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Wirecard ordered to stop payment services in S'pore

Wirecard ordered to stop payment services in S'pore

Source: Straits Times
Article Date: 01 Oct 2020
Author: Sue-Ann Tan & Aw Cheng Wei

MAS also tells insolvent German firm to return all customers' funds by Oct 14.

The Monetary Authority of Singapore (MAS) has ordered Wirecard to stop its payment services in Singapore, in a move that will force businesses that still use the German firm's systems for credit card and other digital payments to shift to other options.

Some users of Wirecard SG's pre-paid cards will be affected as well, said the regulator yesterday.

Wirecard also has to return all customers' funds by Oct 14. The Straits Times understands that this refers to funds held by Wirecard as part of processing payments for merchants, as well as corporate customers which issue pre-paid cards.

Once a fintech giant with businesses spanning the globe, Wirecard filed for bankruptcy in June after disclosing that €1.9 billion (S$3 billion) in cash, supposed to be in bank accounts in the Philippines, did not exist.

Payment gateways like Wirecard act as a link between financial institutions. When a bank customer pays for his purchase at a retailer using a credit card, payment gateways alert the cardholder's bank that a transaction is in process.

Banks will then indicate whether the customer has sufficient credit to make the purchase. The retailer receives the payment and the payment gateway typically receives a cut from the transaction.

Wirecard's main business activities in Singapore are to process Visa and Mastercard payments for merchants and help companies issue pre-paid cards.

Singapore is home to Wirecard's Asia-Pacific headquarters in Pasir Panjang. Wirecard was still listed as a tenant at the building when ST visited the premises yesterday.

MAS said it has been monitoring the impact of parent company Wirecard AG's insolvency on the ability of its Singapore entities to continue providing payment services here.

However, Wirecard SG has told the authority that it is unable to continue providing payment processing services to a "significant number of merchants", it said.

As such, MAS assessed that it is in the interest of the public for Wirecard SG to cease its payment services and promptly return all customers' funds, it said. "This provides the greatest certainty to customers on their appropriate course of action, including seeking alternative service providers."

Alternative forms of e-payment available in Singapore include Nets, PayNow and SGQR. In addition, banks such as DBS, United Overseas Bank and OCBC, as well as payment services provider Nets, provide merchant acquisition services.

Some merchants that have used Wirecard are now offering consumers other payment options while others are adjusting. For example, the BreadTalk outlet at VivoCity did not accept credit cards when ST visited yesterday, suggesting that customers use cash instead.

ST understands that companies across various sectors such as Subway and Gong Cha had used Wirecard, although it is unclear if and when they made a switch.

Sheng Siong Group chief executive Lim Hock Chee said yesterday that the grocery chain had already moved away from using Wirecard. It offers a range of payment options including Nets and credit card.

Chef Park Tan, who owns Indonesian restaurant Pagi Sore, said Wirecard was the main processor of credit cards for his business, but he switched to another payment processor, First Data, after news of the missing billions hit the headlines.

He said: "There was no additional cost in switching but it was troublesome. Things are already bad for businesses during this pandemic and then this hits...

"I imagine that some who have not switched will be scrambling now because it takes a while to change to a new processor."

Entities under Wirecard are not currently licensed by MAS.

Source: Straits Times © Singapore Press Holdings Ltd. Permission required for reproduction.

 

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