The Historical Integration of AI in Payments

PayPal has been utilizing artificial intelligence (AI) since its inception in the late 1990s, largely driven by the need to combat fraud within the payment system. In the early days, the company faced significant losses due to fraudulent activities and realized that traditional fraud prevention methods, such as blocking transactions from specific countries, were ineffective and detrimental to legitimate customers. This led to the development of AI-driven models to analyze data and distinguish between legitimate and fraudulent transactions. The company's ability to collect its own data allowed it to build more sophisticated models, evolving from simple logistic regression to incorporating more advanced techniques over the years.