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This case study involves PayPal.
PayPal is an American
multinational
financial technology company
that revolutionized
the online payment system
offering an electronic
alternative
to traditional methods like
checks and money orders.
The company was founded in
December 1998 as Confinity.
PayPal initially focused on
developing security software for
handheld devices, later
pivoting to a digital wallet.
The first version of the
PayPal electronic systems
was launched in 1999.
In 2002, PayPal
went public and was
subsequently acquired by
eBay for $1.5 billion.
By 2010 over 100
million active users
had active accounts
in 190 markets.
In 2014, eBay spun off
PayPal into an
independent company.
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Now, the big challenge for
PayPal was fraud detection.
In facing the monumental
task of processing
over 35,000 transactions
per minute,
PayPal confronted
a multifaceted challenge
in fraud detection.
The rapid growth
of e-commerce and
digital payments accelerated by
a global digital transformation,
significantly
increased exposure to
various sophisticated
fraud risks.
PayPal had to deal with
diverse types of fraud such
as Signup Fraud or scammers
gate accounts using
stolen or synthetic identities,
often difficult to detect due
to limited historical data.
Login Fraud involving
unauthorized access to
existing customer accounts,
a challenging task
because it requires
differentiating between
legitimate and fraudulent users.
Finally, Payment Fraud scammers
using stolen credit
card details,
requiring rapid and
accurate detection
to prevent unauthorized
transactions.
These challenges were
further intensified
by the need to balance
fraud prevention with
user experience minimizing
false declines and
ensuring smooth and
efficient transactions,
processing for
legitimate customers.
The complexity of these issues
highlighted the need for
an advanced adaptable and
highly accurate fraud
detection system.
