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Is Wirecard just the tip of the iceberg? There is a lot wrong with Fintech Companies

Wolfgang Holzem




Wirecard is currently the black sheep of the payment industry but is it really the case that the longtime fintech star is an inglorious exception? Or is it not the case that companies that sit like parasites on global cash flows are fundamentally susceptible to unethical behavior?

In any case, there are some indications for me that the hype in the e-payment circus has reached an exaggerated level and investors should note that Wirecard alternatives also carry risks.

The hubris of the e-payment industry
Wirecard wanted to win over 100 million customers with boon.PLANET. It is a mobile banking app that is to be rolled out worldwide but many competitors throw around similar numbers.

Worldpay’s 2020 global payment report lists 140 payment methods and almost all promise the great revolution. They combine the payment process with loyalty programs, micro credit and data analysis. All well and good, but is that really so incredibly innovative? From the customer’s point of view, I just want to pay for my bookings comfortably and securely and that actually worked quite well 15 years ago during my time at Asiarooms.

I am suspicious that every fintech company wants to become a global player and that every payment platform speaks of tens of millions of customers and billions of transactions. Even if I am registered with a dozen services, I can only use one of them when making a purchase.

Where does all the wealth come from?
VISA and Mastercard were global brands decades ago and little has changed in their competitive situation since then however, the stock prices have increased a hundredfold.

Sure, online purchases have exploded and payment is also often made by card in retail stores. One of the two payment systems is often directly or indirectly involved in the transactions. And yet the incredible profitability is surprising. In the last quarter ending March 31, Mastercard managed to squeeze a whopping $ 1.7 billion in profits out of $ 4.0 billion in revenues – net!

The rising transaction volume and falling costs thanks to digitization may explain part of it but another factor is higher fees. In the important home market, the two were able to increase their transfer fees by a hefty 77% from 2012 to 2018, according to the Payment Methods Report 2019. But why can the two enforce higher prices on the market? It appears to be a mixture of failure of competition supervision and abuse of market power.

Another example is the pioneer PayPal for online money transfers. Since the recent price gains, the company has been valued at around $ 200 billion. PayPal was one of the best known providers 20 years ago and is still one of
the most popular options today, however, there are now powerful competitors such as ApplePay, Alipay (ANT Financial) and a number of others.

If Paypal wants to stay at the top, it has to dig deep into its pocket to take on smaller competitors. Most recently, Honey Science was acquired for $ 4 billion. This means that many fintech stocks have goodwill on their balance sheets, the value of which is not always guaranteed. As an example Honey Science raised around $ 50 million in funding which is relative low compared to other Fintech companies.

Further doubts about Fintech stocks are warranted
While US competition control is often dysfunctional and promotes lucrative monopoly structures at the expense of domestic consumers, its counterparts in Europe are more vigilant. It is a thorn in your side that such indirectly subsidized systems strive for world power. Local solutions have long dominated in China, which in turn are now trying to conquer the international markets such as ANT Financial (Alibaba).

Just a few days ago, it was also announced that the UK Supreme Court ruled that certain VISA and Mastercard clearing fees were to high and some retail chains will now need to reimburse millions of pounds back to the consumers.

At the same time, the European Union is working hard to establish an instant payment system that is independent of international providers – SEPA Instant Credit-Debit Transfer. Once this works as it should, then the time for parasitical tapping of fees along the digital payment streams may be over within the EU market.

After all, the essence is simply a simple transfer – one account balance is debited and another is credited. From start to finish, it is a fully automated process that, once properly implemented, causes practically no additional costs. It is therefore difficult to understand why you have to pour billions of payment service providers into it.

My conclusion: E-commerce will continue its triumphal march inexorably and the volume of transaction will also skyrocket, therefore there are certainly growth opportunities for innovative Fintechs however, competition is intense in many areas, while the monopoly structures are under fire at the top end.

I cannot imagine that unreasonable margins can be achieved under these circumstances. Wirecard will not be the last payment company to leave its shareholders in tears. In terms of integrations I would very carefully consider switching to Wirecard alternatives such as Asiapay in Asia and Stripe in North America and Europe. We developed payment solutions with Wirecard, Asiapay and Stripe over the last 10 years but it was our German office in Wiesbaden that ordered a stop to cooperate with Wirecard since March last year.

The Wirecard offices in the UK and Singapore (since 2007) hold the keys on finding out the truth of what went wrong at Wirecard.


Former founder of and now reporting mainly on the Asia Pacific region and the global Coronavirus crises in countries such as Thailand, Germany & Switzerland. Born near Cologne but lived in Berlin during my early teenage years. A longterm resident of Bangkok, Udon Thani, Sakon Nakhon and Phuket. A great fan of Bali, Rhodes & Corfu.


Payoneer blocks funds to thousands of users over Wirecard insolvency

Wolfgang Holzem




As you may have seen on the news, Wirecard AG filed for insolvency on Thursday. Your Payoneer Prepaid Mastercard® Card is issued by its subsidiary, Wirecard Card Solutions Limited (WCSL) in the UK. Today, the Financial Conduct Authority (FCA) which regulates WCSL, issued requirements on WCSL, freezing all prepaid card activity for the time being.  We believe that cardholder funds are properly safeguarded and that the freeze will be temporary. 

What does this mean?

The FCA has communicated that they have taken these measures with the primary objective of protecting the interests and money of Wirecard customers. Pending further actions from the FCA, you will temporarily be unable to withdraw the funds on your card, nor receive new payments onto your card.

Any funds that are in excess of the maximum balance of your card are held by Payoneer and are therefore not impacted by the FCA’s temporary freeze.

How can I get paid during this time?

Any future payments that you receive from marketplaces, platforms and clients will not be affected by the freeze. You can sign in to view your funds, and you can now add your bank account for withdrawal of your future incoming payments.

We are actively working on offering additional options for you and your patience and understanding are highly appreciated. We apologize for any inconvenience this may cause and we’ll update you with more information as soon as we have it.

What they did not mention is that Payoneer IBAN accounts in Germany are managed by Wirecard Bank but if the debit cards don’t work more (issued in the UK) and the funds are already in Wirecard Bank IBAN account, they are technically suspended

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Wirecard : Informs Clients & B2B Partners about current Business Operations

Wolfgang Holzem




As announced on Thursday, 25 June 2020, the Management Board of Wirecard AG has filed an application for opening of insolvency proceedings on behalf of Wirecard AG with the competent Munich Local Court. With the filing of the insolvency application, Wirecard’s business activities will be continued. The Management Board is of the opinion that continuation is in the best interests of the creditors.

As a first step, the court has commissioned the Munich lawyer Dr. Michael Jaffé as an official expert. Whether insolvency proceedings will be opened is still under review. The Management Board of Wirecard AG expects a provisional insolvency administrator to be appointed for Wirecard AG shortly.

The business operations of the Group companies ( including the licensed units are currently ongoing. The parent company performs some central functions for the subsidiaries. As previously reported, it is being continuously reviewed whether insolvency applications also have to be filed for subsidiaries of the Wirecard Group. With the exception of a small development branch office, no insolvency applications have been filed by Group companies at present.

Wirecard Bank is currently not part of the insolvency proceedings. the electronic funds transfer of Wirecard Bank are not affected. Payouts to merchants of Wirecard Bank will continue to be executed without restrictions. Further information on Wirecard Bank AG can be found at The licensed legal entities, and where appropriate, Wirecard AG, remain in close contact with the respective regulators. Furthermore, we are in constant contact with the credit card organizations.

Wirecard Card Solutions Limited, headquartered in Newcastle, UK, has suspended its business operations due to an order issued by the competent supervisory authority, Financial Conduct Authority. The company has discussed measures with the authorities. The measures are being undertaken and will hopefully enable it to continue operations.

The TPA business in question is still under review. The newly appointed CEO of Wirecard AG, James H. Freis, Jr., took a new approach to investigating the known allegations immediately upon taking office. Among other measures, a number of new advisors were commissioned to ensure neutrality and, in particular, independence from the former Management Board members of Wirecard AG. The clarification efforts will, of course, continue even after the filing of the application for the opening of insolvency proceedings.

Iris Stöckl
VP Corp.Com./IR
Tel.: +49 (0)89-4424-1424
ISIN DE0007472060
Reuters: WDI.GDE
Bloomberg: WDI GY

Document pulled via Reuters Terminal by Wolfgang Holzem on behalf of Dr. Robert Bowitz, accredited by the German BDP
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Deutsche Bank is considering taking over Wirecard Bank





At the beginning of the week it still looked as if Wirecard’s Bank would also go into bankruptcy because too much customer money had meanwhile flowed out – now it is becoming clear that Deutsche Bank could take over in whole or in part. The Bank is examining possible financial aid in coordination with BaFin, the insolvency administrator of Wirecard AG and the management board of Wirecard Bank, a spokesman said.

According to German media reports, at least one financial investor has also expressed an interest in Wirecard Bank.

The financial supervisory authority Bafin had appointed the Bundesbank as a special representative at Wirecard Bank, who should ensure that no funds flow to Wirecard AG and that business continues.

Wirecard Bank has a full banking license and can offer all financial services. Since the beginning of the year, it has been promoting 0.75 percent interest on checking deposits on the “Boon Planet” banking app, while other institutes hardly pay any interest or even charge fees for fixed deposits.

If the bank had gone bankrupt, the deposit guarantee fund of the private banks would have compensated customers who did not withdraw their money on time.

On the balance sheet, Wirecard Bank is not a heavyweight. According to internal sources, at the end of March it had total assets of 1.6 billion euros, which roughly corresponds to a medium-sized savings bank. The equity at the end of the quarter was 205 million euros and he bottom line was a surplus of 4.7 million euros at the end of the quarter, after 40.8 million in the same quarter of the previous year.

What motives drive Deutsche Bank is still unclear. “We are one of the largest banks in the payment traffic worldwide and that is one of our strengths, a real core business area,” Deutsche Bank board member Fabrizio Campelli told Handelsblatt in an interview published on Friday and “if there are opportunities to strengthen ourselves, we will look at them.”

Deutsche Bank may be targeting Wirecard Bank’s corporate customers in payment transactions, although the first have already turned away. Since the beginning of July, for example, the discounter Aldi Süd has no longer processed credit card payments through the insolvent payment service provider, but through the provider Payone, as the company explained on Thursday. 

The cooperation with Wirecard Bank has since been limited to business with the Aldi gift card. But this has no consequences for customers.

The connections between Wirecard and Deutsche Bank are complex anyway. Last year, on the initiative of the Wirecard Group, there were even informal merger talks with Deutsche Bank, which, however, broke off quickly as Bloomberg news agency reported first. In addition, the bank temporarily granted company founder Markus Braun a private loan of EUR 150 million secured with Wirecard shares.

In addition, one of the auditors, who was responsible for checking the Wirecard balance sheet at EY in 2017, switched to Deutsche Bank in 2018 as chief accountant.

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