PayPal to absorb fraud cost for Aussie sellers

The new protection policy, which will take effect on 11 October, means that PayPal will accept financial liability for sellers that have been targeted by fraudulent campaigns as long as they can provide proof of shipping and proper practice.

The deal has previously only been offered to sellers overseas, and expands upon its buyer-side guarantee to compensate the victims of online fraud by up to $20,000.

At the same time, PayPal is also continuing to refine its risk management technologies.

Clementz said PayPal employs “dozens of PhDs” to write algorithms and develop machine learning programs that are designed to pick dodgy transactions out from the millions the company facilitates.

Risk models built up through the analysis of years of transaction data determine what locations, behaviours and devices should raise warning bells.

“What is unique about PayPal compared to just about any other payment system out there is that we actually have a relationship with both the consumer and the merchant, which we call a closed loop payment system. So we have more data at our disposal than any other competitor,” he said.

The company hopes its efforts will help it target big business with electronic payments in the coming year.

“Our focus in 2014 will be to work will the big retailers that you would expect to see PayPal partnering with. When we are ready we will announce some additional value propositions that will really enhance the experience of buying in those major stores,” said Clementz.

To date PayPal’s mobile payments strategy has focussed on small business in Australia, particularly food outlets. It has expanded cashless and card-less buying capability to more than 2500 physical locations nationwide, including 2000 restaurants through its partnership with the EatNow ordering site.

Clementz declined to provide details of how widely the service is being used by PayPal customers.