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

An Overview of PayPal 6 th 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 � Withdrawal Funding Method Source Credit/Debit Card Bank Account PayPal PayPal Cheque Account Account Seller Buyer Debit Bank Card Account Cash cannot be directly placed into the PayPal System, nor withdrawn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!