What has happened to Wirecard and why this is not a surprise?

Alyona Shevtsova
3 min readJul 3, 2020


Wirecard is the largest fintech platform and electronic payment services provider in Germany. The functionality of Wirecard is extensive

from real and virtual cards to mobile payments. The large international companies

WeChat Pay, Mastercard, Apple Pay, Visa, etc.

and several cryptocurrency projects are the partners of the payment processor. With regard to certain financial indicators, Wirecard outperformed such financial institutions as Deutsche Bank and Commerzbank. However, last week (June 25, 20) Wirecard filed for insolvency. Ernst & Young failed to confirm the existence of 1.9 billion euros (2.1 billion US dollars), or about 32% of the declared assets under management in the Wirecard accounts.

How could this happen?

Discrepancies in the Wirecard financial accounting have been noticed long before. Since 2008, questions regarding its authenticity had been arising. However, the company each time claimed that it was an attempt to regulate processes on the market. As it turned out, Wirecard was engaged in fraud with financial reporting in Asia. It’s a given that such actions were taken to increase company’s capitalization and attract investors interest. For example, one of the “improvements” was aimed at the obtaining a license in Hong Kong, which would permit Wirecard to dole out prepaid bank cards in China. A practice known as “round tripping” was used to reach the target: a significant amount of money would be transferred from a bank in Germany to a dormant subsidiary in Hong Kong, depart to be momentarily in the books of an external “customer”, then travel back to Wirecard in India. The local auditors, in turn, would take that amount of money for legitimate business revenue. The company conducted investigations because of the regular reports about financial statements violations. This is a brief summary of the FT investigation, which I highly recommend reading.

As a result, the budget shortfall was detected at the end of June. The company’s board of governors acknowledged that these funds may not have existed at all. Just like that. As a result, the company failed to publish its 2019 annual report.

What will happen to Payoneer cards?

On June 26, the Financial Conduct Authority (FCA) ordered the Wirecard Card Solution subsidiary to cease all regulated activities in order to prevent the possibility of assets transfer to the parent company. This have led to the problems and restrictions for the Wirecard partners (Anna Money, Crypto.com, Curve, etc.), and their customers’ accounts were blocked.

But in the most uncertain position were users

owners of Payoneer cards. Payoneer cards are issued by Wirecard Card Solutions Limited, a subsidiary within the Wirecard group. Despite this, in the Payoneer blog was stated that the company is an independent legal entity and is subject to regulatory oversight and accounting standards in the UK. Payoneer сards are popular with freelancers in CIS, who work with foreign companies.

From Monday (June 30), the service resumed its operation: FCA lifted restrictions on the work of the British division of the German payment company Wirecard. Payoneer is looking for a new issuer, and uses user’s Payoneer accounts instead of cards for money crediting. All functions are promised to be available from July 6.

So what do we have in common?

· A huge fintech company filed for insolvency

· Ernst & Young failed to confirm the presence of 1.9 billion euros in the trust accounts of the company

· CEO Wirecard was arrested and top managers were fired

· Share value has plummeted ten times or 97% since the beginning of the year

· Payoneer and other Wirecard partners promise to restore the previous mode of operation

What happened once again proves that innovativeness and dynamics aren’t a reason to skip out on a legal point. The rapid pace of development can lead to the temptation to “cut” or circumvent the rules. Don’t listen to that voice, never. The right path is longer and more difficult, but it ensures that your successful business won’t turn into the main financial scandal of the week in a flash.



Alyona Shevtsova

CEO of the international payment system LEO, the shareholder of IBOX Bank