Venmo apparently had a good reason for disabling web payments and temporarily shutting off instant money transfers — it was losing money hand over fist. The Wall Street Journal has obtained documents indicating that the PayPal-owned service took a 40 percent larger than expected operating loss ($40 million) in the first quarter of 2018, and payment fraud played a major factor in that financial blow. Where Venmo had expected dodgy transactions to represent 0.24 percent of its activity, the numbers shot up to 0.4 percent in March.
Executives were reportedly worried that the hit would be large enough to dent PayPal’s overall bottom line and lead it to miss analyst estimates. They also knew customers would be annoyed by the measures used to get fraud under control. Product exec Ben Mills said he was “pissed” Venmo had to “hurt our customers” to get fraud under control, according to one email.