An Overview of PayPal 6 th ASEANPay Steering Committee Meeting - - PowerPoint PPT Presentation

An Overview of PayPal

6th ASEANPay Steering Committee Meeting Chiang Mai, 24-25 April 2008 Presented by: Foo Chek-Tchung

Outline

PayPal – An Overview PayPal in Singapore Anti-Money Laundering and Fraud Risk Management

PayPal – An Overview

PayPal is a fast growing electronic micropayment system which serves as an alternative to traditional paper payment methods Launched in October 1999; acquired by eBay in 2002 Started as person-to-person payment service with growth driven by buyers sending payments to sellers on eBay Total of 141 million accounts Available in 190 markets and territories Supports payments in 17 currencies

Making and Receiving Payments via PayPal

• Buyer

Seller Withdrawal Method

Cheque

PayPal Account Credit/Debit Card

Funding Source

Bank Account Bank Account Debit Card PayPal Account

Cash cannot be directly placed into the PayPal System, nor withdrawn

Products & Services

Primary products

– Stored value facilities for online purchases – Payment processing for online vendors, auction sites and corporate users – Quasi-Cash P2P transfer

Other services*

– PayPal Money Market fund – PayPal credit and debit cards – Invoicing services

* Only available in the United States

PayPal & Other Payment Systems

PayPal and credit cards

– Channel for small businesses to accept credit card payments – About half of PayPal payments are funded with credit cards

PayPal and stored value facilities

– Majority of payments are funded in real-time – Stored values earn no interest

PayPal and the banking system

– Builds on existing financial infrastructure of bank accounts and credit cards

PayPal and P2P

– Majority of payments are for purchase of goods or services

Financials

Net total payment value for 2007 was US$47 billion

– Increase of 33% y-o-y

Revenues for Q42007 was US$563 million

– Increase of 35% y-o-y – International business contributed 44% of Q42007 revenue

Transacted about US$1,806 in payment volume every second in Q42007

PayPal in Singapore

PayPal has established a regional headquarters (PayPal Pte Ltd) in Singapore in August 2006 Main functions of PayPal Pte Ltd are to:

– Support PayPal’s expansion in the region – Provide service for PayPal customers outside the USA and European Union – Establish technology development centre for new payment strategies and products

Anti-Money Laundering and Fraud Risk Management – Global Regulatory Reporting

United States

– Regulated as a Money Service Business (i.e. Money Transmitter) in 29 U.S. jurisdictions – Compliance to U.S. Patriot Act and Banking Secrecy Act

European Union/United Kingdom

– Licensed as an electronic money issuer under the FSA in the U.K. – Regulated as a bank by Commission de Surveillance du Secteur Financier (CSSF) in Luxembourg – Compliance to the EU Anti-Money Laundering Directives

Australia

– Granted Australian Financial Services license to operate as a non-cash payment facility – Compliance to AUSTRAC AML/CFT Act and Rules

Regulatory Oversight of PayPal in Singapore

Regulations under the Payment Systems (Oversight) Act

– MAS has general oversight powers to request for information – Adoption of stored value facilities guidelines

Liquidity management program

– Implementation of liquidity management program to protect funds-at-risk

Anti-money laundering compliance

– PayPal is subject to AML/CFT requirements under the MAS Notice to Holders of Stored Value Facilities

Engagement

– Regular meetings/dialogues with PayPal management on developmental and regulatory issues

PayPal’s Anti-Money Laundering Program

PayPal actively works with the US Treasury Department and other law enforcement agencies through various initiatives

– No acceptance of cash or cheques – Proprietary detection and prevention systems – Global implementation of AML/CFT policies and strategies – Worldwide team of assigned AML officers – Annual global training for all employees – Develop worldwide relationships with law enforcement – Submission of SAR/STRs to various FIUs – Enforce Acceptable User Policy

PayPal’s Fraud Risk Management

PayPal buyer protection programs

– For most transactions on eBay, buyers are protected up to US$500

System safeguards

– System leveraged on top of existing financial infrastructure – No anonymous transactions (mandatory customer name and address) – Anti-fraud models monitor payments and flags risky transactions for manual review – Low system limits for sending payments (US$500) and withdrawals (US$500 per month) until additional user information is obtained and verified – Additional manual reviews for large volume clients

Thank You!