Acquired Card Receivables - Acquired card receivables consisted of the following as of the dates presented (in thousands):


	September 30,			June 30,
	2021			2021
Gross amount of acquired card receivables	$	178,055		$	148,833
Less: allowance for credit losses		(3,717	)		(1,740	)
Total	$	174,338		$	147,093

Certain lines of credit and acquired card receivable balances are collateralized by cash deposits held by the Issuing Banks. Before an account is charged off, the Company obtains any available cash collateral from the Issuing Banks.

As of September 30, 2021, approximately $165.8 million of the acquired card receivable balance served as collateral for the Company’s borrowings from the 2021 Revolving Credit Agreement and the 2019 Credit Agreement (see Note 9).

The Company regularly reviews collection experience, delinquencies, and net charge-offs in determining allowance for credit losses related to acquired card receivables. Historical collections rates have shown that days past due is the primary indicator of the likelihood of loss. The Company elected to use the delinquency trends or past due status of the acquired card receivables as the credit quality indicator. Acquired card receivables are considered past due if full payment is not received on the bill date or within a grace period, which is generally limited to five days. Below is a summary of the acquired card receivables by class (i.e., past due status) as of the dates presented (in thousands):


	September 30,		June 30,
	2021		2021
Current and less than 30 days past due	$	173,272	$	145,993
30 ~ 59 days past due		1,992		1,188
60 ~ 89 days past due		1,581		580
90 ~ 119 days past due		883		713
Over 119 days past due		327		359
Total	$	178,055	$	148,833

The amount of outstanding balance of acquired card receivables that is (i) 90 days or more past due that continue to accrue fees and have an allowance for outstanding balance and fees, and (ii) classified as nonperforming was not material as of September 30, 2021.

Below is a summary of the changes in allowance for credit losses as of the dates presented (in thousands):


	September 30,			June 30,
	2021			2021
Balance, beginning	$	1,740		$	—
Initial allowance for credit losses on purchased card receivables with credit deterioration		14			2,082
Provision for expected credit losses		4,035			462
Charge-off amounts		(2,276	)		(828	)
Recoveries collected		204			24
Balance, end of period	$	3,717		$	1,740

The Company also incurred losses related to card transactions disputed by spending businesses. The amount was not material during the three months ended September 30, 2021.

In connection with the acquisition of Divvy, the Company evaluated the acquired card receivable balances with credit deterioration as of the acquisition date. Accordingly, a financial asset acquired is considered a purchased credit deteriorated (PCD) asset if, as of the acquisition date, such financial asset has experienced a more-than-insignificant deterioration in credit quality since origination. The Company used certain indicators, such as the past due status and charge-off status of the balances, in identifying and assessing whether the acquired card receivables are considered PCD assets.

The acquired card receivables that were considered PCD assets were not material as of September 30, 2021. The table below shows a summary of the acquired card receivables that were considered PCD assets as of June 30, 2021 (in thousands).


Purchase price	$	3,855
Allowance for credit losses		2,082
Less: discount attributable to other factors		(79	)
Par value	$	5,858

The Company sells a portion of acquired card receivables to a Purchasing Bank at a discount. Card receivables held for sale, which are carried at the lower of cost or estimated market value at the individual user account level and included in prepaid expenses and other current assets in the accompanying consolidated balance sheets, amounted to $3.5 million and $2.6 million as of September 30, 2021 and June 30, 2021.

Card Receivables Sold and Related Servicing and Beneficial Interest Derivative Retained

The Company has an agreement with the Purchasing Bank to sell its acquired card receivables. Cash proceeds and other assets received from card receivables transferred to the Purchasing Bank were approximately $259 million during the three months ended September 30, 2021. The Company has continuing involvement under this agreement as servicer, and by retaining a beneficial interest derivative in the form of a deferred purchase price. The beneficial interest derivative represents the Company’s right to receive a portion of collections based on the performance of each cohort of card receivables sold to the Purchasing Bank. The fair value of the beneficial interest derivative was $2.7 million and $2.3 million as of September 30, 2021 and June 30, 2021, respectively, and is included in prepaid expenses and other current assets in the accompanying condensed consolidated balance sheets. The servicing fee income was not material during the quarter ended September 30, 2021. See Note 4 for additional information about the fair value measurement of the beneficial interest derivative.

The Company could experience losses on the beneficial interest derivative if the performance of the cohorts of card receivables sold to the Purchasing Bank is less than expected. The Company could also experience losses on card receivables sold if it were required to repurchase delinquent receivables due to a breach in representations and warranties associated with its sales of receivables.

Below is a summary of transferred card receivables by class (i.e., past due status) as of the periods presented (in thousands):


	September 30,		June 30,
	2021		2021
Current and less than 30 days past due	$	41,372	$	28,687
30 ~ 59 days past due		861		240
60 ~ 89 days past due		444		165
90 ~ 119 days past due		219		301
Over 119 days past due		9		132
Total	$	42,905	$	29,525