Our primary objective in holding derivatives is to reduce the volatility of earnings and cash flows associated with changes in foreign exchange rates. Our derivatives expose us to credit risk to the extent that our counterparties may be unable to meet the terms of the arrangement. We seek to mitigate such risk by limiting our counterparties to, and by spreading the risk across, major financial institutions and by entering into collateral security arrangements. In addition, the potential risk of loss with any one counterparty resulting from this type of credit risk is monitored on an ongoing basis. We do not use any derivative instruments for trading or speculative purposes.

We have significant international revenues and expenses denominated in foreign currencies, which subjects us to foreign exchange risk. We have a foreign currency exposure management program in which we designate certain foreign exchange contracts, generally with maturities of 12 months or less, to reduce the volatility of cash flows primarily related to forecasted revenues and expenses denominated in certain foreign currencies. The objective of these foreign exchange contracts is to help mitigate the risk that the U.S. dollar-equivalent cash flows are adversely affected by changes in the applicable U.S. dollar/foreign currency exchange rate. These derivative instruments are designated as cash flow hedges and accordingly, the derivative’s gain or loss is initially reported as a component of AOCI and subsequently reclassified into revenue or the applicable expense line item in the condensed consolidated statements of income (loss) in the same period the forecasted transaction affects earnings. We evaluate the effectiveness of our foreign exchange contracts on a quarterly basis by comparing the critical terms of the derivative instruments with the critical terms of the forecasted cash flows of the hedged item; if the critical terms are the same, we conclude the hedge will be perfectly effective. We do not exclude any component of the changes in fair value of the derivative instruments from the assessment of hedge effectiveness. We report cash flows arising from derivative instruments consistent with the classification of cash flows from the underlying items that these derivatives are hedging. Accordingly, the cash flows associated with derivatives designated as cash flow hedges are classified in cash flows from operating activities on our condensed consolidated statements of cash flows.

As of March 31, 2025, we estimated that $29 million of net derivative losses related to our cash flow hedges included in AOCI are expected to be reclassified into earnings within the next 12 months. During the three months ended March 31, 2025 and 2024, we did not discontinue any cash flow hedges because it was probable that the original forecasted transaction would not occur and as such, did not reclassify any gains or losses to earnings prior to the occurrence of the hedged transaction. If we elect to discontinue our cash flow hedges and it is probable that the original forecasted transaction will occur, we continue to report the derivative’s gain or loss in AOCI until the forecasted transaction affects earnings, at which point we also reclassify it into earnings. Gains and losses on derivatives held after we discontinue our cash flow hedges and on derivative instruments that are not designated as cash flow hedges are recorded in the same financial statement line item to which the derivative relates.

Prior to 2025, we used foreign exchange contracts to reduce the foreign exchange risk related to our investment in certain foreign subsidiaries. These derivatives were designated as net investment hedges and accordingly, the gains and losses on the portion of the derivatives included in the assessment of hedge effectiveness were recorded in AOCI as part of foreign currency translation. We excluded forward points from the assessment of hedge effectiveness and recognized them in other income (expense), net on a straight-line basis over the life of the hedge. The accumulated gains and losses associated with these instruments will remain in AOCI until the foreign subsidiaries are sold or substantially liquidated, at which point they will be reclassified into earnings. The cash flows associated with derivatives designated as a net investment hedge are classified in cash flows from investing activities on our condensed consolidated statements of cash flows.

We have a foreign currency exposure management program in which we use foreign exchange contracts to offset the foreign exchange risk of our assets and liabilities denominated in currencies other than the functional currency of our subsidiaries. These contracts are not designated as hedging instruments and reduce, but do not entirely eliminate, the impact of foreign exchange rate movements on our assets and liabilities. The gains and losses due to remeasurement of certain foreign currency denominated monetary assets and liabilities are recorded in other income (expense), net, which are offset by the gains and losses on these foreign exchange contracts. The cash flows associated with our non-designated derivatives used to hedge foreign currency denominated monetary assets and liabilities are classified in cash flows from operating activities on our condensed consolidated statements of cash flows.


	Balance Sheet Location	March 31, 2025		December 31, 2024
		(In millions)
Derivative Assets:
Foreign exchange contracts designated as hedging instruments	Other current assets	$	43	$	157

Foreign exchange contracts not designated as hedging instruments	Other current assets	13		86
Total derivative assets		$	56	$	243

Derivative Liabilities:
Foreign exchange contracts designated as hedging instruments	Other current liabilities	$	71	$	10

Foreign exchange contracts not designated as hedging instruments	Other current liabilities	16		27
Total derivative liabilities		$	87	$	37


	Three Months Ended March 31,
	2025				2024
	(In millions)
	Net revenues		Other income (expense), net		Net revenues		Other income (expense), net
Total amounts presented in the condensed consolidated statements of income (loss) in which the effects of cash flow hedges and net investment hedges are recorded	$	7,791	$	73	$	7,699	$	41

Gains (losses) on derivatives in cash flow hedging relationship:
Amount of net gains (losses) on foreign exchange contracts reclassified from AOCI	35		—		—		—
Gains (losses) on derivatives in net investment hedging relationship:
Amount of net gains (losses) on foreign exchange contracts excluded from the assessment of effectiveness	—		—		—		20
Gains (losses) on derivatives not designated as hedging instruments:
Amount of net gains (losses) on foreign exchange contracts	—		(83)		—		21

Total net gains (losses)	$	35	$	(83)	$	—	$	41


	Three Months Ended March 31,
	2025		2024
	(In millions)
Unrealized net gains (losses) on foreign exchange contracts designated as cash flow hedges	$	(141)	$	96
Unrealized net gains (losses) on foreign exchange contracts designated as net investment hedges	—		99
Total unrealized net gains (losses) recognized from derivative contracts designated as hedging instruments in the condensed consolidated statements of comprehensive income (loss)	$	(141)	$	195

Derivative transactions are measured in terms of the notional amount; however, this amount is not recorded on the balance sheet and is not, when viewed in isolation, a meaningful measure of the risk profile of the derivative instruments. The notional amount is generally not exchanged, but is used only as the underlying basis on which the value of foreign currency exchange payments under these contracts is determined. The following table provides the notional amounts of our outstanding derivatives:

Under master netting agreements with certain counterparties to our derivative contracts, repurchase agreements, and reverse repurchase agreements, subject to applicable requirements, we are allowed to net settle transactions of the same type with a single net amount payable by one party to the other. PayPal has not elected to offset for balance sheet presentation and we present the derivative assets, derivative liabilities, repurchase agreements and reverse repurchase agreements on a gross basis on our condensed consolidated balance sheets.

We have entered into collateral security arrangements with certain counterparties that provide for collateral to be received or posted when the net fair value of certain financial instruments fluctuates from contractually established thresholds. Receivables related to cash collateral posted and payables related to cash collateral received are recognized in other current assets and other current liabilities, respectively, on our condensed consolidated balance sheets.

The following tables present the derivative assets, derivative liabilities, repurchase agreements, and reverse repurchase agreements not offset on the condensed consolidated balance sheet but available for offset in the event of default. The tables also present the cash and non-cash collateral received or pledged relating to these positions. The amount of collateral presented is limited to the amount presented on our condensed consolidated balance sheet; therefore, instances of over-collateralization are excluded from the table below.


			Amounts Not Offset on the Condensed Consolidated Balance Sheet
	Amounts Presented on the Condensed Consolidated Balance Sheet		Financial Instruments(1)		Collateral Received(2)		Net Amounts
	(In millions)
As of March 31, 2025
Derivative assets(3)	$	56	$	23	$	29	$	4
Reverse repurchase agreements(4)	200		—		200		—
Total assets	$	256	$	23	$	229	$	4
As of December 31, 2024
Derivative assets(3)	$	243	$	23	$	169	$	51
Reverse repurchase agreements(4)	87		—		87		—
Total assets	$	330	$	23	$	256	$	51


			Amounts Not Offset on the Condensed Consolidated Balance Sheet
	Amounts Presented on the Condensed Consolidated Balance Sheet		Financial Instruments(1)		Collateral Pledged(2)		Net Amounts
	(In millions)
As of March 31, 2025
Derivative liabilities(3)	$	87	$	24	$	55	$	8
Repurchase agreements	—		—		—		—
Total liabilities	$	87	$	24	$	55	$	8
As of December 31, 2024
Derivative liabilities(3)	$	37	$	23	$	7	$	7
Repurchase agreements	—		—		—		—
Total liabilities	$	37	$	23	$	7	$	7

(3) We received cash collateral from derivative counterparties totaling $27 million and $162 million as of March 31, 2025 and December 31, 2024, respectively, and securities from derivative counterparties with a fair value of $10 million and $30 million as of March 31, 2025 and December 31, 2024, respectively. We posted $60 million and $7 million of cash collateral as of March 31, 2025 and December 31, 2024, respectively.

(4) PayPal is permitted by contract to sell or repledge collateral relating to its reverse repurchase agreements. The fair value of this collateral was $203 million and $96 million as of March 31, 2025 and December 31, 2024, respectively. As of March 31, 2025 and December 31, 2024, we have not sold or repledged collateral relating to reverse repurchase agreements.