PayPal Buys Simility to Bolster Mobile Payments Security

Stop me if you’ve heard this one already: So PayPal bought a company, and…no, wait! Come back! This is actually a completely different company! I know it sounds familiar because PayPal has been buying a lot of companies lately—we just heard about Hyperwallet a couple days ago—but now, PayPal has bought again, this time landing Simility, a company that will help PayPal bolster security in mobile payments.

PayPal picked up Simility for $120 million, and this marks the third company PayPal has acquired in a month. With Simility in its corner, PayPal will be able to offer fraud prevention and risk management services to merchants.

Simility’s inner workings are fairly complex; it starts with the arrival of a large mass of data, both structured and unstructured, before proceeding through a process of machine learning and human analysis with an eye toward spotting fraud in account opening. The data is then processed down into a dynamic ontology structure, which helps establish relationships between the data points, and the data is ultimately modeled in graphic form.

Interestingly, PayPal already owned a piece of Simility—about three percent—before buying the company outright. Reports suggest that this is part of a larger overall plan on PayPal’s part to build “a complete financial stack,” using all of its components, including Venmo, to create growth for the company.

Growth is exactly the kind of thing PayPal would need; with the eBay connection restored but looking tenuous, the company needs revenue streams beyond eBay to ensure its future success in the field. It’s been actively working to develop these, and PayPal’s well on its way to being the fully-featured platform that the users need. Since security has long been a problem in mobile payments, perhaps even the biggest problem that’s been holding the concept back, seeing PayPal so clearly push forward with improvements in mobile security is worth seeing.

PayPal’s future looks surprisingly bright, thanks in large part to its diligence in protecting and expanding its income streams. It’s small wonder Marketwatch called it out as a likely winner in mobile payments, and with expansions like this, we can see why.