Amid mounting problems for Revolut which include accounting errors and the very slow acceptance of its highly anticipated banking licence in the UK, a flaw in its US payment system has allowed thieves to steal $20 million of its funds.
Revolut problems continue
The theft, which has not yet been disclosed publicly, is likely to add further pressure to the fintech, which has faced a string of senior departures and a qualified audit from BDO while it awaits a banking licence in the UK.
The problem arose from differences between European and US payment systems, which meant that when certain transactions were declined Revolut would erroneously refund accounts, handing them its own money.
Although Revolut recouped part of the roughly $23 million stolen by pursuing some of those who had taken funds, the net loss was about $20 million — equal to almost two-thirds of its annual net profit in 2021.
The problem first appeared episodically in late 2021. Organised criminal groups then took advantage of the fault early in 2022, encouraging individuals to try to make expensive purchases that would go on to be declined. This would then be cashed out via ATMs.
The fraud affected Revolut’s own corporate funds rather than customer accounts, as its systems failed to pick up the mass fraud and the problem came to light when a partner bank in the US notified the fintech that it was holding less cash than expected.
This was followed by requests from Revolut’s US subsidiary for multimillion dollar cash injections from its parent, after which the company worked to eventually close the flaw around spring 2022.
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