💼 1/3 The Wave of Scams in P2P Payouts Is Not News — It Is a Systemic Market Risk

💼 1/3 The Wave of Scams in P2P Payouts Is Not News — It Is a Systemic Market Risk

Historically, this was mostly seen in South Asia — India, Bangladesh, and similar markets. However, since regulations started tightening in most regions, it has become increasingly common in other countries as well 💧

Most scams are committed by account operators, and less frequently by payment providers. What is more common with payment companies is that they simply shrug their shoulders and refuse to reimburse merchants from their own funds for money stolen by account operators. Agents — including us — often have little room to act in such situations. With a margin of just 0.1%–0.5% per transaction, there is simply no source of funds from which to cover such losses. It is a different matter when an intermediary has enough weight to require and hold a security deposit for the deal, which is something we practise.

Payout scams most commonly occur through P2P or other informal channels. It is extremely easy to change a Telegram username and profile picture, or submit someone else’s documents — or completely fabricated ones. By contrast, changing a taxpayer number, nominee beneficiary, or similar corporate details is much more difficult for a real company, even if that company operates in the grey market.

Nevertheless, the market is not dying. Casinos and other platforms continue serving their users and processing payouts. Payment companies earn substantial amounts from payout traffic, while reliable payout traders are practically shovelling gold simply because they do not scam anyone.

So, what should market participants do, and what principles should they follow to reduce the risk?

First, accept that this risk will always be with you. The probability will never fall to 0%, but it can be reduced significantly by following certain rules.

What should merchants do?

If you have been in the market for a long time, you probably already know whom you can work with. In many cases, there is no real need to search for new providers. Your existing partners not only operate reliably, but probably also offer good commercial terms in exchange for your transaction volume.
And when your volumes are not particularly large, you are not necessarily overpaying — you are paying a premium for reliability and proper execution. Are you sure you want to save money by working with an unknown provider simply because they offer lower rates?

If you are new to the market — or genuinely need additional providers — you must be prepared to lose some money and determine in advance how much you can afford to spend while searching for partners through trial and error. Ask colleagues about them, including competitors. Look at who has been attending industry conferences for a long time, who has a long and traceable online presence — most obviously on Telegram or LinkedIn — and what other market participants say about them.

The fact that a company has operated for many years is not, by itself, proof of exceptional service quality. However, it is evidence that its strengths and achievements have outweighed its fuck ups sufficiently for the company to keep earning money and remain in business.

You should also try to understand how these providers treat their own partners — PSPs within their payment cascade, operators, and agents. If they show no consideration for those partners, they may not show much consideration for you either.

Always maintain a reserve of backup funds.

When you lose money unexpectedly, it is simply a cost.

When you have already allocated reserve funds for these losses and for trial-and-error partner selection, it becomes the acquisition cost of finding a new, high-quality partner.

Next weekend, we will examine in more detail what payment companies can do to protect their businesses and reduce the risks of working with payout account operators.

🌎 payplanet.com verified partner for LatAm, India🇮🇳 Turkey🇹🇷 @pay_planet