Loans and Interest Receivable, Net | 760 $ 567 $ 569 680 - 759 1,637 1,529 600 - 679 1,502 1,449 < 599 433 369 Total $ 4,139 $ 3,916 The table above excludes certain outstanding consumer loans outside of the U.S., for which no FICO scores are available, with an outstanding balance of $84 million and $70 million at June 30, 2016 and December 31, 2015 , respectively. The following tables present the delinquency status of the principal amount of consumer loans and interest receivable: June 30, 2016 (In millions) Current 30 - 59 Days Past Due 60 - 89 Days Past Due 90 - 180 Days Past Due Total Past Due Total Consumer Receivables $ 3,815 $ 181 $ 71 $ 156 $ 408 $ 4,223 December 31, 2015 (In millions) Current 30 - 59 Days Past Due 60 - 89 Days Past Due 90 - 180 Days Past Due Total Past Due Total Consumer Receivables $ 3,593 $ 172 $ 66 $ 155 $ 393 $ 3,986 We charge off consumer loan receivable balances in the month in which a customer balance becomes 180 days past due. Bankrupt accounts are charged off 60 days after receipt of notification of bankruptcy. Past due loans receivable continue to accrue interest until such time they are charged off. The following table summarizes the activity in the allowance for consumer loans and interest receivable, net of participation interest sold for six months ended June 30, 2016 and 2015 : June 30, 2016 June 30, 2015 Consumer Loans Receivable Interest Receivable Total Allowance Consumer Loans Receivable Interest Receivable Total Allowance (In Millions) Balance as of January 1 $ 179 $ 32 $ 211 $ 158 $ 30 $ 188 Reclassification from loans receivable to loans held for sale — — — (22 ) — (22 ) Provisions 179 49 228 127 34 161 Charge-offs (157 ) (51 ) (208 ) (127 ) (40 ) (167 ) Recoveries 18 — 18 14 — 14 Balance as of June 30 $ 219 $ 30 $ 249 $ 150 $ 24 $ 174 The table above excludes receivables from other consumer credit products of $9 million and $8 million at June 30, 2016 and December 31, 2015 , respectively, and allowances of $4 million and $1 million at June 30, 2016 and December 31, 2015 , respectively. The provision for loan losses relating to our consumer loans receivable portfolio is recognized in transaction and loan losses and the provisions for interest receivable is recognized in net revenues from other value added services as a reduction in revenue. Merchant receivables We offer credit products to certain existing small and medium-sized merchants through our PayPal Working Capital product. We closely monitor credit quality for all working capital advances that we extend or purchase through that product to manage and evaluate our related exposure to credit risk. To assess a merchant who wishes to obtain a PayPal Working Capital advance, we use, among other indicators, a risk model that we have internally developed that we refer to as our PayPal Working Capital Risk Model (“PRM”), as a credit quality indicator to help predict the merchant's ability to repay the principal balance and fixed fee related to the working capital advance. The PRM uses multiple variables as predictors of the merchant's ability to repay a working capital advance. Primary drivers of the model include the merchant's annual payment volume and payment processing history with PayPal, prior repayment history with the PayPal Working Capital product, and other measures. Merchants are assigned a PRM credit score within the range of 350 to 750 . We generally expect that merchants to which we extend a working capital advance will have PRM scores greater than 525 . We generally consider scores above 610 to be very good and to pose less credit risk. For all outstanding working capital advances that we own, we assess the participating merchant’s PRM score on a recurring basis. At June 30, 2016 and December 31, 2015, the weighted average PRM score related to our PayPal Working Capital balances outstanding was 637 and 630 , respectively. The following table presents the principal amount of PayPal Working Capital advances and fees receivable segmented by our internal PRM score range: June 30, 2016 December 31, 2015 (In millions) > 630 $ 364 $ 255 566-629 101 94 <565 90 72 Total $ 555 $ 421 Through our PayPal Working Capital product, merchants can borrow a certain percentage of their annual payment volume processed by PayPal and are charged a fixed fee for the advance, which targets an annual percentage rate based on the overall credit assessment of the merchant. The fee is fixed at the time the advance is extended and recognized as deferred revenues in our condensed consolidated balance sheet. Advances plus the fixed fee are repaid through a fixed percentage of the merchant's future payment volume that PayPal processes. The fixed fee is amortized to net revenues from other value added services based on the amount repaid over the repayment period. We estimate the repayment period based on PayPal's payment processing history with the merchant. There is no stated interest rate and there is a general requirement that at least 10% of the original amount advanced plus the fixed fee must be repaid every 90 days. We generally calculate the repayment rate of the merchant's future payment volume so that repayment of the advance and fixed fee is expected to occur within 9 to 12 months from the date of the advance. On a monthly basis, we recalculate the repayment period based on the repayment activity on the receivable. As such, actual repayment periods are dependent on actual payment processing volumes. We monitor receivables with repayment periods greater than the original expected repayment period. We charge off the receivable when the updated repayment period is 180 days past the original expected repayment period and the merchant has not made a payment in the last 60 days. We also charge off the receivable when the updated repayment period is 365 days past the original expected repayment period regardless of whether or not the merchant has made a payment within the last 60 days . The total PayPal Working Capital advances and fees receivable outstanding as of June 30, 2016 and December 31, 2015 were approximately $555 million and $421 million , respectively. The following tables present our estimate of the principal amount of PayPal Working Capital advances and fees receivable past their original expected repayment period. In the three months ended June 30, 2016, we refined our estimate of the original expected repayment period to take into account the variability in repayment patterns. Prior period amounts have been updated to reflect this change. June 30, 2016 (In millions) Within Original Expected Repayment Period 30 - 59 Days Greater 60 - 89 Days Greater 90 - 180 Days Greater 180+ Days Total Past Original Expected Repayment Period Total Merchant Receivables $ 474 $ 29 $ 16 $ 26 $ 10 $ 81 $ 555 December 31, 2015 (In millions) Within Original Expected Repayment Period 30 - 59 Days Greater 60 - 89 Days Greater 90 - 180 Days Greater 180+ Days Total Past Original Expected Repayment Period Total Merchant Receivables $ 367 $ 24 $ 13 $ 15 $ 2 $ 54 $ 421 The following table summarizes the activity in the allowance for PayPal Working Capital advances and fees receivable, for the period indicated: June 30, 2016 June 30, 2015 PayPal Working Capital Advances Fees Receivable Total Allowance PayPal Working Capital Advances Fees Receivable Total Allowance (In millions) Balance as of January 1 $ 19 $ 3 $ 22 $ 6 $ 1 $ 7 Provisions 17 1 18 10 1 11 Charge-offs (14 ) (2 ) (16 ) (6 ) (1 ) (7 ) Recoveries 2 — 2 1 — 1 Balance as of June 30 $ 24 $ 2 $ 26 $ 11 $ 1 $ 12 The provision for loan losses relating to our PayPal Working Capital advances is recognized in transaction and loan losses and the provisions for fees receivable is recognized in deferred revenues in our condensed consolidated balance sheet as a reduction in deferred revenue." id="sjs-B4">Loans and Interest Receivable, Net We offer credit products to consumers who choose PayPal Credit as their funding source at checkout and working capital advances to certain small and medium-sized PayPal merchants through our PayPal Working Capital product. In the U.S., we work with independent chartered financial institutions that extend credit to the consumer or merchant using our credit products. For our consumer credit products outside the U.S., we extend credit through our Luxembourg banking subsidiary. For our merchant credit products outside the U.S., we extend working capital advances in the U.K. through our Luxembourg banking subsidiary, and we extend working capital advances in Australia through an Australian subsidiary. We purchase the related receivables extended by an independent chartered financial institution in the U.S. and are responsible for servicing functions related to all our credit products. During the six months ended June 30, 2016 and 2015 , we purchased approximately $3.9 billion and $3.2 billion , respectively, in credit receivables. As part of the arrangement with an independent chartered financial institution in the U.S., we sell back a participation interest in the pool of consumer receivables outstanding under PayPal Credit consumer accounts. For this arrangement, we do not recognize gains or losses on the sale of the participation interest as the carrying amount of the participation interest sold approximates the fair value at time of transfer. However, we have a separate arrangement with certain investors under which we sold to these investors a participation interest in certain consumer loans receivable that we purchased, where the consideration received exceeded the carrying amount of the participation interest sold which resulted in a gain reflected as net revenues in our condensed combined and consolidated financial statements. Loans, advances and interest and fees receivable are reported at their outstanding principal balances, net of any participation interest sold and pro-rata allowances, including unamortized deferred origination costs and estimated collectible interest and fees. Consumer receivables As of June 30, 2016 , the total outstanding balance in our pool of consumer receivables was $4.2 billion , net of the participation interest sold to the independent chartered financial institution and other investors of $0.9 billion . As of December 31, 2015 , the total outstanding balance in our pool of consumer receivables was $4.0 billion , net of the participation interest sold to the independent chartered financial institution and other investors of $1.0 billion . The independent chartered financial institution and other investors have no recourse against us related to their participation interests for failure of debtors to pay when due. The participation interests held by the chartered financial institution and other investors have the same priority to the interests held by us and are subject to the same credit, prepayment, and interest rate risk associated with this pool of consumer receivables. All risks of loss are shared equally based on participation interests held amongst all participating stakeholders. We use a consumer's FICO score, where available, among other measures, in evaluating the credit quality of our U.S. PayPal Credit consumer receivables. A FICO score is a type of credit score that lenders use to assess an applicant's credit risk and whether to extend credit. Individual FICO scores generally are obtained each quarter in which the U.S. consumer has an outstanding consumer receivable owned by PayPal Credit. The weighted average U.S. consumer FICO scores related to our loans and interest receivable balance outstanding at June 30, 2016 and December 31, 2015 were 684 and 686 , respectively. As of June 30, 2016 and December 31, 2015 , approximately 53.2% and 53.6% , respectively, of the pool of U.S. consumer receivables and interest receivable balance was due from U.S. consumers with FICO scores greater than 680 , which is generally considered "prime" by the consumer credit industry. As of June 30, 2016 and December 31, 2015 , approximately 10.5% and 9.4% , respectively, of the pool of U.S. consumer receivables and interest receivable balance was due from U.S. customers with FICO scores below 599 . As of June 30, 2016 and December 31, 2015 , approximately 90.3% and 90.1% , respectively, of the portfolio of consumer receivables and interest receivable was current. The following table presents the principal amount of U.S. consumer loans and interest receivable segmented by a FICO score range: June 30, 2016 December 31, 2015 (In millions) > 760 $ 567 $ 569 680 - 759 1,637 1,529 600 - 679 1,502 1,449 < 599 433 369 Total $ 4,139 $ 3,916 The table above excludes certain outstanding consumer loans outside of the U.S., for which no FICO scores are available, with an outstanding balance of $84 million and $70 million at June 30, 2016 and December 31, 2015 , respectively. The following tables present the delinquency status of the principal amount of consumer loans and interest receivable: June 30, 2016 (In millions) Current 30 - 59 Days Past Due 60 - 89 Days Past Due 90 - 180 Days Past Due Total Past Due Total Consumer Receivables $ 3,815 $ 181 $ 71 $ 156 $ 408 $ 4,223 December 31, 2015 (In millions) Current 30 - 59 Days Past Due 60 - 89 Days Past Due 90 - 180 Days Past Due Total Past Due Total Consumer Receivables $ 3,593 $ 172 $ 66 $ 155 $ 393 $ 3,986 We charge off consumer loan receivable balances in the month in which a customer balance becomes 180 days past due. Bankrupt accounts are charged off 60 days after receipt of notification of bankruptcy. Past due loans receivable continue to accrue interest until such time they are charged off. The following table summarizes the activity in the allowance for consumer loans and interest receivable, net of participation interest sold for six months ended June 30, 2016 and 2015 : June 30, 2016 June 30, 2015 Consumer Loans Receivable Interest Receivable Total Allowance Consumer Loans Receivable Interest Receivable Total Allowance (In Millions) Balance as of January 1 $ 179 $ 32 $ 211 $ 158 $ 30 $ 188 Reclassification from loans receivable to loans held for sale — — — (22 ) — (22 ) Provisions 179 49 228 127 34 161 Charge-offs (157 ) (51 ) (208 ) (127 ) (40 ) (167 ) Recoveries 18 — 18 14 — 14 Balance as of June 30 $ 219 $ 30 $ 249 $ 150 $ 24 $ 174 The table above excludes receivables from other consumer credit products of $9 million and $8 million at June 30, 2016 and December 31, 2015 , respectively, and allowances of $4 million and $1 million at June 30, 2016 and December 31, 2015 , respectively. The provision for loan losses relating to our consumer loans receivable portfolio is recognized in transaction and loan losses and the provisions for interest receivable is recognized in net revenues from other value added services as a reduction in revenue. Merchant receivables We offer credit products to certain existing small and medium-sized merchants through our PayPal Working Capital product. We closely monitor credit quality for all working capital advances that we extend or purchase through that product to manage and evaluate our related exposure to credit risk. To assess a merchant who wishes to obtain a PayPal Working Capital advance, we use, among other indicators, a risk model that we have internally developed that we refer to as our PayPal Working Capital Risk Model (“PRM”), as a credit quality indicator to help predict the merchant's ability to repay the principal balance and fixed fee related to the working capital advance. The PRM uses multiple variables as predictors of the merchant's ability to repay a working capital advance. Primary drivers of the model include the merchant's annual payment volume and payment processing history with PayPal, prior repayment history with the PayPal Working Capital product, and other measures. Merchants are assigned a PRM credit score within the range of 350 to 750 . We generally expect that merchants to which we extend a working capital advance will have PRM scores greater than 525 . We generally consider scores above 610 to be very good and to pose less credit risk. For all outstanding working capital advances that we own, we assess the participating merchant’s PRM score on a recurring basis. At June 30, 2016 and December 31, 2015, the weighted average PRM score related to our PayPal Working Capital balances outstanding was 637 and 630 , respectively. The following table presents the principal amount of PayPal Working Capital advances and fees receivable segmented by our internal PRM score range: June 30, 2016 December 31, 2015 (In millions) > 630 $ 364 $ 255 566-629 101 94 <565 90 72 Total $ 555 $ 421 Through our PayPal Working Capital product, merchants can borrow a certain percentage of their annual payment volume processed by PayPal and are charged a fixed fee for the advance, which targets an annual percentage rate based on the overall credit assessment of the merchant. The fee is fixed at the time the advance is extended and recognized as deferred revenues in our condensed consolidated balance sheet. Advances plus the fixed fee are repaid through a fixed percentage of the merchant's future payment volume that PayPal processes. The fixed fee is amortized to net revenues from other value added services based on the amount repaid over the repayment period. We estimate the repayment period based on PayPal's payment processing history with the merchant. There is no stated interest rate and there is a general requirement that at least 10% of the original amount advanced plus the fixed fee must be repaid every 90 days. We generally calculate the repayment rate of the merchant's future payment volume so that repayment of the advance and fixed fee is expected to occur within 9 to 12 months from the date of the advance. On a monthly basis, we recalculate the repayment period based on the repayment activity on the receivable. As such, actual repayment periods are dependent on actual payment processing volumes. We monitor receivables with repayment periods greater than the original expected repayment period. We charge off the receivable when the updated repayment period is 180 days past the original expected repayment period and the merchant has not made a payment in the last 60 days. We also charge off the receivable when the updated repayment period is 365 days past the original expected repayment period regardless of whether or not the merchant has made a payment within the last 60 days . The total PayPal Working Capital advances and fees receivable outstanding as of June 30, 2016 and December 31, 2015 were approximately $555 million and $421 million , respectively. The following tables present our estimate of the principal amount of PayPal Working Capital advances and fees receivable past their original expected repayment period. In the three months ended June 30, 2016, we refined our estimate of the original expected repayment period to take into account the variability in repayment patterns. Prior period amounts have been updated to reflect this change. June 30, 2016 (In millions) Within Original Expected Repayment Period 30 - 59 Days Greater 60 - 89 Days Greater 90 - 180 Days Greater 180+ Days Total Past Original Expected Repayment Period Total Merchant Receivables $ 474 $ 29 $ 16 $ 26 $ 10 $ 81 $ 555 December 31, 2015 (In millions) Within Original Expected Repayment Period 30 - 59 Days Greater 60 - 89 Days Greater 90 - 180 Days Greater 180+ Days Total Past Original Expected Repayment Period Total Merchant Receivables $ 367 $ 24 $ 13 $ 15 $ 2 $ 54 $ 421 The following table summarizes the activity in the allowance for PayPal Working Capital advances and fees receivable, for the period indicated: June 30, 2016 June 30, 2015 PayPal Working Capital Advances Fees Receivable Total Allowance PayPal Working Capital Advances Fees Receivable Total Allowance (In millions) Balance as of January 1 $ 19 $ 3 $ 22 $ 6 $ 1 $ 7 Provisions 17 1 18 10 1 11 Charge-offs (14 ) (2 ) (16 ) (6 ) (1 ) (7 ) Recoveries 2 — 2 1 — 1 Balance as of June 30 $ 24 $ 2 $ 26 $ 11 $ 1 $ 12 The provision for loan losses relating to our PayPal Working Capital advances is recognized in transaction and loan losses and the provisions for fees receivable is recognized in deferred revenues in our condensed consolidated balance sheet as a reduction in deferred revenue. |