The Company monitors and manages its foreign currency and interest rate exposures as part of its overall risk management program which focuses on the unpredictability of financial markets and seeks to reduce the potentially adverse effects that the volatility of these markets may have on its operating results. A primary objective of the Company’s risk management strategies is to reduce the financial impact that may arise from volatility in foreign currency exchange rates principally through the use of both foreign exchange derivative contracts and foreign currency denominated debt. In addition, the Company may enter into interest rate derivative contracts to manage the effects of interest rate movements on the Company’s aggregate liability portfolio, including potential future debt issuances. The Company does not enter into derivatives for speculative purposes.

The Company may enter into foreign exchange derivative contracts, including forwards and options, to manage the impact of foreign currency variability on anticipated revenues and expenses, which fluctuate based on currencies other than the functional currency of the entity. The objective of these hedging activities is to reduce the effect of movement in foreign exchange rates for a portion of revenues and expenses forecasted to occur. As these contracts are designated as cash flow hedging instruments, gains and losses resulting from changes in fair value of these contracts are deferred in accumulated other comprehensive income (loss) and subsequently reclassified to the consolidated statement of operations when the underlying hedged transactions impact earnings.

In addition, the Company may enter into interest rate derivative contracts to manage the effects of interest rate movements on the Company’s aggregate liability portfolio, including potential future debt issuances, and designate such derivatives as hedging instruments in a

cash flow hedging relationship. Gains and losses resulting from changes in fair value of these contracts are deferred in accumulated other comprehensive income (loss) and are subsequently reclassified as an adjustment to interest expense over the respective terms of the hedged debt issuances.

The Company may enter into interest rate derivative contracts, including interest rate swaps, to manage the effects of interest rate movements on the fair value of the Company's fixed-rate debt and designate such derivatives as hedging instruments in a fair value hedging relationship. Changes in fair value of these contracts and changes in fair value of fixed-rate debt attributable to changes in the hedged benchmark interest rate generally offset each other and are recorded in interest expense on the consolidated statement of operations. Gains or losses related to the net settlements of interest rate swaps are also recorded in interest expense on the consolidated statement of operations. The periodic cash settlements are included in operating activities on the consolidated statement of cash flows.

In 2021, the Company entered into an interest rate swap designated as a fair value hedge related to $1.0 billion of the 3.850% Senior Notes due March 2050. In effect, the interest rate swap synthetically converts the fixed interest rate on this debt to a variable interest rate based on the Secured Overnight Financing Rate (“SOFR”) Overnight Index Swap Rate. The net impact to interest expense for the three and nine months ended September 30, 2023 and 2022 was not material.

The Company may use foreign currency denominated debt and/or foreign exchange derivative contracts to hedge a portion of its net investment in foreign subsidiaries against adverse movements in exchange rates. The effective portion of the net investment hedge is recorded as a currency translation adjustment in accumulated other comprehensive income (loss). Forward points are excluded from the effectiveness assessment and are recognized in general and administrative expenses on the consolidated statement of operations over the hedge period. The amounts recognized in earnings related to forward points for the three and nine months ended September 30, 2023 and 2022 were not material.

As of September 30, 2023 and December 31, 2022, the Company had €1.7 billion euro-denominated debt outstanding designated as hedges of a portion of its net investment in its European operations. For the three and nine months ended September 30, 2023 and 2022, the Company recorded pre-tax net foreign currency gains (losses) of $54 million and $15 million and $189 million and $388 million, respectively, in other comprehensive income (loss).

As of September 30, 2023 and December 31, 2022, the Company had net foreign currency gains of $350 million and $309 million, respectively, after tax, in accumulated other comprehensive income (loss) associated with this hedging activity.

The Company may also enter into foreign exchange derivative contracts to serve as economic hedges, such as to offset possible changes in the value of monetary assets and liabilities due to foreign exchange fluctuations, without designating these derivative contracts as hedging instruments. In addition, the Company is subject to foreign exchange risk as part of its daily settlement activities. This risk is typically limited to a few days between when a payment transaction takes place and the subsequent settlement with customers. To manage this risk, the Company may enter into short duration foreign exchange derivative contracts based upon anticipated receipts and disbursements for the respective currency position. The objective of these activities is to reduce the Company’s exposure to volatility arising from gains and losses resulting from fluctuations of foreign currencies against its functional currencies. Gains and losses resulting from changes in fair value of these contracts are recorded in general and administrative expenses on the consolidated statement of operations, net, along with the foreign currency gains and losses on monetary assets and liabilities.


	September 30, 2023						December 31, 2022
	Notional		Derivative assets		Derivative liabilities		Notional		Derivative assets		Derivative liabilities
	(in millions)
Derivatives designated as hedging instruments
Foreign exchange contracts in a cash flow hedge 1	$	1,055	$	15	$	9	$	642	$	4	$	15
Interest rate contracts in a fair value hedge 2	1,000		—		109		1,000		—		105
Foreign exchange contracts in a net investment hedge 1	2,858		93		—		1,814		103		4
Derivatives not designated as hedging instruments
Foreign exchange contracts 1	2,099		12		13		521		1		2
Total derivative assets/liabilities	$	7,012	$	120	$	131	$	3,977	$	108	$	126


	Gain (Loss) Recognized in OCI					Gain (Loss) Reclassified from AOCI
	Three Months Ended September 30,				Location of Gain (Loss) Reclassified from AOCI into Earnings	Three Months Ended September 30,
	2023		2022			2023		2022
	(in millions)					(in millions)
Derivative financial instruments in a cash flow hedge relationship:
Foreign exchange contracts	$	17	$	14	Net revenue	$	(10)	$	6
Interest rate contracts	$	—	$	—	Interest expense	$	(2)	$	(2)

Derivative financial instruments in a net investment hedge relationship:
Foreign exchange contracts	$	84	$	183


	Gain (Loss) Recognized in OCI					Gain (Loss) Reclassified from AOCI
	Nine Months Ended September 30,				Location of Gain (Loss) Reclassified from AOCI into Earnings	Nine Months Ended September 30,
	2023		2022			2023		2022
	(in millions)					(in millions)
Derivative financial instruments in a cash flow hedge relationship:
Foreign exchange contracts	$	(7)	$	21	Net revenue	$	(24)	$	14
Interest rate contracts	$	—	$	—	Interest expense	$	(5)	$	(5)

Derivative financial instruments in a net investment hedge relationship:
Foreign exchange contracts	$	38	$	384

The Company estimates that the pre-tax amount of the net deferred loss on cash flow hedges recorded in accumulated other comprehensive income (loss) at September 30, 2023 that will be reclassified into the consolidated statement of operations within the next 12 months is not material. The term of the foreign exchange derivative contracts designated in hedging relationships are generally less than 18 months.