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Revenue Recognition | 12 Months Ended
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Dec. 31, 2020
Revenue from Contract with Customer [Abstract] |
Revenue Recognition | Revenue Recognition Significant Accounting Policy ASU 2014-09 and its related amendments (collectively known as “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. Additional information regarding the Company’s reportable segments is included in Note 21. 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 data processing, 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 revenues 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 sales, as well as software license 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 also sells or leases hardware (POS devices) and other peripherals as part of its contracts with customers. Hardware typically consists of 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. 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 the fees may be adjusted. Allocation of Transaction Price The transaction price (including any discounts or rebates) is allocated between separate 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. In instances where there are observable selling prices for professional services and support and maintenance, the Company may apply the residual approach to estimate the standalone selling price of software licenses. Significant 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 revenue to the remaining performance obligations and the period of recognition for each identified performance obligation. Disaggregation of Revenue The tables below present the Company’s revenue disaggregated by type of revenue, including a reconciliation with its reportable segments. The Company’s disaggregation of revenue for the years ended December 31, 2019 and 2018 have been restated to reflect the Segment Realignment. The majority of the Company’s revenue is earned domestically, with revenue generated outside the United States comprising approximately 13%, 12% and 6% of total revenue in 2020, 2019 and 2018, respectively.
(In millions) | Reportable Segments
Year Ended December 31, 2020 | Acceptance |  | Fintech |  | Payments |  | Corporate and Other |  | Total
Type of Revenue |  |  |  |  |  |  |  |  |
Processing | $ | 4,696 |  |  | $ | 1,426 |  |  | $ | 4,348 |  |  | $ | 58 |  |  | $ | 10,528 |
Hardware, print and card production | 714 |  |  | 51 |  |  | 771 |  |  | — |  |  | 1,536 |
Professional services | 29 |  |  | 465 |  |  | 233 |  |  | 1 |  |  | 728 |
Software maintenance | — |  |  | 563 |  |  | 3 |  |  | 2 |  |  | 568 |
License and termination fees | 28 |  |  | 189 |  |  | 68 |  |  | — |  |  | 285 |
Output solutions postage | — |  |  | — |  |  | — |  |  | 864 |  |  | 864 |
Other | 55 |  |  | 207 |  |  | 81 |  |  | — |  |  | 343 |
Total Revenue | $ | 5,522 |  |  | $ | 2,901 |  |  | $ | 5,504 |  |  | $ | 925 |  |  | $ | 14,852 |
(In millions) | Reportable Segments
Year Ended December 31, 2019 | Acceptance |  | Fintech |  | Payments |  | Corporate and Other |  | Total
Type of Revenue |  |  |  |  |  |  |  |  |
Processing | $ | 2,205 |  |  | $ | 1,382 |  |  | $ | 3,110 |  |  | $ | 166 |  |  | $ | 6,863 |
Hardware, print and card production | 323 |  |  | 51 |  |  | 458 |  |  | — |  |  | 832 |
Professional services | 4 |  |  | 483 |  |  | 172 |  |  | 10 |  |  | 669 |
Software maintenance | — |  |  | 570 |  |  | 3 |  |  | 15 |  |  | 588 |
License and termination fees | 9 |  |  | 255 |  |  | 59 |  |  | 2 |  |  | 325 |
Output solutions postage | — |  |  | — |  |  | — |  |  | 572 |  |  | 572 |
Other | 30 |  |  | 201 |  |  | 107 |  |  | — |  |  | 338 |
Total Revenue | $ | 2,571 |  |  | $ | 2,942 |  |  | $ | 3,909 |  |  | $ | 765 |  |  | $ | 10,187 |
(In millions) |  |  | Reportable Segments
Year Ended December 31, 2018 |  |  | Fintech |  | Payments |  | Corporate and Other |  | Total
Type of Revenue |  |  |  |  |  |  |  |  |
Processing |  |  | $ | 1,345 |  |  | $ | 1,900 |  |  | $ | 163 |  |  | $ | 3,408 |
Hardware, print and card production |  |  | 41 |  |  | 304 |  |  | — |  |  | 345 |
Professional services |  |  | 483 |  |  | 86 |  |  | 8 |  |  | 577 |
Software maintenance |  |  | 577 |  |  | 3 |  |  | 15 |  |  | 595 |
License and termination fees |  |  | 277 |  |  | 32 |  |  | 4 |  |  | 313 |
Output solutions postage |  |  | — |  |  | — |  |  | 308 |  |  | 308 |
Other |  |  | 194 |  |  | 83 |  |  | — |  |  | 277 |
Total Revenue |  |  | $ | 2,917 |  |  | $ | 2,408 |  |  | $ | 498 |  |  | $ | 5,823 |
Contract Balances The following table provides information about contract assets and contract liabilities from contracts with customers at December 31:
(In millions) | 2020 |  | 2019 |  | 2018
Contract assets | $ | 433 |  |  | $ | 382 |  |  | $ | 171 |
Contract liabilities | 733 |  |  | 647 |  |  | 469 |
Contract assets, reported within other long-term assets in the consolidated balance sheets, primarily result from revenue being recognized where payment 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 year ended December 31, 2020, contract assets and contract liabilities increased primarily due to customer discounts and deferred conversion revenue associated with long-term contracts obtained during the year. The Company recognized $492 million of revenue during the year ended December 31, 2020 that was included in the contract liabilities balance at the beginning of the period. During the year ended December 31, 2019, contract assets and contract liabilities increased $153 million and $117 million, respectively, due to the acquisition of First Data. The Company recognized $380 million of revenue during the year ended December 31, 2019 that was included in the contract liabilities balance at the beginning of the period. 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 are unsatisfied (or partially unsatisfied) at December 31, 2020:
(In millions) |
Year Ending December 31, |
2021 | $ | 2,000 |
2022 | 1,658 |
2023 | 1,355 |
2024 | 982 |
Thereafter | 1,825 |
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 primarily 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 at December 31:
(In millions) |  | 2020 |  | 2019
Capitalized sales commissions |  | $ | 402 |  |  | $ | 357 |
Capitalized conversion or implementation costs |  | 290 |  |  | 176 |
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. These costs are primarily included in selling, general and administrative expenses and totaled $124 million, $105 million and $106 million during the years ended December 31, 2020, 2019 and 2018, respectively. Impairment losses recognized during the years ended December 31, 2020, 2019 and 2018 related to capitalized contract costs were not significant.

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- Definition The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -URI http://asc.fasb.org/topic&trid=49130388 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 10 -URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130551-203045 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 13 -Subparagraph (b)(2) -URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130556-203045 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (b) -URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 9 -URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130550-203045 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (e) -URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (a) -URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (d) -URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 15 -URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130558-203045 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 606 -SubTopic 10 -Section 50 -Paragraph 12 -Subparagraph (c) -URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045 + Details
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