Wirecard faces expanded probe, firm assessing its services in S'pore

Payments firm Wirecard is weighing up whether it can keep operating here after its German parent filed for insolvency last week amid an escalating accounting scandal.

The firm told the Monetary Authority of Singapore (MAS) yesterday that it was “assessing its ability to continue providing its services in Singapore”.

Meanwhile, the authorities here are set to expand an “extensive” criminal probe into the company that began last year.

“Credit card payments at merchants using Wirecard’s services, as well as usage of prepaid cards issued by Wirecard, will be affected if it ceases operations here,” the MAS said yesterday.

Wirecard processes payments for merchants and issues prepaid company cards.

The firm did not respond to The Straits Times’ queries yesterday. The Association of Banks in Singapore (ABS) declined to comment.

Wirecard filed for court protection owing creditors €3.5 billion (S$5.5 billion) after disclosing a €1.9 billion hole in its accounts that its auditor Ernst & Young said was the result of sophisticated global fraud.

The firm said it would continue business activity after the German insolvency filing and an administrator was appointed on Monday.

DBS here is seeking details from Wirecard on whether it can continue to provide services.

“DBS also works with other payment gateway providers, and will be able to help transition merchants onto these providers if necessary,” a spokesman said.

The MAS has told Wirecard it must promptly notify customers of any disruption to services. “There are alternative payment service providers available to merchants… such as Nets, PayNow and SGQR,” it added.

TSMP Law joint managing partner Stefanie Yuen-Thio noted: “A merchant may use a Wirecard terminal and its ability to offer credit card payments to its customers will be impacted if it does not have a back-up terminal from another service provider.

“As a consumer with a Visa or Mastercard, I may not be aware that Wirecard might be processing backend payments on my card.”

But she understands that Wirecard’s penetration rate here is not very high.

Visa said it has suspended payment authorisation for one European-based arm of Wirecard.

“Other Wirecard entities, including Wirecard Asia and Wirecard Bank, continue to process on the Visa network,” it added.

Mastercard said: “Our priority is ensuring people are able to continue to use their cards.”

Almost all of UOB’s merchant partners use payment gateways by Mastercard and Visa and not Wirecard, a bank spokesman said.

Likewise, OCBC uses its own payment gateway and those of Mastercard and Visa to process card payments. The bank has never used Wirecard’s payment gateway, a spokesman said.

Wirecard is also in the prepaid cards business. “But we do not know which are the issuers that use their services in the backend and what the extent of the impact is,” Ms Yuen-Thio said.

The MAS added that Wirecard’s entities in Singapore had complied with the regulator’s directions to hold customer funds in segregated accounts with banks in Singapore.

It said on Monday that it is working with the Singapore police in its Wirecard probe, along with the Accounting and Corporate Regulatory Authority, “to scrutinise other possible aspects of the case”.

The Commercial Affairs Department began criminal investigations into Wirecard’s Singapore operations in February last year. It also raided Wirecard’s local offices at Mapletree Business City after fraud allegations.

Ms Yuen-Thio noted: “The question will be whether any of the Singapore operations were illegal, for example, if any funds remitted or received in pursuance of fraud or money-laundering passed through Singapore. If so, there may be criminal charges.

“If Wirecard breaches its contractual obligations to merchants, it will be liable in damages. But given its low penetration here, I don’t think that is the most significant issue it faces.”

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