Revolut is refining its strategy to compete with banks and large payment technology companies, though the U.K. fintech faces regulatory pressure tied to its accounting and challenges in building a brand in new markets.
The challenger bank this week introduced a one-click payment option for online purchases, placing Revolut Pay next to PayPal, Apple Pay, the card networks and other options at checkout. Revolut is joining other fintechs in adding new transaction methods for consumers as part of a broader strategy that uses enrolled payment credentials to build a base for other financial products.
Earlier in 2022, Revolut added
Revolut's primary competitors, Block and PayPal, are U.S.-based companies with a long-standing market share in their home country. Square's share of the U.S. retail market is about 19%, according to
"It is very hard to build a brand," said Ron Van Wezel, a strategic advisor in retail banking and payments for Aite-Novarica. "PayPal is a direct competitor, as are the card networks, Apple, Pay, Google and others."
Revolut Pay has hit the ground running — its launch partners include Shopify, Prestashop and WH Smith. Shoppers can access Revolut Pay to make payments directly from their Revolut account balances or via saved Visa and Mastercard cards. Transaction validation will come through Face ID or fingerprint biometrics, and the system won't require an account number to be shared with merchants.
It's the second major payments addition at Revolut in recent months. The fintech in July launched
"Large brands require multi-channel customer acquiring," said van Wezel, adding Revolut would likely be mainly working with e-commerce transactions given its digital model.
The U.K. neobank has expanded its U.S. customer base to 300,000 mobile users and diversified its product line to include basic banking, crypto trading and investing.
Taken together, Revolut's newly launched payment products are an attempt to add merchant support as Revolut expands globally and adds more financial services beyond its roots as a mobile payments app when it was founded in 2015.
Revolut's other U.S. competitors include banks, the card brands, large payment technology firms and legacy payment processors.
Other European fintechs are also adding payment technology to bolster their U.S. expansion.
Revolut's payments expansion comes as it faces regulatory pressure in its home market in the U.K.
The Financial Reporting Council, which oversees accounting and auditing, in early September reportedly criticized Revolut after an "unacceptably high" risk of "material misstatement" was found in an audit of its accounts.
The accounting firm BDO conducted the audit of an unnamed company, which was identified as Revolut by the
"There's always a risk for firms in harnessing data and safeguarding it," said Aaron Holmes, CEO of Kani Payments, which operates back-office operations for fintechs, adding data stewardship, customer verification and authentication are often challenges for relatively new financial technology companies. "It's generally not a thing they do well."
The Revolut audit was conducted with an "inadequate" approach to revenue recognition, and Revolut's testing for new payment processing was also criticized, according to the Financial Times and other media reports. .
Revolut would not comment on the regulatory report and BDO did not return a request for comment. Revolut additionally did not answer questions about its new payment products by deadline.
"Every financial institution I have spoken with indicates how important it is to engage regulators often, not just when audits are due," said Tim Sloane, vice president of payments innovation at Mercator Advisory Group, adding high-level turnover at Revolut likely put regulators on high alert. "This mitigates this type of surprise finding."
Regulatory pressure in the U.K. does not necessarily translate to other markets, but it's something that other countries' regulators will be aware of. Revolut has also seen turnover in its risk and compliance staff, with several top executives departing in the past few months, including Victoria Stubbs, the U.K. head of regulatory compliance.
"Every financial regulatory agency will review similar aspects of Revolut's operations, although they will use different criteria," Sloane said.
