Money

Revolut’s growing pains rumble on 


Revolut might be close to becoming the biggest fintech unicorn in Europe, but it’s not having a great year.

The international transfer start-up-turned crypto shop-turned bank (kind of) has been caught up in a whole host of controversies and embarrassments in recent months, including having to admit that a decision to switch off an automated system for flagging potential money-laundering for several months last year had been “erroneous”; being investigated by the FCA after it admitted that it had misrepresented statistics in a poorly-judged Valentine’s Day advert; and being probed by a parliamentary committee in Lithuania, where it’s got a banking license (for now).

The company might have switched off the “s” and “h” from the neon sign up on its London HQ wall that tells staff to “get shit done” — in an effort to show how mature and sensible they are these days — but it seems like they might have some more work to do in proving themselves, because the problems just keep on coming.

Last week, a number of customers were charged twice for their transactions, with some customers not refunded for several days. Unsurprisingly, they were not very happy about this:

And it didn’t seem like customers were getting much clarity on exactly when they’d be getting their money back:

We asked Revolut about the issue, and they told us:

One of our third-party service providers was having a widespread technical problem, which affected all of their merchants, including Revolut. This resulted in some of our customers being charged twice for transactions. However, 99.9% of those affected were fully refunded within minutes, and our customer support agents worked closely with any customers who continued to have problems. While it is frustrating that this technical issue was outside of our control, we’d like to apologise to all of those customers affected.

It’s always great to start an apology with anything along the lines of “this wasn’t our fault but…”. Also, it kind of is within Revolut’s control to decide which third-party service providers they use?

This isn’t the first time Revolut has had issues with third-party service providers, either. Last year after a number of outages, the company said — in a post titled “enough with the excuses” — that it was going to ditch its payment processor and build the capacity to do the processing in-house, and was on track to do so by the end of 2018. But seven months into 2019, the company is still using the same payment processor, Global Processing Services.

This time round, it turns out the third-party service provider in question was an old friend of ours, Wirecard, who Revolut no longer use as their card issuer (they now do that in-house) but who they still use as their primary acquiring bank.

So we asked Wirecard about the issue, and theytold us (emphasis ours):

Unfortunately a clearing file was submitted twice at the beginning of July, affecting a handful of our merchants. This was triggered by a connectivity issue with Visa, as a consequence Wirecard switched the processing of the clearing file to a secondary data center. However upon restoration of services in the primary data center, the original file was falsely resubmitted hence causing the issue. The problem was detected within minutes by our automated monitoring and the duplicate transactions were cancelled immediately. Unfortunately a few card issuers apparently took a few days to credit funds back to the consumers. It was a singular case and no financial losses were incurred neither by consumers nor merchants.

Just to be clear, while Wirecard seems to be shifting the blame onto Visa in that quote, when asked for further clarification they told us that was not the case.

So the “teething problems” rumble on. And meantime, Revolut continues to not actually make any money, and indeed has never done so apart from briefly in late-2017/early-2018, just after it introduced crypto trading, right in the middle of crypto-mania. Admittedly, profitability doesn’t appear to be a “core metric” for fintechs these days.

Not that this is putting off potential investors. The company is hoping to raise another $500m in the coming months, which would not only be the biggest fintech funding round to date, but would also reportedly give it a valuation of more than $5bn, which would see it surpass N26, TransferWise, OakNorth and Monzo to become the most highly valued fintech start-up in Europe.

Dare we say City veteran Martin Gilbert, who is set to become the company’s first ever chairman, and who has already had to defend himself against the charge that he is spreading himself too thin, has his work cut out.


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