PayPal Leverages AI to Fight Fraud and Streamline Payments

Since its public introduction earlier this year through ChatGPT, artificial intelligence has become the trending topic of 2023, captivating the interest of various entities such as businesses, schools, universities, and non-profit organizations, all seeking opportunities to incorporate AI into their activities.

John Kim, PayPal’s chief product officer, spoke with The Associated Press about how the company is using the early adoption of AI technology in its business, as well as PayPal’s future in payments amid so much competition. The interview has been edited for length and clarity.

Q: How have security issues changed since you have been in this role or similar positions? How much more complex or sophisticated are the threats or opportunities to protect customer data?

A: One way you can put it is that fraud is a pretty big business, it’s growing and evolving day by day. It used to be that you were sent, say, an email and you found something in it, right? Like there’s a typo and you’re like, “God, I can’t see this person misspelling this general thing,” or the email seems to imply that it doesn’t have a deep understanding of who I am. Then there were voices on the phone trying to get you to do something. Now people can create entire identities with the help of artificial intelligence.

Q: How do you integrate AI into your work? Where do you see the most promise for AI in payments?

A: We plan to launch three new products related to artificial intelligence in the next 120 days. For example, we have a checkout feature that uses AI to track all the permutations of addresses and personal information you might use and use AI to predict which is the right one to use with the right merchant. We currently try to detect unusual patterns – for example, patterns where fraudsters try to test your stolen card to see if it’s good or not – and alert you via your PayPal wallet so you can get the card closed quickly at your bank. But spotting these patterns can be really complex, and patterns can change on the fly, so we believe AI will help us anticipate these changes and keep us ahead.

Q: But by the same token, where do you think artificial intelligence is somehow oversold, or where do you think the application in your industry isn’t quite there yet?

A: I think artificial intelligence has captured a lot of people’s imaginations this year. It has entered conference rooms, shops, every product discussion. Some people have been skeptical, and I think some are healthy. For example, we want to use artificial intelligence to increase our chatbot’s ability to connect with customers, but how much do we invest in such technology – which can be expensive to develop and use – when a customer service representative could do it better? Cost becomes a huge issue. But in this short time frame since the launch of ChatGPT in March, I think you can’t dismiss any claims you hear about AI right now because it’s moving so fast.

Q: There has been a lot of competition in the payments industry in recent years. Apple Pay. Google Pay. Buy now, pay later. PayPal is the oldest company in the online payment industry. What challenges have there been in trying to differentiate PayPal from the competition?

A: PayPal was a really unique company for much of its life. So then it was really just about getting scale. You didn’t really have to sell the value proposition. But now we really need to focus on the value proposition. Every day, customers choose how they want to pay for things, so you need to provide value before just a payment method, such as security and fraud protection, or let people now be fully protected while making us the easiest way to pay.