When regulators suspended Wirecard's UK arm, payments to its fintech partner accounts bounced. The suspension has lifted — but for some, the money is still missing.
- Wirecard's UK arm was allowed to resume regulated activity on June 30 following a four-day suspension, despite its parent company filing for administration.
- The suspension blocked several customers of fintech apps using Wirecard technology from their accounts.
- Incoming payments bounced during the suspension. Some account holders told Business Insider they are still waiting for their money.
UK account holders with brands that use Wirecard's payment services are still waiting for cash that bounced from their accounts when the German fintech firm filed for insolvency. This is despite the fact that Wirecard's UK arm resumed regulated activity more than a week ago.
The UK's Financial Conduct Authority (FCA) suspended Newcastle-based Wirecard Card Solutions' (WDCS) activities on June 26, after the firm's German parent Wirecard AG disclosed a €1.9bn (£1.7bn) hole in its accounts and filed for insolvency. Four days later, the suspension was lifted, but not before it had hit users of financial apps that use Wirecard technology.
Unlike mainstream brands such as Halifax or HSBC, many digital, neo or app-based banking services and fintech companies don't always handle payments or provide debit cards themselves. Instead, they outsource payment services and card provision to regulated third parties such as WDCS.
Once WDCS was suspended by the FCA, users could not use their accounts or access money in them. Payments into the accounts bounced back to their senders — and some users are still waiting to receive their money, a week after WDCS resumed activity.
Apps that use WDCS, such as Curve and Pockit, have hundreds of thousands of customers in the UK, and at the time of the suspension the FCA said WDCS partners would be unable to operate normally. Since restrictions were lifted, fintech firms have tried to keep customers informed through blogs and in-app messages, but users have flooded social media with complaints of missing money.
"I have no assurance of when I will get my money back"
Curve was one brand affected by the suspension
It calls itself the Netflix of banking: It lets users monitor, manage, and spend money from several accounts on one card. They get cashback on spending, known as Curve Cash.
Curve used Wirecard to process its transactions, and the suspension stalled refunds paid into people's accounts from retailers.
Adam Plant, 31, an IT project manager from Staffordshire, is awaiting £170 in refunds.
"These have been processed on the retailers' end but nothing has reached the Curve card or ultimately my main bank account," he said.
"Curve has not offered any assurance that these funds will actually make it back to me … It isn't making a major dent in my finances but it is a decent amount and it's the annoyance of not knowing what's happening or what their plans are to make sure I get this back," he said.
Plant said he had trouble with refunds on Curve in the past, and that he's now been put off the app for good.
Curve said in a statement that it is in touch with customers awaiting refunds.
It has moved to Checkout.com for its payment services, and will supply its own card through MasterCard.
However, Curve said the temporary Wirecard suspension, and its subsequent move to Checkout.com, has delayed refunds that were requested or due to be repaid by retailers before 2pm on June 27. These are now in the process of being paid, it added.
"I had to pawn my phone to access cash"
The Wirecard's suspension also hit customers of Pockit, a digital current account designed for those with low incomes or poor credit ratings.
Ashleigh, 28, who spoke on the condition her surname was not revealed, had a £300 benefit payment from the department for work and pensions (DWP) due during the suspension. It has not yet arrived.
She had to take a £370 loan from a pawnshop, secured against her phone, to fund get by, she said.
"My DWP payments have resumed but all money that bounced due to Wirecard is missing," she said.
"I'm lucky that I've been able to open a NatWest account and make plans for future payments to go in but there are people who can't due to poor credit or a lack of ID.
"There are vulnerable people who get paid once a month who don't know how long they have to wait."
Pockit told Business Insider that all its accounts are functional.
"The Pockit team understands completely the urgency and distress that the situation at Wirecard has provoked for our customers," it said in a statement.
"We were not given any advanced warning by the FCA of the measures it decided to take and have worked closely with the DWP and the FCA to find a swift solution for our customers.
"We are taking decisive steps to ensure our customers have better access to reliable financial services in the coming weeks, including an orderly transition to a different UK-based payments provider."
Wirecard AG declined to comment but highlighted statements from its insolvency administrator and the FCA, which said the UK subsidiary was able to continue operating.
A statement on the WDCS website apologized for delays on its card programmes.
Will this dent confidence in financial apps?
Fintech brands have flourished during lockdown.
In a survey by analysts Capgemini of more than 1,000 consumers in April, 45% of people said they would use digital payments more during lockdown, and 82% said they were unlikely to visit bank branches.
Sankar Krishnan, head of growth and industry head within the banking and capital business at Capgemini, doubted the Wirecard collapse, and the knock-on impact on the firm's UK subsidiary, would damage confidence in financial apps.
"I do not see there being any decline in digital banks," Krishnan said, adding that more and more people continue to switch "to digital from 'trusted' digital providers including traditional banks."
Carl Uminski, co-founder of digital agency Somo, says some people will feel more wary of digital payments. But he added that system outages can also hit traditional banks.— TSB's technology collapsed in 2018 and users couldn't access their accounts, for example.
"This isn't a sign of a turbulent industry or a reason to not trust neobanks and simply go back to a traditional brand," he said.
Jon Ostler, chief executive at personal finance comparison site, Finder.com, said the Wirecard incident alone is unlikely to change the behaviour of most consumers so long as fintech firms are transparent. Users may, however, want more detail on how their apps operate.
"It will certainly have been a wakeup call though and might lead to consumers taking a more detailed look at how these apps work," he said.