Operating expenses by nature are as follows:


For the year ended March 31, 2024
								(In millions of yen)
	Payment		Financial service		Inter-segment eliminations			Consolidated
Point expenses (1)		45,402	―		―				45,402
Settlement related cost (2)		30,660		9,832		(500	)		39,992
Employee benefit expenses (3)		30,981		6,783	―				37,764
Professional and outsourcing services expenses (4)		26,456		8,516		(172	)		34,800
Provision for loss allowance		22,650		356	―				23,006
Other operating expenses
Depreciation and amortization		12,849		4,700	―				17,549
License fees		15,899	―		―				15,899
Interest expenses		2,814		544		(1,427	)		1,931
Advertising and promotion expenses		7,955		4,050		(547	)		11,458
Tax and charges		4,270		2,248	―				6,518
Amortization of contract cost		1,043	―		―				1,043
Other		14,105		5,391		(258	)		19,238
Subtotal		58,935		16,933		(2,232	)		73,636
Total		215,084		42,420		(2,904	)		254,600


For the year ended March 31, 2025
								(In millions of yen)
	Payment		Financial service		Inter-segment eliminations			Consolidated
Point expenses (1)		50,362	―		―				50,362
Settlement related cost (2)		33,645		10,592		(575	)		43,662
Employee benefit expenses (3)		32,984		8,499	―				41,483
Professional and outsourcing services expenses (4)		19,887		8,997		(117	)		28,767
Provision for loss allowance		23,368		574	―				23,942
Other operating expenses
Depreciation and amortization		14,705		5,388	―				20,093
License fees		18,027	―		―				18,027
Interest expenses		2,628		2,278		(652	)		4,254
Advertising and promotion expenses		6,896		4,528		(693	)		10,731
Tax and charges		3,038		2,014	―				5,052
Amortization of contract cost		1,297	―		―				1,297
Other		11,061		5,616		(779	)		15,898
Subtotal		57,652		19,824		(2,124	)		75,352
Total		217,898		48,486		(2,816	)		263,568


For the year ended March 31, 2026
								(In millions of yen)
	Payment		Financial service		Inter-segment eliminations			Consolidated
Point expenses (1)		60,195		—		—			60,195
Settlement related cost (2)		37,817		11,713		(799	)		48,731
Employee benefit expenses (3)		36,790		10,865		(14	)		47,641
Professional and outsourcing services expenses (4)		20,336		8,120		(357	)		28,099
Provision for loss allowance		23,861		1,062		—			24,923
Other operating expenses
Depreciation and amortization		17,018		6,740		—			23,758
License fees		18,060		839		—			18,899
Interest expenses		3,920		6,997		(327	)		10,590
Advertising and promotion expenses		7,281		3,028		(303	)		10,006
Tax and charges		3,889		2,054		—			5,943
Amortization of contract cost		1,724		—		—			1,724
Other		15,831		5,361		(1,121	)		20,071
Subtotal		67,723		25,019		(1,751	)		90,991
Total		246,722		56,779		(2,921	)		300,580

(1)

Point expenses are incurred primarily when the Group grants reward points to a PayPay User through various reward programs, which the PayPay User can use such reward points at the merchants to pay off balance due in a purchase transaction.

(2)

Settlement related cost includes fees paid to banks for users to charge their PayPay Balance from their bank accounts and brand or network fees paid to international card brands. Settlement related cost also includes interbank transaction fees.

(3)

Refer to Note 26, Employee Benefits for details.

(4)

Professional and outsourcing services expenses include customer service related costs, system development labor, and other professional services.