The fall of Germany-based payments company Wirecard, which filed for insolvency amid an accounting scandal over a missing $2B, is now affecting app users that depend on its payment services. As an issuer and acquirer, Wirecard allows merchants to accept a variety of payment methods. Wirecard serves thousands of consumers by enabling popular financial apps and platforms, including card consolidation app Curve, banking app Pockit, business banking platform ANNA and foreign exchange provider FairFX. U.K. regulator the Financial Conduct Authority (FCA) last week instructed the company’s U.K. subsidiary, Wirecard Solutions Ltd., to freeze all assets and funds to “protect the interests and money of consumers.” Wirecard Card Solutions is still operating and working to meet the regulator’s requirements, and the company is reportedly working with advisers from Alvarez & Marsal to explore further options. 
 
Why should we care?
The collapse of Wirecard could affect the bottom line of Wirecard’s client companies that may be rushing to find alternatives. U.K. industry group The Emerging Payments Association (EPA) says the freeze could affect more than 150 companies. In a letter to the FCA, the EPA said “the costs to service cardholders and to move to alternatives to Wirecard Card Services, a process that takes several months, are significant,” noting that dozens of corporate failures and massive job losses could result unless accounts are unfrozen immediately. Though Curve is back online after completing its migration to other payment providers, customers of other platforms that depend on Wirecard’s U.K. subsidiary are still locked out, including some Pockit users who say they are unable to make payments for essential services like rent and utilities. Meanwhile, ANNA says it is working “around the clock” to allow clients to access their accounts. Though the longer-term effects on consumers is unclear, the consequences of the turbulence at Wirecard could shift trust away from fintechs and toward established incumbents.