PayPal Holdings Inc. sees itself pushing into new markets and creating more personalized payments experiences as it leverages its technological strengths.
The company’s chief technology officer told MarketWatch last week that PayPal’s
PYPL, -2.28%
agile platform and artificial-intelligence capabilities are enabling it to quickly support new regions and improve the customer experience.
One way the company is doing this through regulatory technology, or regtech. Doing business globally requires knowledge of laws and rules in each jurisdiction. PayPal manages the compliance aspects for merchants who are part of its network, which CTO Sri Shivananda said gives the company an advantage in signing up new customers who likely don’t want to keep track of the varying laws themselves.
See also: PayPal’s iZettle purchase is likely to be followed by a lot more fintech M&A
In general, the increase in global trade has companies looking for ways that they can help manage the complexities of international commerce for their customers. Alibaba Group Holding Ltd.
BABA, -2.25%
for example, provides tools that allow merchants to better navigate the customs process and translate the communications they have with customers in other regions.
Shivananda said that PayPal’s efforts go beyond policy and into technology, because the company’s flexible platform structure enables it to stay up to date on changing regulations and make sure they’re applied across the system.
MarketWatch recently caught up with Shivananda about PayPal’s technological endeavors and how concepts like AI will affect the payments industry more broadly in the years ahead. Excerpts of the conversation follow.
What are you doing technologically that’s different from what others are doing?
We’ve been a platform company for more than a decade. Tech is something where if you solved the problem a few years ago, the methodology, the context, and the scale have all changed. The brain of PayPal is a combination of identity, payments, risk, compliance, and credit. We think of all of these as platforms and they’ve been built in a way that is nimble. You have to look at all the tech you build and see what needs an evolution. The stack of a company like ours is probably a 500-piece puzzle. We need to know what pieces to replace at what time. A few years ago, we were doing eight code releases a year, and now we’re doing 17,000 releases a year. That’s the kind of velocity you need to compete in the industry and be ahead of everyone else.
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How does that apply on a practical level?
As shopping has moved from what used to be in stores to web and mobile, the boundaries between countries around the world have disappeared. Cross-border trade is easier. Now anyone with a mobile phone can buy from anywhere. As that’s happened, governments around the world have taken stock, and there are laws on how money’s moved and managed. We are in more than 200 markets and each is a jurisdiction. We need to be compliant with all those laws in every transaction, so you can imagine the complexity of that. Last year, the industry started talking about this as regtech, or regulatory technology. We are probably at the leading edge of it. Because we’re a platform company, we’ve built compliance into the platform as well. That’s a big advantage. Every merchant in the world has to be globally compliant with all the regulations everywhere, but if they partner with PayPal, which manages the payments for them, they get global access to customers. We subsidize that for them, which allows for lower barriers to entry.
How does artificial intelligence help the business?
Recent advancements in compute, like GPUs, have made the algorithms that have existed for a long time commercially viable and effective. We are always looking to see how we can mechanize the creation of insights from data. A recent innovation is our customer chatbot. You can actually get a refund or resolve a dispute through a system that understands context and is highly privacy oriented. There’s no replacement for a human touch, but it helps us be more efficient and resolve things faster.
Where do you see the payments industry headed in a decade?
Experiences are becoming tailor-stitched for each individual. That wasn’t plausible through software development in the past, but with AI, customers can now get different experiences based on who they are, what their wants are, and what their intent is. Concepts like the subscription economy, immediacy, and instant gratification play a role in how the commerce experiences are going to evolve. The payment platforms that will win are the ones that can support all of those experiences. All of our competitive advantages come into play. We are a two-sided network, we have a platform, and we’re compliant in hundred of markets. I don’t think it’s a 10-year-out kind of prediction. This is what’s coming in the next few years.
What is PayPal doing with blockchain?
We are interested in any technology that has the potential to enable our mission of democratizing financial services. Blockchain is in its early days. We have a few experiments running within PayPal, but none that we can share yet. As a technologist, my general view of blockchain is that it has good potential in the digitization of asset transfer, supply chain, and payments. So far it has had one use case built on it, which is crypto. The underlying tech has been compelling, and we are trying to figure out through experiments what the potential is and if we can apply it to our purpose.
PayPal shares are up 54% in the past 12 months, while the S&P 500
SPX, -0.07%
has risen 14%.
Source : MTV
