PayPal plans to hire more than 250 compliance officers this year to bolster expansion in online payment markets outside the U.S., according to its new chief compliance officer.
Leonard Shen, who joined the eBay subsidiary in September from American Express, said the company needs more compliance officers to specialize in the local markets in which it operates. PayPal currently operates in 190 countries.
Over the past two years, PayPal has clashed with regulators in both Australia and India, signaling a need to be more in line with local laws.
Shen, 50, said hiring will take place worldwide, including in locations such as San Jose, Calif., Phoenix, Shanghai, London, Kuala Lumpur and Dublin. The compliance unit grew to almost 300 employees in 2010 from about 200 in 2009.
The company's commitment to building out its compliance department signifies the its intent to solidify its foothold in the online payment space in all its markets. PayPal is regulated as a bank in Europe, but has no plans to become a bank in the U.S., Shen said.
"International business is going to become more important to the company," said Menekse Gencer, the founder of mPay Connect, a mobile payments consulting service, and a former director of PayPal's mobile business development for North America. "You're going to need a fair amount of compliance officers who understand regulatory policies of the countries they're expanding into."
Shen, who was the chief compliance officer when he was at AmEx and, previously, General Electric, said he wants to create a competitive advantage for the company with regards to compliance.
"If you have a strong compliance program, investors, employees and customers will be attracted," he said. "Investors will pay a higher premium and you'll get the best employees because they want to get involved with a company with a good brand."
Shen is looking for candidates with experience at financial institutions and at least ten years in a compliance role. "I am looking generally for more seasoned professionals," he said. "There aren't a lot of entry level positions."
Compliance officers work with risk assessment monitoring and testing, anti-money laundering and the Foreign Corrupt Practices Act.
Shen said that designations such as a Certified Regulatory Compliance Manager certification are relevant factors in an application but not critical.
In Australia, eBay Australia sought to make PayPal the only accepted payment service for its online marketplace, but was pressured by Australian competition and fair trading authorities. It has since backed down.
In India, the central bank suspended some PayPal services in February 2010 after saying the company was not properly registered. More recently, PayPal was forced to impose restrictions on online merchants by the central bank.
Paypal's revenues now account for more than 39% of eBay's overall revenues. PayPal ended the fourth quarter in 2010 with 94.4 million active registered accounts and is adding about one million active accounts per month, the company said in its fourth quarter earnings. PayPal's total payment volume – or the total value of all its transactions – rose to $26.9 billion in the fourth quarter, up from $21.3 billion a year earlier. Nearly half of its revenue came from outside the United States, pointing to PayPal's increasing saturation of the global market.
Write to Julie Steinberg
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