Fintech & Ecommerce

Revolut US Payments Flaw Leads to $20 Million Theft

The media reported that due to shortcomings in the functioning of the Revolut payment system in the United States, criminals were able to steal money in the amount of two tens of millions of dollars.

Revolut US Payments Flaw Leads to $20 Million Theft

According to the information available to journalists, the embezzlement of funds occurred during several months last year. Then the British fintech company managed to eliminate a flaw in the payment system, which became a kind of black entrance to the wallets of the victims of criminals.

The media, citing sources who are aware of this problem, report that a flaw in the functioning of the service arose as a result of differences between the specifics of the payment sphere in the United States and Europe. In this situation, there were also cases when the company rejected transactions and mistakenly returned funds from accounts using its own money.

The firm was able to return about $23 million to the victims. Revolut managed to do this as a result of influencing those who illegally seized funds. At the same time, compensation for damages did not correct the situation in an absolute sense and did not become a factor in the complete elimination of the negative consequences of what happened. The company was unable to return about $20 million stolen due to the shortcomings of the payment system. This amount is approximately 65% of the firm’s net profit for 2021.

The problem of the functioning of the payment system on a limited scale and in an episodic format began to manifest itself two years ago. In 2022, criminals began to make the most of this flaw in their favor. They forced the victims to make expensive purchases, that would be declined, and cash out money at ATMs.

Revolut has not yet provided any comments on the incident. The theft of funds will become an additional factor of pressure on the company, which has recently been in a difficult situation. In recent months, the firm has reduced part of its staff. The company also became a person involved in the inspection by regulators. Another negative factor for the company was the fall in its value in anticipation of obtaining a banking license in the UK.

In June, Molten Ventures, the venture capital firm that invested in Revolut, reduced the value of its stake in the company by 40%. Martin Davis, CEO of Molten Ventures, said that this decision is a kind of reaction to Revolut’s so-far unsuccessful attempts to obtain a British banking license. At the same time, he expressed confidence in the positive prospects of the fintech partner.

Martin Davis noted that from the point of view of the market position and the degree of stability of this position, it is important that Revolut demonstrate an acceptable level of profitability and obtain a banking license in the UK, the movement towards which has become a whole campaign for the company and one of the main goals.

The financial and technological firm has been trying to obtain the mentioned license since 2021. In May of this year, the company’s CEO, Nick Storonsky, said that the recent turmoil in the banking sector had significantly hindered the achievement of this goal. According to him, it is the crisis in the banking sphere that is the main reason for additional caution of regulators when making decisions. He also noted that the current position or actions of Revolut in this context have no impact.

Currently, the company is actively expanding the scope of its activities in the US financial market. Last week, the firm introduced a new feature to local users, which provides an opportunity to instantly receive cashback in the amount of up to 3% of the cost of goods of certain brands and retailers.

At the end of June, Revolut brought its robot consultant to the USA, which is actually a tool for managing various portfolios for the company’s clients and investing in these portfolios.

Serhii Mikhailov

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Serhii’s track record of study and work spans six years at the Faculty of Philology and eight years in the media, during which he has developed a deep understanding of various aspects of the industry and honed his writing skills; his areas of expertise include fintech, payments, cryptocurrency, and financial services, and he is constantly keeping a close eye on the latest developments and innovations in these fields, as he believes that they will have a significant impact on the future direction of the economy as a whole.