PayPal snaps up fraud prevention player Simility for $120m

PayPal snaps up fraud prevention player Simility for $120m

NEWSBYTE PayPal has announced that it is to acquire fraud prevention and risk management platform, Simility, for $120 million in cash.

The acquisition, which is expected to close in Q3 2018, will enable the electronics payment provider to make Similarity’s customisable fraud prevention and risk management solutions available to merchants globally.

The machine learning-powered tools learn from each transaction, helping traders to reduce fraudulent payment activity over time, and in some cases, verify transactions that might otherwise have failed.

“Digital commerce has exploded, and fraudsters have taken note, adapting and developing new methods to carry out their crimes,” said PayPal COO, Bill Ready.

“Now, merchants will be able to configure those solutions to manage the unique complexities of their businesses. Together with Simility, we will be able to put more control in the hands of our merchants to fight fraud, while helping make commerce experiences faster and more secure.”

“Our vision for Simility was to create an adaptive risk management platform that empowers organisations operating in a digital world to manage an evolving fraud and risk landscape,” added Rahul Pangam, co-founder and CEO, Simility.

“We are excited to enter the next phase of our growth with PayPal and are thrilled to join them to help drive the next generation of payment and commerce solutions while scaling our business together.”

Internet of Business says

PayPal is certainly on the acquisition trail. In May, it announced the purchase of European fintech player, iZettle, for $2.2 billion, in a move that drew the online payments giant further out of the world of clicks and deeper into bricks-and-mortar retailing.

PayPal stepped in to acquire the company just 10 days after iZettle announced that it planned to go for IPO.

That acquisition was the largest in PayPal’s history and set it in direct competition with Square Inc, which has focused on enabling digital payments for millions of small businesses.

However, the $2.2 billion price tag was twice what analyst consensus predicted would be iZettle’s valuation, post IPO, eight times the sum it hoped to raise by going public, and 13 times the size of its projected 2018 revenues.

Whether PayPal paid over the odds must be the key question, therefore, and suggests that it is feeling the heat from increased competition in the digital payments and retail sectors – where fraud detection is an increasingly important facility.

The adoption of AI- and machine-learning powered fraud detection and prevention systems has been a key theme for the financial services sector this year.