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Jun 25, 2020

Visa, Mastercard said to weigh cutting ties with Wirecard after scandal

Wirecard

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Visa Inc. and Mastercard Inc. are considering revoking Wirecard AG’s ability to process payments on their networks, moves that could cause further pain for the fintech firm that’s been battered by an accounting scandal.

The world’s largest payment networks have begun reaching out to some Wirecard clients to prepare them for the possibility, according to people familiar with the matter, who asked not to be named because the information isn’t public.

“We continue to closely monitor developments and assess new information as it becomes available,” Visa said in a statement. “Our priority is, and will always be, maintaining the integrity of the Visa payments system and protecting the interests of consumers, merchants and our clients.”

Wirecard helps businesses around the world accept electronic payments from customers, so its relationships with Visa and Mastercard and being able to process payments with the companies are critical to its business.

“Mastercard is aware of the news regarding Wirecard AG and is monitoring the situation closely,” Mastercard said in a statement. “Our priority is ensuring people are able to continue to use their cards. We will continue to work with all parties and stand ready to take any necessary action.”

Wirecard filed for insolvency Thursday, citing over-indebtedness and inability to assure it can continue as a going concern. The announcement was the culmination of a stunning accounting scandal that led to the arrest of its chief executive officer and left the German payment-processing firm unable to find more than US$2 billion missing from its balance sheet.

Wirecard Bank, where the Visa and Mastercard licenses are held, isn’t part of the insolvency proceedings, the company said. German financial regulator BaFin has appointed a representative for the lender.

“In future, the release processes for all payments of the bank will be located exclusively within the bank and no longer at group level,” Wirecard said in a statement Thursday.

A representative for Wirecard said it’s currently not making any additional statements.