While scams are something all financial services have to have to deal with, incumbent lenders often have more compliance resources – as well as experience they can draw upon – that they can dedicate to the problem than fintechs. For a financial services provider like Revolut that has been in existence for less than a decade, there is bound to be a learning curve.

In a Sept. 11 report, Bloomberg News noted that Revolut is grappling with a significant authorized push payment (APP) scam problem. In an APP scam, criminals fool their victims into transferring money to an online account beyond their control. In August, the UK's Payments Systems Regulator (PSR) issued a report which says that APP fraud rose 12% in volume to 252,636 cases in 2023. According to the UK’s Financial Ombudsman Service, Revolut has received more complaints about this type of scam than all its UK competitors combined. And yet, in 2023, Revolut reportedly began to push back against reimbursement requests from thousands of victims.

So what is Revolut doing about the problem? According to Bloomberg, the UK fintech unicorn is doubling down on efforts to combat fraud. This includes having a seat on the advisory board of the UK agency that fights economic crime. Revolut’s lead anti-fraud executive has also testified before the British Parliament. Finally, Revolut UK CEO Francesca Carlesi said that the fintech considers the issue a “national emergency” and that it has a “duty and moral obligation to be a pioneer to fight fraud.”

There are practical considerations as well. Revolut in August was reportedly preparing a share sale that would value it at US$45 billion. It would achieve that valuation by selling approximately US$500 million in employee-owned shares, according to The Wall Street Journal. That is a lofty valuation given Revolut’s current financials. It is roughly 17 times Revolut’s revenue in the 12 months through March, compared to eight times for NYSE-listed Nubank and about two times for PayPal.

Both for that share sale and looking ahead, because it eventually plans to go public, Revolut must get its house in order. It cannot be seen as deficient on compliance when it has to undergo all the scrutiny that comes with an IPO. With that in mind, we expect Revolut will invest more in anti-fraud capabilities and its overall compliance regime as it prepares for its IPO.