PayPal Buys CyActive, Plans Security Center in Israel

PayPal is creating a new cyber-security center in Tel Aviv as part of its acquisition of Israeli security vendor CyActive.

The security center will allow PayPal to "tap into the country's cutting-edge technology and top cybersecurity talent," James Barrese, PayPal's chief technology officer and senior vice president of payment services, stated in a March 10 blog post.

Barrese did not disclose an acquisition price for CyActive, though Israeli press last week reported it to be at $60 million. The new center and the acquisition of CyActive are further indications that PayPal is planning to aggressively pursue new opportunities once it is separated from its parent company, eBay Inc.

PayPal's incoming chief Dan Schulman confirmed that plan with investors last week, saying his company is open to more partnerships and alliances.

Schulman's comments came two days after PayPal disclosed its acquisition of mobile payment technology provider Paydiant, a move that gives it a potentially major role in the development of the Merchant Customer Exchange's planned CurrentC mobile wallet (a key rival to Apple Pay).

PayPal has experience with data security development in Israel, having previously operated a fraud and risk detection center in Tel Aviv. The company acquired Israel-based Fraud Sciences in 2008, obtaining its risk tools and analytics capabilities.

With the acquisition of CyActive, which specializes in technology that predicts how malware will develop, PayPal obtains "great talent" and can immediately add "future-proof technology" to its security platform, Barrese said.

"With CyActive, we'll have even more ways to proactively predict and prevent security threats from ever affecting our customers," he added.

As part of its spinoff from eBay, PayPal filed its registration form with the U.S. Securities and Exchange Commission on Feb. 25 to establish PayPal Holdings Inc. The companies expect the separation to occur soon.