Friday, October 21, 2022
In today's eCONomy, a recurring threat to consumers is payment fraud. What started out as a simple idea, "How do I digitally transfer money?" has grown into a multi-billion dollar revenue geyser. At the front of this packed line, collecting buckets upon buckets of money, is Venmo (owned by PayPal.)
Venmo gets a taste of every transaction, and there are literally trillions of them, moving along its rails, bank rails, and the credit card company rails. These are the digital rails powering the internet, WiFi, and acting as the backbone of the new economy.
Unlike the origin of the credit cards, however, Venmo was designed to be self-centric; ie neither favoring the buyer or seller of a good or service, but rather ensuring that the company got a small piece of every transaction.
What has evolved is a landscape fraught with corruption where the singular purpose of peer-to-peer payments is volume rather than order fulfillment for goods and services. Processors are not worried about the back end; they are worried about the front end.
The greatest threat to digital payment processors is decreasing payment volume, which to a large extent is based both on their digital footprint and velocity of money. Payment volume is God to Venmo, fraud is the risk consumers must bear to use Venmo rails.
Using Venmo as the posterchild for payment fraud, the consumer has little to no recourse on a payment gone bad; ie sending to the wrong address or more likely thievery by digital bank robbers. The best way to accomplish this in non-fulfillment of purchases. The credit card companies avoid this buy being buyer-centric, payment processors are self-centric...volume, especially "bad volume," is good.
The crimes of today are primarily digital, because as the old bank robber Willie Sutton said: "That's where the money is." Like consumers don't have enough to worry about, the rise of banksters like Venmo have seriously eroded trust in an industry that supposedly is regulated by the CFPB; most assuredly it is not.
Venmo fraud is real, recurring, and massive. It is no wonder their HQ is located on Locust Street! And those locusts are most definitely eating the wheat from the chaff. When you hear "Venmo" dear readers, run!