As PayPal seeks to turn Venmo into a profit engine, the service has also taken steps to collect consumer debts, moves that are sure to spark controversy as some of the targeted users claim they have been fraud victims.
The digital transfer service also amended its user agreement to allow Venmo to seize funds from other accounts at PayPal, Venmo’s parent company, according to The Wall Street Journal, which reports it has reviewed emails from Venmo to consumers. The dollar amounts in the emails range from $7 to $3,000.
The Ebay Inc. Venmo application (app) is arranged for a photograph on an Apple Inc. iPhone 5s in Washington, D.C., U.S., on Friday, Aug. 22, 2014. After downloading the Venmo mobile-payment app onto a smartphone, users can connect them to bank and credit-card accounts, and then link up with friends to send and receive money on-the-go. Venmo, based in New York, alone handled $314 million in mobile payments in the first quarter of this year, up 62 percent from the prior quarter. Photographer: Andrew Harrer/Bloomberg
Andrew Harrer/Bloomberg
Some of the consumers say they had negative balances because of account takeover or were victims of scams that resulted in sending funds to crooks. In one incident, a user attempted to stop the payment at both Venmo and his bank; the bank stopped its payment to Venmo, but Venmo did not stop money from going out, creating a negative balance, the Journal reports.
PayPal did not return a request for comment, but told the Journal it updated its policies to allow collection from other PayPal accounts to drive consistency across its platforms.
News of the collection changes comes as PayPal diversifies Venmo through partnerships with companies like American Express in an attempt to turn it cash flow positive. Venmo is growing quickly and is popular with users, but it’s still losing money.
PayPal has also pushed Venmo as an option in stores, signing deals with retailers including Abercrombie and streaming services such as Hulu. The moves helped Venmo’s dollar volume pass $19 billion for the most recent quarter, an 80 percent increase. But while Venmo has pared financial losses, it’s still not profitable. PayPal also reported earnings dips due to Venmo-related fraud in late 2018.
In PayPal’s most recent earnings call, CEO Dan Schulman said the company will have to “really put our foot on the pedal” and drive profitability on Venmo at the same level or higher than PayPal and other services.
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Federal Reserve Board Gov. Stephen Miran said the growth of stablecoins and cryptocurrencies will likely impact monetary policy and could lead to lower interest rates.
The Spanish bank says it can connect small and medium-size U.S. businesses with local market experts on its newly launched digital platform Navigator Global.
The Pittsburgh-based bank said Friday that it will focus on building 300 branches in high-growth markets by 2030. It also minimized the prospects for another acquisition on the heels of its recent deal for Colorado-based FirstBank.
Consumers' and merchants' penchant for 0% loans are boosting the buy now/pay later lender in its first fiscal quarter ended Sept. 30, as gross merchandise volume hit a record.
HoldCo Asset Management drops its pursuit of proxy battles with Columbia Banking System and First Interstate; Cape Cod's Mutual Bancorp prepares to acquire Bluestone Bank; Servbank HoldCo announces plans to acquire IF Bancorp; and more in this week's banking news roundup.
