Payments Firm Wirecard Collapse Hits Singapore Businesses Hard

Friday, December 4th, 2020

During an already unprecedented and challenging year, a scandal rocked Germany – the biggest corporate scandal in post-war Germany. In June, payments firm Wirecard collapsed, admitting that €1.9bn (£1.7bn; $2.2bn) was missing from its accounts. Markus Braun, former head of Wirecard was then escorted to Berlin for pre-trial detention in Munich. 

Mr. Braun denies wrongdoing, saying, “In the end, independent judges will decide who bears legal responsibility for the collapse of the Wirecard AG business.”

Immediately, payment cards and foreign currency cards linked in any way to Wirecard were blocked in the U.K. The scandal quickly sent shockwaves through German politics, with allegations being thrown about. Now, the ripples are beginning to reach across the globe.

According to a recent report (Oct. 12) in the Financial Times, Singapore businesses are now struggling to get paid following the shutdown of Wirecard in September. The Monetary Authority of Singapore (MAS) ordered the closure and directed Wirecard to return customers’ funds by Oct. 14. 

“Customers who have not yet made alternative arrangements are encouraged to do so promptly,” MAS told FT.

The collapse has been incredibly disruptive, since it came with no prior warning. It has also proven to be a big hassle for customers, with many of them having bills set up to automatically debit on a card that suddenly stopped working. 

“The sudden cessation of Wirecard . . . took everyone by surprise,” said the Singapore telecommunications firm M1. It had to send text messages to its recurring monthly payments customers to make alternate arrangements since Wirecard stopped working.

Thus far, three of the biggest Wirecard lenders have declared losses, due to Wirecard’s sudden collapse. To make matters worse, Wirecard executives allegedly raided the company of $1 billion while fighting accounting fraud allegations.

When Wirecard first joined Germany’s blue-chip Dax 30 share index two years ago, it was valued at €24bn. Fast-forward to this summer and the scandal that caused it to collapse, the company’s shares plummeted by more than 80% when the story broke.

The world is now anxiously watching to see how this shutdown will affect businesses in the coming months. Already, Singapore businesses have had to push to process payments for things as simple as telephone bills and restaurant meals. Sadly, it has also caused businesses to lose some customers.

An employee at a French café said Wirecard’s shutdown led it to lose some customers. “Some go to the ATM [to get cash] and never come back.” 

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