Venmo has reportedly reached operating losses of $40m following a string of payments frauds earlier in the year.
The company, which is the digital money remittance solution of PayPal, reported the losses for the first three quarters of 2018, according to a report from The Wall Street Journal which cites internal documents. This loss is just under 40 per cent more than the amount it had budgeted, it said.
Expenses due to fraudulent transactions increased from 0.25 per cent up to 0.4 per cent of the overall volume at Venmo during March, the article states. This level of fraud allegedly surprised a lot of the senior team at Venmo.
Some of the high levels of loss was also down to the launch of new services at the start of the year, which a spokeswoman for PayPal told the Wall Street Journal that new service rollouts can cause short-term loss level spikes. However, the loss reached 0.35 per cent in the first quarter and the levels are lower now and are even lower than overall averages for PayPal, it said.
In order to combat these fraudulent attacks Venmo removed the ability for users to send funds instantly to bank accounts and removed tens of thousands of suspicious accounts which were found via algorithms, the article reports.
Venmo normally reimburses customers that lose money via fraud attacks.
A recent report from Juniper Research revealed that fraud from online payments is expected to hit $48bn by 2023, making it more than double that projected for 2018.
Its new report, Online Payment Fraud: Emerging Threats, Segment Analysis & Market Forecasts 2018-2023, attributes the continued high level of data breeches and theft of personal data is a core driver of this steep increase.
Copyright © 2018 FinTech Global
Copyright © 2018 RegTech Analyst
