If there is a company that can boast of being 100% digital native, it is PayPal, a platform that allows companies and consumers to send and receive payments over the Internet in a secure, comfortable and profitable way. Since its birth in 1998, in Silicon Valley, the brand has not stopped evolving and growing at the pace that technology has done in these 25 years. In fact, today, the size of its network and the increasing acceptance of its product has made it one of the main digital payment systems.

Initially, the company emerged from two different companies: x.com and Confinity. “We started as a crypto company, developing P2P payments and using Palm Pilots' Beam technology. Over time, we became an email-based payment solution; quite a revolution at that time. Just by having an email address you could receive money,” explains Sri Shivananda, executive vice president and chief technology officer at PayPal. Soon, the brand became an unofficial third-party service provider that eBay users included as a payment method in item descriptions, so “eBay saw the opportunity to welcome us into their fold and, eventually, we were acquired, becoming their official payment service. We grew hand in hand with eBay and have continued to do so after separating in 2015.”

Innovation, the cornerstone

Since its inception, innovation and technology have been the key pieces of the brand's success, which, according to Shivananda, has been developed in four iterations: “The start-up phase, where we use the technologies at our disposal to put the service into operation, testing different hypotheses, exploring different axes, unifying companies, etc.” Secondly, in the growth phase, “We take C++ code as a starting point., this being a much more detailed architecture that allowed us to work with a much larger volume, and which lasted approximately a decade.” The third phase, the expansion phase, involved “our horizontal architecture phase, in which we dismantle monoliths, partitioning data, microservices and event-driven architecture, using open source technologies”. And finally, “we position ourselves in a platform mentality, where undifferentiated heavy technology converges, using the cloud philosophy, integrating our acquisitions, unifying data assets and using data science and AI.”

One strategy, five keys

From a technological point of view, the brand's strategic engine is divided into five significant investment areas. The security is, according to Sri Shivananda, “our main technological priority”, since it is essential to offer a trusted platform to customers in a world where security breaches are the order of the day. “When we talk about security, what was enough yesterday is no longer enough today. PayPal, like many other large companies, suffers attacks every second, and we can only manage this volume of threats through an architecture with reinforced security layers and solid technology such as AI.”

“Safety is our top technological priority”

Stability is another objective to be followed by the brand. For the 35 million merchants who trust PayPal as a means of payment in your businesses, it is of utmost importance that the service is of high quality, reliable and always available. “Last year we processed a payment volume of $1.3 billion, and it continues to grow. It is our responsibility to ensure that each valid transaction is completed and reaches the merchant,” explains PayPal's chief technology officer.

Another of the fundamental pieces is speed, that is, the ability to innovate at a rate higher than that of the industry and that can be maintained. To achieve this, according to Shivananda, “we invest heavily in our platforms, tools and product development lifecycle processes, so that we improve flow, reduce effort and eliminate barriers that appear during execution. This allows us greater productivity and creativity on the part of developers.”

From 2016 to 2022, the company went from processing payments volume of $354 billion to $1.36 trillion last year. This growth, according to Shivananda, “needs to be supported by a technological architecture that can grow by increasing capacity and without requiring heavy engineering, reconstruction or re-architecture work,” so scalability is another of the axes. clue. Last but not least is the bonus or, in other words, efficiency. “As we work in these areas above, we must closely monitor efficiency and spend to ensure that our cost per transaction is the lowest and that we maintain operational excellence in all technological areas.”

To face all these challenges, PayPal has a highly qualified human team, although in Spain, the staff is relatively small, with functions such as sales and marketing. “Our technology workforce operates on a global scale and in all regions, so we learn different lessons from each one, which we apply in the rest of the markets where we operate. This also allows us to have the best in terms of global technology, fraud mitigation and prevention and cybersecurity measures in all markets, all while complying with local regulations and compliance requirements.” In 2022, globally, the company invested more than $3.2 billion in technology and development.

Technological layers

To make all these strategic areas flow as smoothly as possible, PayPal's technology is organized into four main layers. At the lowest layer is, according to Shivananda, the infrastructure, “made up of databases and data lakes, which are the fundamental systems of the company.” These applications are located on millions of thousands of servers and “much of our infrastructure has been built by PayPal; however, we also host some of our technology in the public cloud. This combination allows us to connect our customers around the world and deliver the speed, value and reliability expected from PayPal.” User data is also housed in this layer: profile, behavior, transactions and risk. It is, in short, “the structural skeleton of PayPal.”

The second layer is made up of a set of technologies that underpin all PayPal products and services. “We call them foundational platforms and they allow us to efficiently use the underlying infrastructure,” explains the company's technology director. These platforms are made up of a series of functionalities, such as internal tools for developers and engineers, or services such as caching, messaging, password management, cryptography, etc. “It is vital for our business. It's like PayPal's nervous system.”

“Much of our infrastructure has been built by PayPal; However, we also host some of our technology in the public cloud.”

In the next layer, called Common Platforms, is where the technology that makes up the products and services is located; It is “the secret ingredient.” It is made up, among other platforms, of identity (user authentication), payments (transactions), risk (trust and security), compliance (meeting obligations across jurisdictions), privacy (protection of contextual information), tax, finance (money movement) and treasury (management of money). He is, according to Shivananda, “the brain of PayPal.”

The fourth and final layer, called the merchant, consumer and developer experience layer, “includes our web interface, our mobile applications and our APIs (application programming interface), which allow customers to use our service interactively and programmatically. “It is the heart of PayPal, the closest thing to our customers.”

Depending on the criticality of each project, Paypal uses a different working model. In the case of areas that are fundamental to the company, the technology is developed internally or used open source; in the case of basic products, ready-made commercial software is purchased; and in the case of context, which would be what is between what is fundamental and what are basic products, they work with technological partners. “We make these decisions based on architecture, capacity, uniqueness, cost, integrability and priorities.”

Disruptive technologies that look to the future

Although the brand has various cutting-edge technologies in its hands, one of the most relevant for the future development of the business is Artificial Intelligence. “We've been working on this for over a decade, including transformer-based deep learning (the key technology underlying ChatGPT). Today we apply AI and ML across our business, including for fraud reduction, risk management, customer protection, personalized services and global trade empowerment.”

As a company with more than 431 million active accounts and 35 million merchants operating in its bilateral network, The company sees huge potential in AI in creating the next generation of payments and commerce. Data that unlocks value at both ends is, according to Shivananda, key. “Currently, PayPal has more than 200 petabytes of payment data; data that is a competitive advantage as it contains valuable information and potential to drive better commerce experiences for consumers and merchants.” An example of the tremendous impact of AI is found in the fact that from 2019 to 2022, at a time when the company's payment volumes almost doubled from $712 billion to $1.36 trillion, they reduced the loss rate by almost half, in part thanks to advances in algorithms and AI technology. “Today, Thanks to our advances in AI, we can quickly adapt, for example, to changing fraud patterns to protect our customers. PayPal's deep learning models can be trained and put into production in two weeks, and even less for simpler algorithms. This allows us to train models using the latest production data, incorporate new fraud patterns, as well as get feedback from internal agents and PayPal customers.”

The brand is also working on shaping the next generation of digital currencies and their corresponding financial infrastructure. For it, has invested in its own technology and personnel, filed cryptocurrency-related patents, and in companies focused on blockchain. “Given our experience as a trusted digital payments company and our strong relationships with the regulatory and financial ecosystem, we believe that the combination of our team of blockchaincryptocurrencies and digital currencies (BCDC), and our investments in technical and regulatory infrastructure will provide a strong platform for our aspirations in this space.”

Ultimately, the goal is to drive the inclusion, ubiquity and utility of digital assets to further define the future of commerce and value exchange.

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