Fair Value Measurements

12 Months Ended

Dec. 31, 2022

9. Fair Value Measurements

Fair value, as defined by the relevant accounting standards, represents the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Refer to Note 2 for additional information on how the Company measures fair value.

The following tables present the Company’s assets and liabilities which are measured at fair value on a recurring basis, by balance sheet category (in millions):


	Fair Value Measurement Using				Total
December 31, 2022	Level 1		Level 2		Fair Value
Assets:
Settlement assets:
Measured at fair value through net income:
Money market funds	$	11.7	$	—	$	11.7
Measured at fair value through other comprehensive income (net of expected credit losses recorded through net income):
State and municipal debt securities		—		933.3		933.3
Asset-backed securities		—		184.1		184.1
Corporate debt securities		—		146.9		146.9
State and municipal variable-rate demand notes		—		48.9		48.9
United States government agency mortgage-backed securities		—		20.5		20.5
Other assets:
Derivatives		—		126.1		126.1
Total assets	$	11.7	$	1,459.8	$	1,471.5
Liabilities:
Other liabilities:
Derivatives	$	—	$	98.9	$	98.9
Total liabilities	$	—	$	98.9	$	98.9


	Fair Value Measurement Using				Total
December 31, 2021	Level 1		Level 2		Fair Value
Assets:
Settlement assets:
Measured at fair value through net income:
Money market funds	$	7.9	$	—	$	7.9
Measured at fair value through other comprehensive income (net of expected credit losses recorded through net income):
State and municipal debt securities		—		1,219.9		1,219.9
State and municipal variable-rate demand notes		—		84.8		84.8
Corporate and other debt securities		—		57.8		57.8
United States government agency mortgage-backed securities		—		36.4		36.4
Other assets:
Derivatives		—		247.7		247.7
Total assets	$	7.9	$	1,646.6	$	1,654.5
Liabilities:
Other liabilities:
Derivatives	$	—	$	183.8	$	183.8
Total liabilities	$	—	$	183.8	$	183.8

There were no material, non-recurring fair value adjustments other than approximately $15 million of operating lease ROU asset, property and equipment, and other intangible asset impairments associated with the Company's suspension of its operations in Russia and Belarus, the first closing of its Business Solutions divestiture, and its operating expense redeployment initiatives for the year ended December 31, 2022, as discussed further in Note 18. There were no material, non-recurring fair value adjustments for the year ended December 31, 2021, or transfers between Level 1 and Level 2 measurements during the years ended December 31, 2022 and 2021.

Other Fair Value Measurements

The carrying amounts for many of the Company’s financial instruments, including certain cash and cash equivalents, settlement cash and cash equivalents, and settlement receivables and obligations approximate fair value due to their short maturities. The Company’s borrowings are classified as Level 2 within the valuation hierarchy, and the aggregate fair value of these borrowings was based on quotes from multiple banks. Fixed-rate notes are carried in the Company’s Consolidated Balance Sheets at their original issuance values as adjusted over time to amortize or accrete that value to par. As of December 31, 2022, the carrying value and fair value of the Company’s borrowings were $2,616.8 million and $2,442.5 million, respectively (see Note 16). As of December 31, 2021, the carrying value and fair value of the Company’s borrowings were $3,008.4 million and $3,217.2 million, respectively.

During the year ended December 31, 2022, the Company entered into reverse repurchase agreements, a form of secured lending, with broker-dealer affiliates of large U.S. banks, using a portion of the proceeds from the sale of the Company's Business Solutions business. These agreements require the counterparties to pledge marketable securities with a value greater than the amount of cash transferred as collateral, which is held and valued by a third-party custodial bank. These investments generate interest income through the date of repurchase, at which point the purchase price together with the interest due will be paid back to the Company. The Company carries these investments at amortized cost, and as of December 31, 2022, the carrying value of these investments, as reported in Other assets in the Company's Consolidated Balance Sheets, was $100.0 million, which approximates fair value due to the creditworthiness of the counterparty, the value of the collateral, and the investments' short-term nature and variable interest rate.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details