400 million Euros and 751 million Singapore Dollars have been designated as net investment hedges to hedge a portion of the Company’s net investment in certain subsidiaries whose functional currencies are the Euro and Singapore Dollar.

The Company has also designated certain of its Euro- and British Pound-denominated senior notes and Euro commercial paper notes as net investment hedges to hedge a portion of its net investment in certain subsidiaries whose functional currencies are the Euro and the British Pound. On May 24, 2023, in conjunction with the public offering and issuance of the 4.500% Euro-denominated senior notes due in May 2031 (see Note 12), the Company elected to designate such notes as a net investment hedge and simultaneously de-designated its existing net investment hedge election on its 0.375% Euro-denominated senior notes due in July 2023. To mitigate foreign currency exchange exposure on the 0.375% Euro-denominated senior notes, the Company entered into a forward exchange contract, not designated as a hedge, with matching critical terms which settled in July 2023 in conjunction with the maturity of the senior notes.

Foreign currency transaction gains or losses on the qualifying net investment hedge instruments are recorded as foreign currency translation within other comprehensive income (loss) in the consolidated statements of comprehensive income and will remain in accumulated other comprehensive loss in the consolidated balance sheets until the sale or complete liquidation of the underlying foreign subsidiaries.

Foreign currency transaction gains (losses), net of income tax, related to net investment hedges that were recorded as foreign currency translation within other comprehensive income (loss) in the consolidated statements of comprehensive income were as follows:



	Year Ended December 31,
(In millions)	2023		2022		2021
Cross-currency rate swap contracts	$	(29)	$	(17)	$	—
Foreign currency-denominated debt	(177)		236		110

The Company recorded income tax impacts of $68 million, $(73) million and $36 million for the years ended December 31, 2023, 2022 and 2021, respectively, in other comprehensive income (loss) from the translation of foreign currency-denominated senior notes, Euro commercial paper notes and cross-currency rate swap contracts.

Fair Value Hedges

The Company maintains a fixed-to-fixed cross-currency rate swap contract of 525 million notional British Pounds, designated as a fair value hedge, to mitigate the spot foreign exchange rate risk on the principal amount of its British Pound-denominated 2.250% senior notes due in July 2025. Changes in the fair value of the cross-currency rate swap, along with the offsetting changes in the fair value of the senior notes, attributable to fluctuations in the British Pound/U.S. dollar spot rates are recognized in other (expense) income, net within the consolidated statements of income. The Company also maintains fixed-to-fixed cross-currency rate swap contracts in the aggregate notional amount of 157 million Euros, designated as fair value hedges, to mitigate the spot foreign exchange rate risk on the principal amount of a Euro-denominated intercompany note. Changes in

the fair value of the cross-currency rate swaps, along with the offsetting change in the fair value of the intercompany note, attributable to fluctuations in the Euro/U.S. dollar spot rates are recognized in other (expense) income, net within the consolidated statements of income.

10. Fair Value Measurements

The fair values of cash equivalents, trade accounts receivable, other current assets, settlement assets and obligations, accounts payable, and client deposits approximate their respective carrying values due to the short period of time to maturity. Derivative instruments maintained by the Company (see Note 9) are measured on a recurring basis based on foreign currency spot rates and forwards quoted by banks and foreign currency dealers and are marked to market each period. Contingent consideration related to certain of the Company’s acquisitions (see Note 4) is estimated using the present value of a probability-weighted assessment approach based on the likelihood of achieving the earn-out criteria. The fair value of the Company’s contingent liability for current expected credit losses associated with its debt guarantees, as further described below, is estimated based on assumptions of future risk of default and the corresponding level of credit losses at the time of default.

Assets and liabilities measured at fair value on a recurring basis consisted of the following:


			Fair Value at December 31,
(In millions)	Classification	Fair Value Hierarchy	2023		2022
Assets
Forward exchange contracts designated as cash flow hedges	Prepaid expenses and other current assets	Level 2	$	2	$	—
Cross-currency rate swap contract designated as fair value hedge	Other long-term assets	Level 2	3		—


Liabilities
Cross-currency rate swap contracts designated as fair value hedges	Other long-term liabilities	Level 2	$	1	$	—
Forward exchange contracts designated as cash flow hedges	Accounts payable and accrued expenses	Level 2	—		7
Forward exchange contracts designated as cash flow hedges	Other long-term liabilities	Level 2	—		1
Cross-currency rate swap contracts designated as net investment hedges	Other long-term liabilities	Level 2	61		23
Contingent consideration	Accounts payable and accrued expenses	Level 3	2		6
Contingent consideration	Other long-term liabilities	Level 3	—		2

Contingent debt guarantee	Other long-term liabilities	Level 3	23		21

Debt

The Company’s senior notes are recorded at amortized cost but measured at fair value for disclosure purposes. The estimated fair value of senior notes was based on matrix pricing which considers readily observable inputs of comparable securities (Level 2 of the fair value hierarchy). The carrying value of the Company’s foreign lines of credit, term loan credit agreement, commercial paper notes and revolving credit facility borrowings approximates fair value as these instruments have variable interest rates and the Company has not experienced any change to its credit ratings (Level 2 of the fair value hierarchy). The estimated fair value of total debt, excluding finance leases and other financing obligations, was $21.6 billion and $19.2 billion at December 31, 2023 and 2022, respectively, and the carrying value was $22.2 billion and $20.6 billion at December 31, 2023 and 2022, respectively.

Debt Guarantee Arrangements

The Company maintains liabilities for its obligations to perform over the term of its debt guarantee arrangements with the Lending Joint Ventures (see Note 8), which are reported within other long-term liabilities in the consolidated balance sheets. In April 2022, the Lending Joint Ventures amended their respective term loans and revolving credit facilities, increasing aggregate borrowing capacity by $75 million and extending the maturity to April 2027. The Company elected to guarantee this incremental indebtedness, resulting in aggregate guarantees of $520 million and a pre-tax expense of $48 million related to such debt guarantee obligations, recorded within other (expense) income, net in the consolidated statement of income and within

other operating activities in the consolidated statement of cash flows, during the year ended December 31, 2022. The Company is entitled to receive a defined fee in exchange for its incremental guarantee of this indebtedness. The Company has not made any payments under the guarantees, nor has it been called upon to do so, and does not anticipate that the Lending Joint Ventures will fail to fulfill their debt obligations.

The non-contingent component of the Company’s debt guarantee arrangements is recorded at amortized cost, but measured at fair value for disclosure purposes. The carrying value of the Company’s non-contingent liability of $31 million and $40 million approximates the fair value at December 31, 2023 and 2022, respectively (Level 3 of the fair value hierarchy). Such guarantees will be amortized in future periods over the contractual term of the debt. The contingent component of the Company’s debt guarantee arrangements represents the current expected credit losses to which the Company is exposed. The amount of the liability is estimated based on certain financial metrics of the Lending Joint Ventures and historical industry data, which is used to develop assumptions of the likelihood the guaranteed parties will default and the level of credit losses in the event a default occurs. The Company recognized $7 million, $12 million and $12 million during the years ended December 31, 2023, 2022 and 2021, respectively, within other (expense) income, net in its consolidated statements of income related to its release from risk under the non-contingent guarantees as well as a change in the provision of estimated credit losses associated with the indebtedness of the Lending Joint Ventures.

Other Non-Financial Assets

Certain of the Company’s non-financial assets are measured at fair value on a non-recurring basis, including property and equipment, lease ROU assets, equity securities without a readily determinable fair value, goodwill and other intangible assets, and are subject to fair value adjustment in certain circumstances. Additional information about fair value adjustments recorded on a non-recurring basis during the years ended December 31, 2023, 2022 and 2021 is included in Notes 1 and 8.

11. Leases

Company as Lessee

The Company primarily leases office space, data centers and equipment from third parties. The Company determines if a contract is a lease at inception. A contract contains a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The lease term begins on the commencement date, which is the date the Company takes possession or obtains control of the asset, and may include options to extend or terminate the lease when it is reasonably certain that the option will be exercised. Many of the Company’s leases contain renewal options for varying periods, which can be exercised at the Company’s sole discretion. Leases are classified as operating or finance leases based on factors such as the lease term, lease payments, and the economic life, fair value and estimated residual value of the asset. Certain leases include options to purchase the leased asset at the end of the lease term, which is assessed as a part of the Company’s lease classification determination. The Company’s leases have remaining lease terms ranging from one month to 20 years.

The Company uses the right-of-use model to account for its leases. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized on the commencement date based on the present value of lease payments over the lease term. ROU assets are based on the lease liability and are increased by prepaid lease payments and decreased by lease incentives received. For leases where the Company is reasonably certain to exercise a renewal option, such option periods have been included in the determination of the Company’s ROU assets and lease liabilities. Certain leases require the Company to pay taxes, insurance, maintenance and other operating expenses associated with the leased asset. Such amounts are not included in the measurement of the ROU assets and lease liabilities to the extent they are variable in nature. These variable lease costs are recognized as variable lease expenses when incurred. As a practical expedient, lease agreements with lease and non-lease components are accounted for as a single lease component for all asset classes. The Company estimates contingent lease incentives when it is probable that the Company is entitled to the incentive at lease commencement. The Company elected the short-term lease recognition exemption for all leases that qualify. Therefore, leases with an initial term of 12 months or less are not recorded on the consolidated balance sheets; instead, lease payments are recognized as lease expense on a straight-line basis over the lease term. The depreciable life of the ROU assets and leasehold improvements are limited by the expected lease term unless the Company is reasonably certain of a transfer of title or purchase option. The Company uses its incremental borrowing rate to discount future lease payments in the calculation of the lease liability and ROU asset based on the information available on the commencement date for each lease. The Company’s leases typically do not provide an implicit rate. The determination of the incremental borrowing rate requires judgment and is determined using the Company’s current unsecured borrowing rate, adjusted for various factors such as collateralization, currency and term to align with the terms of the lease.

Lease Balances


	December 31,
(In millions)	2023		2022
Assets
Operating lease assets (1)	$	628	$	586
Finance lease assets (2)	623		541
Total lease assets	$	1,251	$	1,127

Liabilities
Current:
Operating lease liabilities (1)	$	118	$	124
Finance lease liabilities (2)	187		156
Noncurrent:
Operating lease liabilities (1)	665		628
Finance lease liabilities (2)	430		366
Total lease liabilities	$	1,400	$	1,274

(1) Operating lease assets are included within other long-term assets, and operating lease liabilities are included within accounts payable and accrued expenses (current portion) and other long-term liabilities (noncurrent portion) in the consolidated balance sheets.

(2)Finance lease assets are included within property and equipment, net and finance lease liabilities are included within short-term and current maturities of long-term debt (current portion) and long-term debt (noncurrent portion) in the consolidated balance sheets.

Components of Lease Cost


	Year Ended December 31,
(In millions)	2023		2022		2021
Operating lease cost (1)	$	185	$	186	$	162
Finance lease cost: (2)
Amortization of right-of-use assets	189		169		122
Interest on lease liabilities	31		17		23
Total lease cost	$	405	$	372	$	307

(1)Operating lease expense is included within cost of processing and services, cost of product and selling, general and administrative expense, dependent upon the nature and use of the ROU asset, in the consolidated statements of income. Operating lease expense includes approximately $41 million, $38 million and $39 million of variable lease costs during the years ended December 31, 2023, 2022 and 2021, respectively.

(2)Finance lease expense is recorded as depreciation and amortization expense within cost of processing and services, cost of product and selling, general and administrative expense, dependent upon the nature and use of the ROU asset, and interest expense, net in the consolidated statements of income.

Supplemental Cash Flow Information


	Year Ended December 31,
(In millions)	2023		2022		2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows - operating leases	$	134	$	131	$	153
Operating cash flows - finance leases	31		17		23
Financing cash flows - finance leases	207		183		161

Right-of-use assets obtained in exchange for lease liabilities:
Operating leases	$	76	$	109	$	197
Finance leases	279		234		231

Lease Term and Discount Rate


	December 31,
	2023		2022
Weighted-average remaining lease term:
Operating leases	10 years		10 years
Finance leases	4 years		4 years
Weighted-average discount rate:
Operating leases	2.8	%	2.7	%
Finance leases	4.8	%	3.8	%

Maturity of Lease Liabilities

Future minimum rental payments on leases with initial non-cancellable lease terms in excess of one year were due as follows at December 31, 2023:


(In millions)
Year Ending December 31,	Operating Leases (1)		Finance Leases (2)
2024	$	131	$	216
2025	121		187
2026	118		149
2027	109		95
2028	81		33
Thereafter	386		6
Total lease payments	946		686
Less: Interest	(163)		(69)
Present value of lease liabilities	$	783	$	617

(1)Operating lease payments include $52 million related to options to extend lease terms that are reasonably certain of being exercised.

(2)Finance lease payments exclude $59 million of legally binding minimum lease payments for leases signed but not yet commenced. Finance leases that have been signed but not yet commenced are for equipment and will commence in 2024 with lease terms of up to 5 years.

Company as Lessor

The Company owns certain POS terminal equipment which it leases to merchants. Leases are classified as operating or sales-type leases based on factors such as the lease term, lease payments, and the economic life, fair value and estimated residual value of the asset. The terms of the leases typically range from one month to four years. For operating leases, the minimum lease payments received are recognized as lease income on a straight-line basis over the lease term and the leased asset is included in property and equipment, net in the consolidated balance sheets and depreciated over its estimated useful life. For sales-type leases, selling profit is recognized at the commencement date of the lease to the extent the fair value of the underlying asset is different from its carrying amount. Selling profit is directly impacted by the Company’s estimate of the amount to be derived from the residual value of the asset at the end of the lease term. The residual value of the asset is computed using various assumptions, including the expected value of the underlying asset at the end of the lease term. Unearned income is recognized as interest income over the lease term. For sales-type leases, the Company derecognizes the carrying amount of the underlying leased asset and recognizes a net investment in the leased asset in the consolidated balance sheets. The net investment in a leased asset is computed based on the present value of the minimum lease payments not yet received, along with the present value of the residual value of the asset less unearned interest income.

Components of Lease Income


	Year Ended December 31,
(In millions)	2023		2022		2021
Sales-type leases:
Selling profit (1)	$	56	$	55	$	61
Interest income (1)	81		99		85
Operating lease income (2)	259		279		297

(1)Selling profit includes $160 million, $147 million and $141 million recorded within product revenue with a corresponding charge of $104 million, $92 million and $80 million recorded within cost of product in the consolidated statements of income for the years ended December 31, 2023, 2022 and 2021, respectively. Interest income is included within product revenue in the consolidated statements of income.

(2)Operating lease income includes a nominal amount of variable lease income and is included within product revenue in the consolidated statements of income for each of the years ended December 31, 2023, 2022 and 2021.

Components of Net Investment in Sales-Type Leases


	December 31,
(In millions)	2023		2022
Minimum lease payments	$	465	$	428
Residual values	20		20
Less: Unearned interest income	(177)		(169)
Net investment in leases (1)	$	308	$	279

(1)Net investments in leased assets are included within prepaid expenses and other current assets (current portion) and other long-term assets (noncurrent portion) in the consolidated balance sheets.

Maturities of Future Minimum Lease Payment Receivables

Future minimum lease payments receivable on sales-type leases were as follows at December 31, 2023:


(In millions)
Year Ending December 31,	Sales-Type Leases
2024	$	182
2025	147
2026	95
2027	38
2028	3
Thereafter	—
Total minimum lease payments	$	465

Lease Payment Receivables Portfolio

The Company accounts for lease payment receivables in connection with POS terminal equipment as a single portfolio. The Company recognizes an allowance for expected credit losses on lease payment receivables at the commencement date of the lease by considering the term, geography and internal credit risk ratings of such lease. The internal credit risk ratings are established based on lessee specific risk factors, such as FICO score, number of years the lessee has been in business and the nature of the lessee’s industry, which are considered indicators of the likelihood a lessee may default in the future. The allowance for estimated credit losses on lease payment receivables was $50 million and $60 million at December 31, 2023 and 2022, respectively.

The Company determines delinquency status on lease payment receivables based on the number of calendar days past due. The Company considers lease payments that are 90 days or less past due as performing. Lease payments that are greater than 90 days past due are placed on non-accrual status in which interest income is no longer recognized. Lease payment receivables are fully written off in the period they become delinquent greater than 180 days past due. Lease payment receivables that were determined to be on non-accrual status were nominal at each of December 31, 2023 and 2022.

12. Debt

The Company’s debt consisted of the following:


	December 31,
(In millions)	2023		2022
Short-term and current maturities of long-term debt:
Foreign lines of credit	$	442	$	198
Finance lease and other financing obligations	313		270
Total short-term and current maturities of long-term debt	$	755	$	468

Long-term debt:



0.375% senior notes due July 2023 (Euro-denominated)	$	—	$	531
3.800% senior notes due October 2023	—		1,000
2.750% senior notes due July 2024	2,000		2,000
3.850% senior notes due June 2025	900		900
2.250% senior notes due July 2025 (British Pound-denominated)	672		632
3.200% senior notes due July 2026	2,000		2,000
2.250% senior notes due June 2027	1,000		1,000
1.125% senior notes due July 2027 (Euro-denominated)	555		531
5.450% senior notes due March 2028	900		—
5.375% senior notes due August 2028	700		—
4.200% senior notes due October 2028	1,000		1,000
3.500% senior notes due July 2029	3,000		3,000
2.650% senior notes due June 2030	1,000		1,000
1.625% senior notes due July 2030 (Euro-denominated)	555		531
4.500% senior notes due May 2031 (Euro-denominated)	889		—
3.000% senior notes due July 2031 (British Pound-denominated)	672		632
5.600% senior notes due March 2033	900		—
5.625% senior notes due August 2033	1,300		—
4.400% senior notes due July 2049	2,000		2,000
U.S. dollar commercial paper notes	418		2,329
Euro commercial paper notes	1,321		1,210
Revolving credit facility	74		35

Term loan facility	—		200
Unamortized discount and deferred financing costs	(145)		(120)
Finance lease and other financing obligations	652		539
Total long-term debt	$	22,363	$	20,950

Annual maturities of the Company’s total debt were as follows at December 31, 2023:


(In millions)
Year Ending December 31,
2024	$	755
2025	1,834
2026	2,198
2027	5,502
2028	2,648
Thereafter	10,326
Total principal payments	23,263
Unamortized discount and deferred financing costs	(145)
Total debt	$	23,118

The Company was in compliance with all financial debt covenants during the year ended December 31, 2023.

Senior Notes

The Company has outstanding $20.0 billion of various fixed-rate senior notes, as described above. The indentures governing the Company’s senior notes contain covenants that, among other matters, limit (i) the Company’s ability to consolidate or merge with or into, or convey, transfer or lease all or substantially all of its properties and assets to, another person, (ii) the Company’s and certain of its subsidiaries’ ability to create or assume liens, and (iii) the Company’s and certain of its subsidiaries’ ability to engage in sale and leaseback transactions. The Company may, at its option, redeem the senior notes, in whole or in part, at any time and from time to time, at the applicable redemption price. Interest on the Company’s U.S. dollar-denominated senior notes is paid semi-annually, while interest on its Euro- and British Pound-denominated senior notes is paid annually. The interest rate applicable to certain of the senior notes is subject to an increase of up to two percent in the event that the credit rating assigned to such notes is downgraded below investment grade.

On August 21, 2023, the Company completed the public offering and issuance of $2.0 billion of senior notes, comprised of $700 million aggregate principal amount of 5.375% senior notes due in August 2028 and $1.3 billion aggregate principal amount of 5.625% senior notes due in August 2033. The Company used the net proceeds from these senior notes offerings for general corporate purposes, including the repayment of U.S. dollar commercial paper notes, share repurchases and, in October 2023, the repayment of its 3.800% senior notes.

On May 24, 2023, the Company completed the public offering and issuance of 800 million Euros aggregate principal amount of 4.500% senior notes due in May 2031. The Company used the net proceeds from this senior notes offering for general corporate purposes, including the repayment of U.S. dollar commercial paper notes and, in July 2023, the repayment of its 0.375% Euro-denominated senior notes.

On March 2, 2023, the Company completed the public offering and issuance of $1.8 billion of senior notes, comprised of $900 million aggregate principal amount of 5.450% senior notes due in March 2028 and $900 million aggregate principal amount of 5.600% senior notes due in March 2033. The Company used the net proceeds from these senior notes offerings for general corporate purposes, including the repayment of U.S. dollar commercial paper notes.

At December 31, 2023, the 2.750% senior notes due in July 2024 were classified in the consolidated balance sheet as long-term, as the Company has the intent to refinance this debt on a long-term basis and the ability to do so under its revolving credit facility.

Commercial Paper

The Company maintains unsecured U.S. dollar and Euro commercial paper programs. From time to time, the Company may issue under these programs U.S. dollar commercial paper with maturities of up to 397 days from the date of issuance and Euro commercial paper with maturities of up to 183 days from the date of issuance. Outstanding borrowings under the U.S. dollar program were $0.4 billion and $2.3 billion at December 31, 2023 and 2022, respectively, with a weighted average interest rate of 5.454% and 4.818%, respectively. Outstanding borrowings under the Euro program were $1.3 billion and $1.2 billion at December 31, 2023 and 2022, respectively, with a weighted average interest rate of 4.029% and 1.918%, respectively. The Company intends to maintain available capacity under its revolving credit facility, as described below, in an amount at least equal to the aggregate outstanding borrowings under its commercial paper programs. Outstanding borrowings under the commercial paper programs are classified in the consolidated balance sheets as long-term as the Company has the intent to

refinance this commercial paper on a long-term basis through the continued issuance of new commercial paper upon maturity, and the Company also has the ability to refinance such commercial paper under its revolving credit facility.

Revolving Credit Facility

The Company maintains a senior unsecured multicurrency revolving credit facility, which matures in June 2027 and provides for a maximum aggregate principal amount of availability of $6.0 billion. Borrowings under the credit facility bear interest at a variable rate based on a Secured Overnight Financing Rate (SOFR), or a base rate in the case of U.S. dollar borrowings, in each case, plus a specified margin based on the Company’s long-term debt rating in effect from time to time (6.450% at December 31, 2023). The credit facility also requires the Company to pay a facility fee based on the aggregate commitments in effect under the agreement from time to time. The credit facility contains various restrictions and covenants that require the Company to, among other things, limit its consolidated indebtedness as of the end of each fiscal quarter to no more than 3.75 times the Company’s consolidated net income before interest, taxes, depreciation, amortization, non-cash charges and expenses and certain other adjustments (“EBITDA”) during the period of four fiscal quarters then ended, subject to certain exceptions.

Foreign Lines of Credit

The Company maintains certain short-term lines of credit and other borrowing arrangements with foreign banks and alliance partners primarily to fund settlement activity associated with international operations in Latin America. The Company entered into an annually renewable term loan facility, which was fully funded in April 2023, to fund settlement advance cash payments associated with international operations in Brazil. This term loan has a notional value of 514 million Brazilian real ($106 million USD equivalent) at December 31, 2023 that matures in April 2024 and bears interest at a variable Certificado de Depósito Interbancário (CDI) Rate, plus a specified margin of 1.70% per annum.

The following table provides a summary of the outstanding borrowings and weighted average interest rates of the Company’s foreign lines of credit and other borrowing arrangements by country at December 31:


	Outstanding Borrowings (in millions)				Weighted-Average Interest Rate
	2023		2022		2023		2022
Argentina	$	208	$	68	121.581	%	69.791	%
Brazil	123		61		13.500	%	16.254	%
Uruguay	55		34		11.125	%	12.188	%
Other	56		35		4.912	%	0.994	%
Total	$	442	$	198	63.060	%	30.578	%

Term Loan Facility

In June 2023, the Company repaid all remaining outstanding borrowings on its existing term loan facility utilizing proceeds from the issuance of U.S. dollar commercial paper notes and operating cash on hand, thereby terminating such facility. Borrowings under the term loan facility accrued interest at a variable rate based on one-month LIBOR or on a base rate, plus, in each case, a specified margin based on the Company’s long-term debt rating in effect from time to time. The variable interest rate on the term loan facility borrowings was 5.639% at December 31, 2022.

Deferred Financing Costs

Deferred financing costs are amortized as a component of interest expense, net over the term of the underlying debt using the effective interest method. Deferred financing costs, primarily related to the Company’s senior notes, totaled $94 million and $76 million at December 31, 2023 and 2022, respectively, and are reported as a direct reduction of the related debt instrument in the consolidated balance sheets. Deferred financing costs related to the Company’s revolving credit facility are reported in other long-term assets in the consolidated balance sheets and totaled $7 million and $10 million at December 31, 2023 and 2022, respectively.

13. Redeemable Noncontrolling Interests

The minority partner in one of the Company’s existing merchant alliance joint ventures maintains a redeemable noncontrolling 1% interest which is presented outside of equity and carried at its estimated redemption value. The minority partner is entitled to a contractually determined share of the entity’s income, and the joint venture agreement contains redemption features whereby the interest held by the minority partner is redeemable either (i) at the option of the holder or (ii) upon the occurrence of an event that is not solely within the Company’s control. The joint venture may be terminated by either party for convenience

any time after December 31, 2024. In the event of termination for cause, as a result of a change in control, or for convenience after the predetermined date, the Company may be required to purchase the minority partner membership interest at a price equal to the fair market value of the minority interest through a distribution of cash, certain merchant contracts of the joint venture, or a combination thereof. In conjunction with the termination of the joint venture, the minority partner may also exercise an option to purchase certain additional merchant contracts at fair market value.

In 2021, the Company and a joint venture minority partner mutually agreed to terminate one of the Company’s merchant alliance joint ventures effective March 2022. The redeemable noncontrolling interest was adjusted by $18 million to reflect the estimated redemption value, with such adjustment recorded within additional paid-in capital in the consolidated statement of equity for the year ended December 31, 2021. In conjunction with the termination, the joint venture minority partner elected to exercise its option to purchase certain additional merchant contracts of the joint venture. The Company received proceeds of $175 million from the sale of such merchant contracts of the joint venture, resulting in the recognition of a pre-tax gain of $137 million within net gain on sale of businesses and other assets, with related tax expense of $7 million recorded through the income tax provision, in the consolidated statement of income for the year ended December 31, 2022.

The following table presents a summary of the redeemable noncontrolling interests activity during the years ended December 31:


(In millions)	2023		2022
Balance at beginning of year	$	161	$	278
Distributions paid to redeemable noncontrolling interests	(26)		(34)
Share of income	26		28

Derecognition of redeemable noncontrolling interest	—		(111)
Balance at end of year	$	161	$	161

14. Accumulated Other Comprehensive Loss

Changes in accumulated other comprehensive loss by component, net of income taxes, consisted of the following:


(In millions)	Derivatives		Foreign Currency Translation		Pension Plans		Total
Year Ended December 31, 2023
Balance at December 31, 2022	$	(103)	$	(1,064)	$	(22)	$	(1,189)
Other comprehensive income before reclassifications	11		366		5		382
Amounts reclassified from accumulated other comprehensive loss	14		10		—		24
Net current-period other comprehensive income	25		376		5		406
Balance at December 31, 2023	$	(78)	$	(688)	$	(17)	$	(783)

Year Ended December 31, 2022
Balance at December 31, 2021	$	(107)	$	(676)	$	38	$	(745)
Other comprehensive loss before reclassifications	(11)		(444)		(60)		(515)
Amounts reclassified from accumulated other comprehensive loss	15		56		—		71
Net current-period other comprehensive income (loss)	4		(388)		(60)		(444)


Balance at December 31, 2022	$	(103)	$	(1,064)	$	(22)	$	(1,189)

15. Employee Benefit Plans

Defined Contribution Plans

The Company and its subsidiaries maintain defined contribution savings plans covering the majority of their employees. Under the plans, eligible participants may elect to contribute a specified percentage of their salaries and the Company makes matching contributions, each subject to certain limitations. The plans provide tax-deferred amounts for each participant, consisting of

employee elective contributions, company matching and discretionary company contributions. During the year ended December 31, 2021, Company matching contributions were 100% on the first 1% contributed and 25% on the next 4% contributed for eligible participants. Effective January 1, 2022, Company matching contributions were increased to 100% on the first 1% contributed and 50% on the next 4% contributed for eligible participants. Expenses for company contributions under these plans totaled $78 million, $79 million, and $58 million for the years ended December 31, 2023, 2022 and 2021, respectively.

Defined Benefit Plans

The Company maintains noncontributory defined benefit pension plans (collectively, the “Plans”) covering certain of its employees in the United Kingdom (“U.K.”), the U.S., Germany and Austria. All of these plans were frozen and provide benefits to eligible employees based on an employee’s average final compensation and years of service.

Effective September 30, 2023, the Company terminated the U.K. and U.S. defined benefit pension plans and expects to purchase group annuity contracts from certain insurance companies that will provide for the administration of future payments to eligible plan participants. In connection with such terminations and upon the settlements of the respective plans, which are expected to be completed in 2024, the Company will fund estimated plan termination liability shortfalls for the U.S. defined benefit pension plan of approximately $25 million and expects to recognize a non-cash pension settlement charge of approximately $110 million, which includes the recognition of remaining net actuarial losses recorded within accumulated other comprehensive loss. The amount of accrued vested benefits to be received by participants will not be impacted.

Funded Status

The following table provides a reconciliation of benefit obligations, plan assets and the funded status of the Plans as of and for the years ended December 31:


	U.K. Plan				U.S. and Other Plans
(In millions)	2023		2022		2023		2022
Change in projected benefit obligations:
Balance at beginning of year	$	(418)	$	(736)	$	(169)	$	(221)


Interest cost	(21)		(12)		(8)		(5)

Actuarial (loss) gain	(5)		230		(1)		41
Benefits paid	26		28		14		14
Foreign currency translation	(27)		72		—		2
Balance at end of year	$	(445)	$	(418)	$	(164)	$	(169)

Change in fair value of plan assets:
Balance at beginning of year	$	570	$	983	$	130	$	183

Actual return on plan assets	8		(290)		8		(39)


Benefits paid	(26)		(28)		(14)		(14)
Foreign currency translation	37		(95)		—		—
Balance at end of year	$	589	$	570	$	124	$	130

Funded status of the plans	$	144	$	152	$	(40)	$	(39)

The funded status of the Plans is recognized as an asset or a liability within other long-term assets or within other long-term liabilities in the consolidated balance sheets.

Projected Benefit Obligations

The Company records amounts relating to Plan obligations and their associated expenses based on calculations which include actuarial assumptions, including the discount rate and the expected rate of return on plan assets. Changes in any of the assumptions and the amortization of differences between the assumptions and actual experience affect the amount of pension expense in future periods. The Company reviewed its actuarial assumptions at least annually and modified the assumptions based on then-current rates and trends, as appropriate. The effects of modifications were recognized immediately within the consolidated balance sheets, and were generally amortized to operating income over future periods, with the deferred amount recorded in accumulated other comprehensive loss within the consolidated balance sheets. The Company’s funding policy was

to contribute quarterly an amount as recommended by the Plans’ independent actuaries. Company contributions under the Plans were nominal in both 2023 and 2022. The Company employed a building block approach in determining the expected long-term rate of return for plan assets with proper consideration of diversification and re-balancing. Historical markets were studied and long-term historical relationships between equities and fixed-income securities were preserved consistent with the widely accepted capital market principle that assets with higher volatility generate a greater return over the long run. Current market factors such as inflation and interest rates were evaluated before long-term capital market assumptions were determined. Peer data and historical returns were reviewed to check for reasonableness and appropriateness.

The weighted-average rate assumptions used in the measurement of the Company’s projected benefit obligations and net periodic benefit expense as of and for the years ended December 31 were as follows:


	Projected Benefit Obligations				Net Periodic Benefit Expense
	2023		2022		2023		2022
Discount rate	4.81	%	5.01	%	5.01	%	1.97	%
Expected long-term return on plan assets	n/a		n/a		4.74	%	2.19	%

The estimated settlement of future benefit payments of $391 million for the U.K. and U.S. defined benefit pension plans is expected to be paid before December 31, 2024.

Plan Assets

Prior to its termination, the Company’s investment strategy for the U.K. plan was to allocate the assets into two pools: (i) liability-hedging assets whereby the focus was risk management, protection and insurance relative to the liability target invested in, but not limited to, money market funds, debt, U.K. government bonds and U.K. government index-linked bonds; and (ii) return-seeking assets whereby the focus was on return generation and taking risk in a controlled manner. Such assets included equities, government bonds, high-yield bonds, property, commodities or hedge funds. Prior to its termination, the Company’s investment strategy for the U.S. plan employed a total return investment approach whereby a diversified blend of equities and fixed-income investments were used to maximize the long-term return of plan assets for a prudent level of risk. The Company set an allocation mix necessary to support the underlying plan liabilities as influenced significantly by the demographics of the participants and the frozen nature of the plan.

Upon termination of these defined benefit pension plans, a modified investment allocation strategy was adopted for purposes of protecting the funded status of the respective plan assets subsequent to such terminations. The assets of the respective plans are now invested exclusively in liability-hedging assets. Investment risk is measured and monitored on an ongoing basis through quarterly investment portfolio reviews, annual liability measurements, and periodic asset and liability studies.

The following table sets forth assets carried and measured at fair value on a recurring basis for the Plans at December 31:


(In millions)	Level 1		Level 2		Level 3
December 31, 2023
Cash and cash equivalents (1)	$	27	$	—	$	—
Equity securities (2)	—		—		—
Fixed income securities (3)	312		—		—
Other investments (4)	269		6		—
Total investments at fair value	$	608	$	6	$	—

December 31, 2022
Cash and cash equivalents (1)	$	43	$	—	$	—
Equity securities (2)	1		40		—
Fixed income securities (3)	137		86		—
Other investments (4)	301		(26)		—
Total investments at fair value	$	482	$	100	$	—

(1)Cash and cash equivalents include highly liquid investments in money market funds.

(2)Equity securities primarily consist of domestic, international and global equity pooled funds.

(3)Fixed income securities primarily consist of debt securities issued by U.S. and foreign government agencies and debt obligations issued by a variety of private and public corporations.

(4)Other investments primarily consist of index-linked government bonds, derivatives and other investments.

In addition to the investments presented within the fair value hierarchy table above, the Plans’ assets include investments in various collective trusts that are measured at fair value using the net asset value per share (or its equivalent) practical expedient. Such investments totaled $99 million and $118 million at December 31, 2023 and 2022, respectively.

Net Periodic Benefit Cost

The components of net periodic benefit cost (income) were as follows:


	Year Ended December 31,
(In millions)	2023		2022		2021

Interest cost	$	29	$	17	$	16
Expected return on plan assets	(26)		(18)		(23)

Net periodic benefit expense (income)	$	3	$	(1)	$	(7)

16. Share-Based Compensation

The Company recognizes the fair value of share-based compensation awards granted to employees in cost of processing and services, cost of product, and selling, general and administrative expense in its consolidated statements of income.

The Company’s share-based compensation awards are typically granted in the first quarter of the year; however, grants may also occur throughout the year in conjunction with acquisitions of businesses, and primarily consist of the following:

*•*Restricted Stock Units and Awards – The Company grants restricted stock units and awards to employees and non-employee directors. Time-based restricted stock units and award grants generally vest over a three- or four-year period. Performance-based restricted stock units generally vest over a three- to five-year period based upon the achievement of defined performance goals including revenue growth, achievement of integration milestones, and completion of strategic initiatives. The Company recognizes compensation expense for restricted stock units and awards based on the market price of its common stock on the grant date over the period during which the units and awards vest.

*•*Performance Share Units – The Company grants performance share units to employees. The number of shares issued at the end of the performance period is determined by the level of achievement of predefined performance goals, including earnings, revenue growth, integration attainment, and shareholder return. The Company recognizes compensation expense on performance share units ratably over the requisite performance period of the award, generally two to five years, to the extent management views the performance goals as probable of attainment. The Company recognizes compensation expense for the fair value of the shareholder return component over the requisite service period of the award.

Stock Options – The Company grants stock options to employees and non-employee directors at exercise prices equal to the fair market value of the Company’s stock on the dates of grant. Stock option grants generally vest over a three- or four-year period. All stock options expire ten years from the date of the award. The Company recognizes compensation expense for the fair value of the stock options over the requisite service period of the stock option award.

*•*Employee Stock Purchase Plan – The Company maintains an employee stock purchase plan that allows eligible employees to purchase a limited number of shares of common stock each quarter through payroll deductions at a discount of the closing price of the Company’s common stock on the last business day of each calendar quarter. The employee discount of 5% under the employee stock purchase plan is considered noncompensatory and therefore does not give rise to recognizable compensation cost.

The Company recognized $342 million, $323 million and $239 million of share-based compensation expense during the years ended December 31, 2023, 2022 and 2021, respectively. At December 31, 2023, the total remaining unrecognized compensation cost for restricted stock units and awards, performance share units, and unvested stock options, net of estimated forfeitures, of $361 million is expected to be recognized over a weighted-average period of 1.9 years. During the years ended December 31, 2023, 2022 and 2021, stock options to purchase 2.4 million, 3.7 million and 4.4 million shares, respectively, were exercised.

Share-Based Compensation Activity

No stock option awards were granted during the years ended December 31, 2023 and 2022. The weighted-average estimated fair value of stock options granted during the year ended December 31, 2021 was $33.35 per share. The fair values of stock options granted were estimated on the date of grant using a binomial option-pricing model with the following assumptions:


	2021
Expected life (in years)	6.5
Average risk-free interest rate	0.6	%
Expected volatility	29.3	%
Expected dividend yield	0	%

The Company determined the expected life of stock options using historical data. The risk-free interest rate was based on the U.S. treasury yield curve in effect as of the grant date. Expected volatility was determined using weighted-average implied market volatility combined with historical volatility. The Company believes that a blend of historical volatility and implied volatility better reflects future market conditions and better indicates expected volatility than purely historical volatility.

A summary of stock option activity is as follows:


	Shares (In thousands)	Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value (In millions)
Stock options outstanding - December 31, 2022	6,336	$	62.91

Granted	—	—
Forfeited	(38)	112.83
Exercised	(2,433)	47.11
Stock options outstanding - December 31, 2023	3,865	$	72.36	3.74	$	234
Stock options exercisable - December 31, 2023	3,574	$	69.10	3.52	$	228

A summary of restricted stock unit, restricted stock award and performance share unit activity is as follows:


	Restricted Stock Units and Awards			Performance Share Units
	Shares (In thousands)	Weighted- Average Grant Date Fair Value		Shares (In thousands)	Weighted- Average Grant Date Fair Value
Units and awards - December 31, 2022	5,530	$	96.88	3,243	$	100.93

Granted	2,664	113.52		372	131.66
Forfeited	(453)	102.97		(269)	102.03
Vested	(2,322)	99.51		(127)	101.54
Units and awards - December 31, 2023	5,419	$	103.11	3,219	$	104.09

In conjunction with certain acquisitions, the Company granted restricted stock units with performance vesting provisions to be measured over two and five years, which are presented as performance share units within the table above.

The table below presents additional information related to stock option and restricted stock unit activity:


(In millions)	2023		2022		2021
Total intrinsic value of stock options exercised	$	177	$	226	$	339
Fair value of restricted stock units vested	267		335		332
Income tax benefit from stock options exercised and restricted stock units vested	101		109		142
Cash received from stock options exercised	62		105		91

At December 31, 2023, 19.7 million share-based awards were available for grant under the Amended and Restated Fiserv, Inc. 2007 Omnibus Incentive Plan. Under its employee stock purchase plan, the Company issued 0.4 million shares during the year ended December 31, 2023 and 0.5 million shares in each of the years ended December 31, 2022 and 2021. At December 31, 2023, there were 22.9 million shares available for issuance under the employee stock purchase plan.

17. Income Taxes

Substantially all of the Company’s pre-tax earnings are derived from domestic operations in all years presented. The income tax provision was as follows:


	Year Ended December 31,
(In millions)	2023		2022		2021
Components of income tax provision (benefit):
Current:
Federal	$	913	$	802	$	378
State	148		175		138
Foreign	204		132		109
	1,265		1,109		625
Deferred:
Federal	(380)		(339)		(186)
State	(12)		(84)		(106)
Foreign	(119)		(135)		30
	(511)		(558)		(262)
Income tax provision	$	754	$	551	$	363

A reconciliation of the statutory federal income tax rate to the Company’s effective income tax rate is as follows:


	Year Ended December 31,
	2023		2022		2021
Statutory federal income tax rate	21.0	%	21.0	%	21.0	%
State income taxes, net of federal effect	2.8	%	2.5	%	1.6	%



Foreign tax law changes (1)	—	%	—	%	8.0	%
Foreign derived intangibles income deduction	(0.4)	%	(0.9)	%	(3.1)	%
Excess tax benefit from share-based awards	(0.8)	%	(0.8)	%	(2.2)	%
Sale of businesses and subsidiary restructuring	(1.3)	%	(2.2)	%	(2.1)	%

Unrecognized tax benefits	(0.2)	%	(0.5)	%	(2.7)	%
Nondeductible executive compensation	0.2	%	0.4	%	0.7	%
Transferable federal tax credits (2)	(1.4)	%	—	%	—	%
Valuation allowance	(0.6)	%	(0.5)	%	(1.3)	%
Other, net	—	%	(0.1)	%	1.9	%
Effective income tax rate	19.3	%	18.9	%	21.8	%

(1) Foreign tax law changes during the year ended December 31, 2021 included $134 million of income tax expense attributed to the revaluation of certain net deferred tax liabilities in connection with enacted corporate income tax rate changes in foreign countries. In 2021, the enacted tax rate in the United Kingdom increased from 19% to 25% starting in 2023, and the tax rate in Argentina increased from 25% to 35%.

(2) Pursuant to provisions under the Inflation Reduction Act, the Company purchased transferable federal tax credits during 2023 from various counterparties. Such federal tax credits were purchased at negotiated discounts, resulting in an income tax benefit recorded during the year ended December 31, 2023. Receivables associated with transferable federal tax credits are recorded within prepaid expenses and other current assets, and amounts owed to counterparties for the purchased credits are recorded within accounts payable and accrued expenses within the consolidated balance sheet at December 31, 2023.

Significant components of deferred tax assets and liabilities consisted of the following:


	December 31,
(In millions)	2023		2022
Accrued expenses	$	193	$	170

Share-based compensation	122		116
Net operating loss and credit carry-forwards	642		805

Leasing liabilities	183		170
Other	252		163
Subtotal	1,392		1,424
Valuation allowance	(467)		(620)
Total deferred tax assets	925		804

Capitalized software development costs	(331)		(481)
Intangible assets	(2,047)		(2,319)
Property and equipment	(341)		(308)
Capitalized commissions	(112)		(106)
Investments in joint ventures	(562)		(597)
Leasing right-of-use assets	(144)		(134)

Other	(386)		(405)
Total deferred tax liabilities	(3,923)		(4,350)
Total	$	(2,998)	$	(3,546)

The Company maintained a valuation allowance of $467 million and $620 million at December 31, 2023 and 2022, respectively, against its deferred tax assets. Substantially all of the valuation allowance relates to certain foreign and state net operating loss carryforwards.

Deferred tax assets and liabilities are reported in the consolidated balance sheets as follows:


	December 31,
(In millions)	2023		2022
Noncurrent assets	$	80	$	56
Noncurrent liabilities	(3,078)		(3,602)
Total	$	(2,998)	$	(3,546)

Noncurrent deferred tax assets are included in other long-term assets in the consolidated balance sheets at December 31, 2023 and 2022.

The following table presents the amounts of federal, state and foreign net operating loss carryforwards and foreign tax credit carryforwards:


	December 31,
(In millions)	2023		2022
Net operating loss carryforwards: (1)
Federal	$	86	$	214
State	3,074		2,810
Foreign	1,880		2,373
Foreign tax credit carryforwards	16		17

(1)At December 31, 2023, the Company had federal net operating loss carryforwards of $86 million, most of which do not expire, state net operating loss carryforwards of $3.1 billion, most of which expire in 2024 through 2043, and foreign net operating loss carryforwards of $1.9 billion, of which $162 million expire in 2024 through 2043, and the remainder of which do not expire.

The Company asserts that its investment in its foreign subsidiaries is intended to be indefinitely reinvested. Undistributed historical and future earnings of its foreign subsidiaries are not considered to be indefinitely reinvested. Should these earnings be distributed in the future in the form of dividends or otherwise, the Company may be subject to foreign or U.S. taxes. The Company has the ability and intent to limit distributions so as to not make a distribution in excess of its investment in those subsidiaries. The Company will continue to monitor its global cash requirements and the need to recognize a deferred tax liability.

Unrecognized tax benefits were as follows:


	December 31,
(In millions)	2023		2022		2021
Unrecognized tax benefits - Beginning of year	$	96	$	124	$	171

Increases for tax positions taken during the current year	2		3		16
Increases for tax positions taken in prior years	8		—		5
Decreases for tax positions taken in prior years	(10)		(18)		(41)
Decreases for settlements	(3)		(2)		(1)
Lapse of the statute of limitations	(9)		(11)		(26)
Unrecognized tax benefits - End of year	$	84	$	96	$	124

At December 31, 2023, unrecognized tax benefits of $49 million, net of federal and state benefits, would affect the effective income tax rate if recognized. The Company believes it is reasonably possible that the liability for unrecognized tax benefits may decrease by up to $5 million over the next twelve months as a result of possible closure of federal tax audits, potential settlements with certain states and foreign countries, and the lapse of the statute of limitations in various state and foreign jurisdictions.

The Company classifies interest expense and penalties related to income taxes as components of its income tax provision. The income tax provision included interest expense (benefits) and penalties on unrecognized tax benefits of $2 million in 2023, less than $1 million in 2022 and $(6) million in 2021. Accrued interest expense and penalties related to unrecognized tax benefits totaled $15 million and $13 million at December 31, 2023 and 2022, respectively.

The Company’s U.S. federal income tax returns for 2022 and 2023, and tax returns in certain states and foreign jurisdictions for 2017 through 2023, remain subject to examination by taxing authorities.

18. Commitments and Contingencies

Litigation and Legislative Matters

In the normal course of business, the Company or its subsidiaries are named as defendants in lawsuits in which claims are asserted against the Company. The Company maintained accruals of $32 million and $21 million at December 31, 2023 and 2022, respectively, related to its various legal proceedings, primarily associated with the Company’s merchant acquiring business and certain tax matters. The Company’s estimate of the possible range of exposure for various litigation matters in excess of amounts accrued is $0 million to approximately $90 million. In the opinion of management, the liabilities, if any,

which may ultimately result from such legal proceedings are not expected to have a material adverse effect on the Company’s consolidated financial statements.

In June 2023, a Canadian tax law change related to the Goods and Services Tax / Harmonized Sales Tax (GST/HST) treatment of payment card services was enacted. The Company estimated its exposure related to this multi-year retroactive tax law change and recognized a pre-tax expense of $27 million within selling, general and administrative expenses in the consolidated statement of income during the year ended December 31, 2023.

Electronic Payments Transactions

In connection with the Company’s processing of electronic payments transactions, which are separate and distinct from the settlement payment transactions described in Note 5, funds received from subscribers are invested from the time the Company collects the funds until payments are made to the applicable recipients. These subscriber funds are invested in short-term, highly liquid investments. Subscriber funds, which are not included in the Company’s consolidated balance sheets, can fluctuate significantly based on consumer bill payment and debit card activity and totaled approximately $3.5 billion and $1.7 billion at December 31, 2023 and 2022, respectively.

Indemnifications and Warranties

The Company may indemnify its clients from certain costs resulting from claims of patent, copyright or trademark infringement associated with its clients’ use of the Company’s products or services. The Company may also warrant to clients that its products and services will operate in accordance with identified specifications. From time to time, in connection with sales of businesses, the Company agrees to indemnify the buyers of such businesses for liabilities associated with the businesses that are sold. Payments, net of recoveries, under such indemnification or warranty provisions were not material to the Company’s consolidated financial statements.

19. Related Party Transactions

Merchant Alliances

A portion of the Company’s business is conducted through merchant alliances between the Company and financial institutions (see Note 8). A merchant alliance is an agreement between the Company and a financial institution that combines the processing capabilities and management expertise of the Company with the visibility and distribution channel of the financial institution. A merchant alliance acquires credit and debit card transactions from merchants. The Company provides processing and other services to the alliance and charges fees to the alliance based on contractual pricing.

To the extent the Company maintains a controlling financial interest in an alliance, the alliance’s financial statements are consolidated with those of the Company and the related processing fees are treated as an intercompany transaction and eliminated in consolidation. To the extent the Company has significant influence in, but not control of, an alliance, the Company uses the equity method to account for its investment in the alliance. As a result, the processing and other service fees charged to merchant alliances accounted for under the equity method are recognized in the Company’s consolidated statements of income primarily as processing and services revenue. Such fees totaled $177 million, $187 million and $171 million during the years ended December 31, 2023, 2022 and 2021, respectively. No directors or officers of the Company have ownership interests in any of the alliances. The formation of each of these alliances generally involves the Company and the financial institution contributing contracts with merchants to the alliance and a cash payment from one owner to the other to achieve the desired ownership percentage for each. The Company and the financial institution enter into a long-term processing service agreement, which governs the Company’s provision of transaction processing services to the alliance. The Company had approximately $38 million and $43 million of amounts due from unconsolidated merchant alliances included within trade accounts receivable, net in the Company’s consolidated balance sheets at December 31, 2023 and 2022, respectively.

Joint Venture Transition Services Agreements

Pursuant to certain transition services agreements, the Company provides, at fair value, various administration, business process outsourcing, and technical and data center related services for defined periods to certain joint ventures accounted for under the equity method. Amounts transacted through these agreements, including with InvestCloud through June 2021 (see Note 8), totaled $5 million, $18 million and $37 million during the years ended December 31, 2023, 2022 and 2021, respectively, and were primarily recognized as processing and services revenue in the consolidated statements of income.

Share Repurchases

On August 7, 2023, the Company entered into a stock purchase agreement with ValueAct Capital Master Fund, L.P., an affiliate of which employed a member of the Company’s board of directors, to repurchase 4.1 million shares of the Company’s common

stock for $121.98 per share in a privately negotiated transaction for an aggregate purchase price of $500 million. The repurchase was effected pursuant to an existing repurchase authorization for up to 75.0 million shares of the Company’s common stock approved by the Company’s board of directors on February 22, 2023. The share repurchase was completed on August 8, 2023, and the fair value of the repurchased shares of Company common stock was recorded to treasury stock during the year ended December 31, 2023.

On May 3, 2021, New Omaha Holdings L.P. (“New Omaha”), a shareholder of the Company, completed an underwritten secondary public offering of 23.0 million shares of Fiserv, Inc. common stock (the “2021 offering”). The Company did not sell any shares in, nor did it receive any proceeds from, the 2021 offering. New Omaha received all of the net proceeds from the 2021 offering. In connection with the 2021 offering, the Company repurchased from the underwriters 5.0 million shares of its common stock that were subject to the 2021 offering, at a price equal to the price per share paid by the underwriters to New Omaha in the 2021 offering (the “2021 share repurchase”). The 2021 share repurchase totaled $588 million and was funded with cash on hand. The repurchased shares were cancelled and no longer outstanding following the completion of the 2021 share repurchase. Prior to the 2021 offering, New Omaha owned approximately 13% of the Company’s outstanding shares of common stock, and immediately following the 2021 offering, New Omaha owned approximately 9% of such outstanding shares. As of December 31, 2022, New Omaha did not own any of the outstanding shares of the Company’s common stock.

20. Business Segment Information

The Company’s operations are comprised of the Acceptance segment, the Fintech segment and the Payments segment. The businesses in the Acceptance segment provide a wide range of commerce-enabling solutions and serve merchants of all sizes around the world. These solutions include merchant acquiring and digital commerce services; mobile payment services; security and fraud protection products; Clover®, the Company’s cloud-based POS and integrated commerce operating system for small and mid-sized businesses and independent software vendors; and CaratSM, the Company’s integrated operating system for large businesses. The Company distributes the products and services in the Acceptance segment businesses through a variety of channels, including direct sales teams, strategic partnerships with agent sales forces, independent software vendors, financial institutions and other strategic partners in the form of joint venture alliances, revenue sharing alliances and referral agreements. Merchants, financial institutions and distribution partners in the Acceptance segment are frequently clients of the Company’s other segments.

The businesses in the Fintech segment provide financial institutions around the world with the technology solutions they need to run their operations, including products and services that enable financial institutions to process customer deposit and loan accounts and manage an institution’s general ledger and central information files. As a complement to the core account processing functionality, the Fintech segment businesses also provide digital banking, financial and risk management, professional services and consulting, check processing, and other products and services that support numerous types of financial transactions. Certain of the businesses in the Fintech segment provide products or services to corporate clients to facilitate the management of financial processes and transactions. Many of the products and services offered in the Fintech segment are integrated with products and services provided by the Company’s other segments.

The businesses in the Payments segment provide financial institutions and corporate and public sector clients with the products and services required to process digital payment transactions. This includes card transactions such as debit, credit and prepaid card processing and services; a range of network services; security and fraud protection products; and card production and print services. In addition, the Payments segment businesses offer non-card digital payment software and services, including bill payment, account-to-account transfers, person-to-person payments, electronic billing, and security and fraud protection products. Clients of the Payments segment businesses reflect a wide range of industries around the world, including merchants, distribution partners and financial institution customers in the Company’s other segments.

Corporate and Other supports the reportable segments described above, and consists of amortization of acquisition-related intangible assets, unallocated corporate expenses and other activities that are not considered when management evaluates segment performance, such as gains or losses on sales of businesses, certain assets or investments; costs associated with acquisition and divestiture activity; certain services revenue associated with various dispositions; and the Company’s Output Solutions postage reimbursements.

The Company is effecting changes in its business designed to further enhance operational performance in the delivery of its integrated portfolio of products and solutions to its financial institution clients. As a result, the Company expects to realign its reportable segments to correspond with these organizational changes, which the Company expects to be completed effective for the quarter ending March 31, 2024. The Company continues to allocate resources and assess performance based on the current reportable segment structure.

Operating results for each segment were as follows:


	Reportable Segments
(In millions)	Acceptance		Fintech		Payments		Corporate and Other		Total
Year Ended December 31, 2023
Processing and services revenue	$	7,087	$	2,982	$	5,538	$	23	$	15,630
Product revenue	1,045		189		1,158		1,071		3,463
Total revenue	8,132		3,171		6,696		1,094		19,093
Operating income (loss)	2,856		1,159		3,189		(2,190)		5,014
Capital expenditures, including capitalized software and other intangibles	465		254		304		365		1,388
Depreciation and amortization expense	334		274		318		2,236		3,162

Year Ended December 31, 2022
Processing and services revenue	$	6,288	$	2,986	$	5,164	$	22	$	14,460
Product revenue	1,004		184		1,098		991		3,277
Total revenue	7,292		3,170		6,262		1,013		17,737
Operating income (loss)	2,321		1,157		2,823		(2,561)		3,740
Capital expenditures, including capitalized software and other intangibles	464		259		286		470		1,479
Depreciation and amortization expense	276		241		275		2,420		3,212

Year Ended December 31, 2021
Processing and services revenue	$	5,560	$	2,832	$	4,883	$	32	$	13,307
Product revenue	919		190		950		860		2,919
Total revenue	6,479		3,022		5,833		892		16,226
Operating income (loss)	1,996		1,081		2,557		(3,346)		2,288
Capital expenditures, including capitalized software and other intangibles	314		222		272		352		1,160
Depreciation and amortization expense	245		226		254		2,523		3,248

The Company does not evaluate the performance or allocate resources to its reportable segments using asset data. Long-lived assets, excluding goodwill and other intangibles, within the Company’s international regions comprised approximately 26% and 25% of total consolidated long-lived assets, excluding goodwill and other intangible assets, at December 31, 2023 and 2022, respectively.

Fiserv, Inc.

Schedule II — Valuation and Qualifying Accounts

(In millions)


			Additions
Description	Balance at Beginning of Period		Charged to Costs and Expenses	Charged to Other Accounts		Deductions		Balance at End of Period
Year ended December 31, 2023
Deferred tax asset valuation allowance	$	620	2	(125)	(1)	(30)		$	467
Year ended December 31, 2022
Deferred tax asset valuation allowance	$	697	33	(41)		(69)		$	620
Year ended December 31, 2021
Deferred tax asset valuation allowance	$	888	13	(127)	(1)	(77)	(1)	$	697

(1)The decrease in the deferred tax asset valuation allowance is primarily due to subsidiary restructurings.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and the Board of Directors of Fiserv, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Fiserv, Inc. and subsidiaries (the "Company") as of December 31, 2023 and 2022, the related consolidated statements of income, comprehensive income, equity, and cash flows, for each of the three years in the period ended December 31, 2023, and the related notes and the schedule listed in Item 8 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 22, 2024, expressed an unqualified opinion on the Company's internal control over financial reporting.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Revenue – Refer to Note 1 and Note 3 to the consolidated financial statements

Critical Audit Matter Description

The Company generates revenue from the delivery of processing, service and product solutions. Revenue is measured based on consideration specified in a contract with a customer, and the Company recognizes revenue when it satisfies a performance obligation by transferring control over a product or service to a customer, which may be at a point in time or over time. The Company’s revenue consists of a significant volume of transactions sourced from multiple systems and applications. The processing of such transactions and recording of the majority of revenue is system-driven and based on contractual terms with customers. In addition, contract modifications occur when the Company and its customers agree to modify existing customer contracts to change the scope or price (or both) of the contract. Contract modifications also occur when a customer terminates some, or all, of the existing services provided by the Company, which may result in the customer paying a termination fee to the Company based upon the terms in the initial contract. When a contract modification occurs, it requires the Company to exercise judgment to determine if the modification should be accounted for as: (i) a separate contract, (ii) the termination of the original contract and creation of a new contract, or (iii) a cumulative catch-up adjustment to the original contract. Further, contract modifications require the identification and evaluation of the performance obligations of the modified contract,

including the allocation of consideration to the remaining performance obligations and the period of recognition for each identified performance obligation.

We identified the complexity of revenue processing and revenue recognition, including customer contract modifications, as a critical audit matter because of the increased extent of effort and involvement of professionals in our firm having expertise in information technology (IT) to identify, test, and evaluate the Company's systems and automated controls and the management judgments necessary to determine the appropriate accounting. This required an increased extent of effort and a high degree of auditor judgment when performing audit procedures to evaluate whether revenue transactions were recognized appropriately.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to revenue recognition included the following, among others:

We evaluated management’s significant accounting policies.
We tested internal controls within the relevant revenue business processes, including those in place to reconcile the various reports extracted from the IT systems to the Company’s general ledger and those related to the Company’s accounting for contract modifications.
With the assistance of professionals in our firm having expertise in IT, we:

◦Identified the relevant systems used to process revenue transactions and tested the general IT controls over each of these systems, including testing of user access controls, change management controls, and IT operations controls.

◦Tested system interface controls and automated controls within the relevant revenue streams, as well as the controls designed to assess the accuracy and completeness of revenue.

We developed expectations of revenue at a disaggregated level based on historical transaction prices and current year volumes. We compared those estimates to revenue recognized by the Company.
For a sample of revenue transactions, we tested selected transactions by agreeing the amounts of revenue recognized to source documents and tested the mathematical accuracy of the recorded revenue.
We selected a sample of significant customer contract modifications and performed the following procedures:

◦Obtained and read the customer contracts.

◦Evaluated whether the contract represented a new contract or a contract modification and, if applicable, assessed the accounting treatment of any modification in scope or price.

◦Tested management’s identification of new or remaining performance obligations.

◦Recalculated the transaction price and assessed the appropriateness of the allocation of consideration to each performance obligation.

◦Assessed the pattern of delivery for each distinct performance obligation.

Goodwill — Certain Reporting Units — Refer to Note 1 and Note 7 to the consolidated financial statements

Critical Audit Matter Description

The Company’s evaluation of goodwill for impairment involves the comparison of the fair value of each reporting unit to its carrying value. The Company determines the fair value of its reporting units using both a discounted cash flow model and a market approach. The determination of fair value using the discounted cash flow model requires management to make significant estimates and assumptions, which include assumptions related to revenue growth rates, margin growth rates and discount rates. The goodwill balance was $37,205 million as of December 31, 2023. For all reporting units, the fair values exceeded the carrying values and therefore, no impairment was recognized.

The three reporting units we identified as a critical audit matter have fair values exceeding their carrying values as of the annual assessment, ranging between 16% and 36%. Revenue growth rates, margin growth rates, and discounts rates for these three reporting units are sensitive to significant and long-term deterioration in the macroeconomic environment, industry or market conditions.

We identified goodwill for these three reporting units as a critical audit matter because of the significant estimates and assumptions management makes to estimate the fair value of these reporting units and the sensitivity of operations to changes in the macroeconomic environment, industry or market conditions. This required a high degree of auditor judgment and an increased extent of effort, including the need to involve professionals in our firm having expertise in valuation, when

performing audit procedures to evaluate the reasonableness of management’s estimates and assumptions related to revenue growth rates, margin growth rates, and selection of the discount rates.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the revenue growth rates, margin growth rates, and the selection of discount rates for the three reporting units included the following, among others:

We tested the effectiveness of controls over management’s goodwill impairment evaluation, including those over the determination of the fair value of these reporting units, specifically controls related to management’s forecasts and selection of the discount rates.
We evaluated management’s ability to accurately forecast by comparing actual results to management’s historical forecasts.
We evaluated the reasonableness of management’s forecasts by comparing the forecasts to (1) historical results, (2) industry reports containing analyses of the Company’s and its competitors’ products and (3) forecasted information included in Company press releases as well as in analyst and industry reports of the Company and companies in its peer group.
With the assistance of professionals in our firm having expertise in valuation, we evaluated the discount rates including testing the underlying source information and the mathematical accuracy of the calculations and developing a range of independent estimates and comparing those to the discount rates selected by management.

/s/ Deloitte & Touche LLP

Milwaukee, Wisconsin

February 22, 2024

We have served as the Company’s auditor since 1985.

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