As presented in CodeMotion Tel Aviv: http://telaviv.codemotionworld.com

1. © 2014 PayPal Inc. All rights reserved. Confidential and proprietary.
Big Data and Financial
Risk Management
December 1, 2014

2. © 2014 PayPal Inc. All rights reserved. Confidential and proprietary.
at a glance
143M active accounts in nearly 200 countries
180B payment volume in 2013; ↑24% YoY
2B+ events/day
12 TB new data added per day
7.5M payments per day, 5,000 every minute
500K+ real time queries per second
Less than 100ms average response time
We are talking a lot of data …Big Data!

3. © 2014 PayPal Inc. All rights reserved. Confidential and proprietary.
• Key dangers stated by experts (partial list):
Buyer Fraud
• Good account is taken over by fraudster (e.g.,
using phishing)
• Identity theft (using a stolen credit-card in a new
account)
• There are not sufficient funds in the Bank
Seller Fraud
• Order never arrives/ merchants don’t send it
• Product is significantly not what you ordered
(e.g., picture of iPhone and not an iPhone…)
There is also AUP, AML, terror-funding, etc.,…
Risk/Fraud is regarded many times as a big threat to
online/mobile commerce

4. © 2014 PayPal Inc. All rights reserved. Confidential and proprietary.
• % of Transactions with fraudulent activity is very close to ZERO!
• Well ahead of our competitors (traditional and start-up competitors)
PayPal gives protection:
• Full buyer/purchase protection (if the seller was fraudulent)
• Full Seller protection for tangible goods
• Global expansion to digital-goods/non-tangible Seller protection as well
However, reality (at least with PayPal) is so much better…

5. © 2014 PayPal Inc. All rights reserved. Confidential and proprietary.

6. © 2014 PayPal Inc. All rights reserved. Confidential and proprietary.

7. © 2014 PayPal Inc. All rights reserved. Confidential and proprietary.

8. © 2014 PayPal Inc. All rights reserved. Confidential and proprietary.
Car…….. Pat…..
Created: Aug 30, 2013
P… Tho…
Legit PayPal user
t0
$686.55
Al… Wo….
Created: Sep 3, 2013
t+1:03 min.
$673.54
D… Mar…
Legit PayPal user
J… Smi…
Legit PayPal user
I… Le…
Legit PayPal user
Jam…….. Lo…..
Created: Aug 30, 2013
Tom…….. Men…..
Created: Aug 30, 2013
Alb…….. Rich…..
Created: Aug 30, 2013
Fio… Jec….
Created: Sep 3, 2013
Don…….. Li…..
Created: Aug 30, 2013
Anj…….. Por…..
Created: Aug 30, 2013
t+0:23 min.
$686.55
t+1:21 min.
$686.55
t+1:47 min.
$686.55
t+0:58 min.
$686.55
t+0:35 min.
$686.55
t+2:00 min.
$686.55

9. © 2014 PayPal Inc. All rights reserved. Confidential and proprietary.

10. © 2014 PayPal Inc. All rights reserved. Confidential and proprietary.
Identity
IP
Phone num.
Device
Location
Phone
Name
Email
Connection
Change IP
Change num.

11. © 2014 PayPal Inc. All rights reserved. Confidential and proprietary.
Identity
IP
Phone num.
Change IP
Change num.
Name
Email
Location
Phone
Connection
DeviceIP b-class
IP whois
IP geo
Phone geo
Phone type

12. © 2014 PayPal Inc. All rights reserved. Confidential and proprietary.

13. © 2014 PayPal Inc. All rights reserved. Confidential and proprietary.
Fraudsters are people like you and me, they also have habits
Scaling attacks requires them to generate a lot of information

14. © 2014 PayPal Inc. All rights reserved. Confidential and proprietary.
ana… para. pro…
Premier - Mexican Verified
borigita...@hotmail.com
Time Created: Jun 20, 2013 10:24:26
Contact Information
julion 8…
huniero
culiacan, Sinaloa 895932
Mexico
Home: +52 5278…….9700808
Date of Birth: 1981
gab.. noc… sino…
Premier - Mexican Verified
e…lmxmx@hotmail.com
Time Created: Jun 20, 2013 10:43:33
Contact Information
culubire 8…
amada
culiacan, Sinaloa 49693
Mexico
Home: +52 5374……9978989
Date of Birth: 1981
mor… ind… ca…
Premier - Mexican Verified
d…lxlx@hotmail.com
Time Created: Jun 20, 2013 09:46:35
Contact Information
poier 9…
esdirre
culiacan, Sinaloa 59879
Mexico
Home: +52 52…..697998
Date of Birth: 1981
sir…. bon… pas….
Premier - Mexican Verified
ju.…pxpx@hotmail.com
Time Created: Jun 20, 2013 10:33:41
Contact Information
camjutuli 4…
indio
culiacan, Sinaloa 43869
Mexico
Home: +52 52……9798
Date of Birth: 1981
mar… sin… pit…
Premier - Mexican Verified
ci……pepe@hotmail.com
Time Created: Jun 20, 2013 10:16:19
Contact Information
esburgos 9….
pancho
culiacan, Sinaloa 38692
Mexico
Home: +52 527……9969798
Date of Birth: 1981
Behavioral patterns:
• Jun 20, 2013 – Signup
• Aug 10, 2013 – Added CC
• Jan 11, 2014 – Confirmed CC
Same actions, same dates!
• Name pattern
• Account type
• Country
• Email pattern
• City
• Date of birth

15. © 2014 PayPal Inc. All rights reserved. Confidential and proprietary. 16
Input
Generation
Algorithm
Execution
Output
Generation
~3 hour run-time
Output:
26 week x 1M accounts
5 min per week
Memory based (not MR)
~150k account a week
~15M account from the last
two years

16. © 2014 PayPal Inc. All rights reserved. Confidential and proprietary.

17. © 2014 PayPal Inc. All rights reserved. Confidential and proprietary.
Merchant Industry in PayPal data is partial and incorrect
18
• Required only for business accounts
• Incorrect user inputs (lying? / negligent?)
Example 3 – Ambiguous categories:
• Retail (not elsewhere classified)/Chemicals and allied products
• Business/General
• Hardware and Software
Sells:
’Tickets’
Example 1:
Declared:
‘Sports &
Recreation/
General’
18
Sells:
’Fashion’
Example 2:
Declared:
‘Business to
Business/Acc
ounting’

18. © 2014 PayPal Inc. All rights reserved. Confidential and proprietary.
True Industry
19
• An automated system for merchant website
categorization:
• Identifies seller websites using PayPal known URL’s
• Crawls seller websites for terms and additional attributes
• Categorizes sites to industry categories by applying statistical
modeling
• Training process is done offline based on examples to
produce a predictive model

19. © 2014 PayPal Inc. All rights reserved. Confidential and proprietary.
Category probability estimation example – “Travel” category
20
Random site scores
from training set
“Travel” site scores
from training setFor each site, we
estimate the probability
of it belonging to each
category given its
weight

20. © 2014 PayPal Inc. All rights reserved. Confidential and proprietary. 21
73%
91%
39%
84%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
PayPal and Agent True Industry
True Industry Performance
Accuracy
Coverage

21. © 2014 PayPal Inc. All rights reserved. Confidential and proprietary.
cost, speed
data volume, accuracy
Effective decision = func (accuracy, speed, cost)
data age
secondshoursyears
Data in-motion
Data in-use
Tiered Big-Data strategy

22. © 2014 PayPal Inc. All rights reserved. Confidential and proprietary.
Working HL Flow
Crawler
Crawler
Manager
URL list
Crawled
data
Sellers’
Potential
Details
External Data
source
Queries
API data
Attributes
output
Common Infra
THE
WEB
WEB
SERVICES
DB
/FILES

23. © 2014 PayPal Inc. All rights reserved. Confidential and proprietary.
Thank You!
Ido Lustig – ilustig@paypal.com