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Monday, August 10, 2020

FCA claims that Wirecard is making “good progress”; fintechs warn of economic catastrophe

Following last week’s action by the Financial Conduct Authority to suspend business at Wirecard UK, the watchdog claims to have seen good progress by the battered payment manager in meeting the conditions for a return to operational activity.

Last week, the FCA imposed restrictions on Wirecard UK to stop all regulated activities and freeze all activities and funds as German parent company Germany filed for insolvency following the discovery of a $ 1.9 billion black hole in the its budget.

Watchdog actions took the British fintech community by surprise, with many companies relying on Wirecard for operational support knocked to the side. The FCA is facing pressure from lobbyists who support the UK’s fintech sector to speed up the process or risk a crisis of confidence in the sector and the potential bankruptcy of dozens of companies.

In an update today, the FCA claims to have teamed up with the company and other international and UK authorities over the weekend to address customer security concerns.

“We are keeping pressure on the company to solve these problems that would allow it to operate under certain conditions,” says FCA. “However, we cannot lift the restrictions without reassuring ourselves that the company has been able to meet all our concerns, such as that all customer money is safe. We hope to be able to publish an update soon.”

Meanwhile, the Curve card consolidation app has worked overtime on the weekend to migrate away from Wirecard and return to normal activities.

In a statement on its website, the company says, “We started our transition from Wirecard a few months ago and are furiously moving along the path to complete this migration. We hope to be fully operational soon.”

In the meantime, all Curve’s services and accounts have been temporarily suspended.

The mobile phone account Anna Money, which was also hit by the fallout, promised to replace the user’s frozen money from their pockets, reassuring customers that their accounts remain secure.

The Emerging Payment Association wrote to the regulator asking for swift action to avoid permanent damage to the UK’s fintech sector: “The Emerging Payments Association (EPA) and its members strongly urge the FCA to unlock Wirecard Card accounts Services as soon as possible for the benefit of cardholders, companies and their employees and the UK fintech industry.

“Without this suspension being lifted quickly, we believe there will be significant and lasting damage to current and future UK individuals, companies and prospects as a leader in the fintech industry.

“We believe the suspension will impact over 150 companies and thousands of employees. Not only do revenues no longer flow, but the costs for service cardholders and the switch to alternatives to Wirecard card services, a process that requires several months, that is significant. We expect dozens of business failures, hundreds of job losses and significant reductions in tax payments, unless they are immediately removed. ”

While Wirecard awaits the outcome of the insolvency proceedings, rumors abound that Visa and Mastercard are preparing to cut the thread with the payment processor, a move that would put the company in a tailstock from which there would be little hope of a recovery.

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