Payment provider PayPal continues apace with its acquisitions streak to bring more modern tools into its platform to serve its 237 million customers. Today the company announced that it is buying Simility, a fraud prevention specialist, for $120 million in cash.
PayPal had been an investor in Simility (it owns three percent of the company, it says), along with Accel, Trinity Ventures and others. The startup had raised just under $25 million and was last valued at $52.75 million, making this a decent return for its backers. The deal is expected to close in Q3.
Online fraud involving either buyers or sellers has been one of the biggest limiting factors to the growth of e-commerce, and it has only grown as e-commerce has become more mature and spread to more platforms.
Simility's approach is to use a set of APIs and beacons that essentially monitor digital transactions and buying activity wherever they happen to take place: on mobile, web or in physical environments Augmenting these with machine learning and feeds from other data sources, it creates something it calls "adaptive" risk management: a changing approach and protection strategy based on what the threat of the moment might be.
Acquiring a company like this makes sense on two levels for PayPal: not just for its own systems, but for that of its customers, who make PayPal-powered transactions on the web, on mobile and at physical points of sales.
“Digital commerce has exploded, and fraudsters have taken note, adapting and developing new methods to carry out their crimes,” said Bill Ready, chief operating officer, PayPal, in a statement. “PayPal has been at the forefront of developing innovative fraud prevention and risk management solutions for nearly 20 years, but until now, merchants haven’t been able to configure those solutions to manage the unique complexities of their businesses. Together with Simility, we will be able to put more control in the hands of our merchants to fight fraud while helping make commerce experiences faster and more secure.”
Simility already has a number of customers that also work with PayPal such as PayPal's former owner eBay/StubHub, OfferUp, Dicks Sporting Goods and Rebtel, and this will mean a more integrated approach for them. PayPal said that after the deal closes, it will also extend Simility's tools to the rest of the merchants on its platform.
“Our vision for Simility was to create an adaptive risk management platform that empowers organizations operating in a digital world to manage an evolving fraud and risk landscape where data breaches are the new normal,” said Rahul Pangam, co-founder and CEO, Simility, in a statement. “We are excited to enter the next phase of our growth with PayPal and are thrilled to join them to help drive the next generation of payment and commerce solutions while scaling our business together.”
PayPal has made a number of acquisitions over the last few weeks, all pointing to adding in new technologies and tools to reflect our changing times and how that is playing out in the world of payments. They have included European mobile payments and financial services business iZettle, money transfer startup Hyperwallet and AI-based CRM specialist Jetlore.
- This article originally appeared on TechCrunch.