Settlement Assets and Obligations

Settlement assets and obligations result from the Company’s processing services and associated settlement activities, including settlement of payment transactions. Settlement assets are generated principally from merchant services transactions. Certain merchant settlement assets that relate to settlement obligations accrued by the Company are held by partner banks to which the Company does not have legal ownership but has the right to use to satisfy the related settlement obligation. The Company records corresponding settlement obligations for amounts payable to merchants and for payment instruments not yet presented for settlement.

The principal components of the Company’s settlement assets and obligations were as follows:



	As of December 31,
(in millions)	2016		2015
Settlement assets:
Cash and cash equivalents	$	1,620	$	1,426
Investment securities	—		1
Due from card associations, bank partners, and merchants	13,175		6,723
Total settlement assets	$	14,795	$	8,150
Settlement obligations:
Payment instruments outstanding	$	12	$	34
Card settlements due to merchants	14,783		8,116
Total settlement obligations	$	14,795	$	8,150

The changes in settlement assets and obligations are presented on a net basis within operating activities in the consolidated statements of cash flows. However, because the changes in the settlement assets balance exactly offset changes in settlement obligations, the activity nets to zero.