PayPal-owned P2P payments app Venmo experienced a surge in fraud earlier this year, leading to bigger than expected quarterly losses.
According to the Wall Street Journal, citing internal documents, in the first three months of 2018 Venmo reported an operating loss of around $40 million, 40% up on what had been expected. During the quarter, Venmo's transaction loss rate went from 0.25% in January to 0.40% in March.
A PayPal spokeswoman told the Journal that Venmo rolled out a series of new features during the first quarter and that this often leads to a spike in losses. Loss levels have since dropped and "are lower than the overall average for PayPal and compare favourably to the industry".
However, the uptick caused significant concern at the time, with internal documents showing that executives feared that PayPal could miss its first quarter earnings target.
Venmo reacted by purging thousands of suspicious accounts and killing off some features, such as the ability to transfer funds instantly to bank accounts and to send money via the firm's website.
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