PayPal must be doing quite well if they are able to open a new facility dedicated just to research. A 92,000 square foot building is being placed in Scottsdale, Arizona, and will be host to over 400 individuals. They're also adding other staff to assist in the development of this project:

PayPal says that it plans to have the new facility up and running by November of this year. Jamie Patricio, a spokesperson for PayPal mentions that PayPal will be hiring roughly 100 new employees for product development, operations and infrastructure design immediately.
PayPal has plenty of cause for concern, with Google rapidly expanding and digging its teeth into markets that PayPal currently dominates. With eBay as a backer and a service that already is fairly profitable, PayPal likely has capital to draw on to look for new technologies and prepare for a war with Google. There's no word yet on what projects the new facility will be responsible for.