Venmo seeks measures to deal with payments fraud

Monday 26 November 2018 14:25 CET | News

After the wave of payments fraud earlier this year, Venmo has decided that, in order to diminish losses, they will shut down some user features to control the damage.

In Q1 2018, the digital money-transfer service owned by PayPal recorded an operating loss of about USD 40 million, which means 40% larger than the loss for which the company had budgeted. The so-called transaction loss rate, which includes losses related to fraudulent charges, rose from about 0.25% of overall Venmo volume in January to 0.40% in March.

As a measure to deal with the losses, the company stopped allowing customers to transfer funds instantly to their bank accounts and blacklisted tens of thousands of users deemed suspicious by algorithms. It also stopped letting customers send and receive money through its website. However, even though these measures helped cut fraud, they angered users whose legitimate transactions were declined.

Moreover, not only instant transfers were paused during the fraud-fighting response, but also some of Venmo’s initiatives have had slow starts. For instance, payment volume related to commercial transactions was just USD 16 million in the Q1, about half of what Venmo had expected in its budget.

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Keywords: Venmo, PayPal, payments fraud, money losses, digital money, money transfer, fraudulent charges, bank accounts
Countries: World

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