The London-based fintech company, Revolut reportedly lost $20 million to fraudsters due to a fault in its payment systems, the Financial Times (FT) reported citing several sources familiar with the matter. The security incident occurred over several months, the publication reported.

The fraudsters reportedly took advantage of a flaw caused by the difference between Revolut's payment systems in Europe and the systems in the US. Three people familiar with the matter told the FT that unsuccessful transactions were still refunded to customer accounts due to the technical issue.

Organized Criminal Groups

Additionally, the sources told the publication that the problem started towards the end of 2021 and organized criminal groups took advantage of the situation. The groups reportedly encouraged users to make large transactions that were likely to be declined. The amount transacted were then withdrawn from the ATMs and paid by the company from its corporate accounts.

The system issue was discovered when one of Revolut's banking partners in the US told the fintech that its account balances had been erroneously captured. After the issue was discovered, the sources said, Revolut sent funds to the US subsidiary to cover the losses. The issue was addressed in the Spring of 2022.

Finance Magnates contacted Revolut for comments and had not received any communication at the time of writing.

The development arrived at a time Revolut is expanding its services globally. A few days ago, the company launched its services in New Zealand, marking its initial entry into the region. Through its financial services app, Revolut expects to allow users in New Zealand access to foreign currency exchange services, peer-to-peer payments, among other services, the company said.

Revolut Defies Concerns

Commenting on the launch, Matt Baxby, the CEO of Revolut in Australia and New Zealand, said: "We are incredibly excited to be launching Revolut in New Zealand to enable Kiwis to access a seamless and affordable global money management experience, secure budgeting, analytical features, and advanced physical and digital card control capabilities, on one seamless location."

Additionally, Revolut introduced robo-advisors for users in the US in June. The application uses algorithms and computer programs to offer automated and personalized investment advice. During the unveiling, the fintech firm praised the move as a way to "remove friction in investing."

Meanwhile, Revolut announced in May that it was seeking a banking license in Australia. The announcement followed the company's launch of business accounts in the country. However, Revolut is yet to receive a similar license in the UK after submitting an application in 2021.