The German payment star, who has just filed for bankruptcy, offers his services to many finance start-ups whose future is now linked to his.
[Article mis à jour le 26 juin 2020 à 17h30] The British regulator on Friday 26 June ordered Wirecard Card Solutions, a subsidiary of the German fintech, to cease its activities. The fintech clients of WCS are also forced to stop their services.
The future of Wirecard has never been so uncertain. German fintech has admitted that the 1.9 billion euros not found in its balance sheet probably did not exist. This June 25, the company listed on the Dax filed for bankruptcy, two days after the arrest of its boss, Markus Braun. The future of many fintechs is equally unclear. Many start-ups * use Wirecard technologies to issue bank cards or offer mobile payment, for example. Note that they are clients of Wirecard Card Solutions (WCS), an independent subsidiary installed and regulated in the United Kingdom, and not of Wirecard AG which is concerned by the scandal. Even if the latter goes bankrupt, WCS will continue to operate. But the whole image of the group could be tainted.
“Wirecard remains an actor who offers interesting solutions, that has not changed”
Currently, no French fintech works with Wirecard, although the German star rents offices at Village by CA, the place of innovation of Crédit Agricole. The French bank had entered into a partnership with Wirecard in April 2018, which was finally suspended at the end of 2019. What about the other fintechs? “Wirecard remains a player that offers interesting solutions, that has not changed,” said Lionel Vincke, managing partner at Azzana consulting, a firm specializing in payments. “He has a great versatility. This does not destroy the skills acquired over the years,” said Angelo Caci, managing director of Syrtals Cards, a firm specializing in electronic banking. “The business is long-term and solid, and there is a real market,” added the boss of a German start-up who works with Wirecard. “There is a big gap between commercial success and the questioning of the governance of the company. In addition, it has been two years since there have been rumors about Wirecard, which had not been affected until then. Simply because there is a real need, “he adds.
In the first half of 2019 (the results of the second half are still unknown), the German fintech recorded a turnover of 1.2 billion euros, against 885 million in the first half of 2018, an increase of 36, 6%. Transaction volumes increased by 37.5% between the same two periods. Obviously, although certified, these figures can inspire a certain mistrust now.
Difficulty changing providers
Even if German fintech continues to provide its services, client start-ups may decide to change providers, scalded by the scandal. Finally, in theory. Because changing your banking service provider doesn’t happen overnight. “Payment integration projects are quite long. This is normal, it strikes a sensitive chord: incoming payments. It is therefore not easy to change providers. It takes at least six months between the moment when we decide to change it and when we no longer use it, “says Lionel Vincke. Same observation for the boss of Lydia. “It can take a year if you are doing very well. Otherwise, it’s more like two or three,” says Cyril Chiche.
“When you are at a provider, it is hell to change it. Especially when you issue Wirecard cards, because that means that you have to reissue all end user cards. This is a huge problem which creates an enormous dependence “, loose Alexandre Louisy, CEO of the software of collection Upflow, customer of Treezor, competitor of Wirecard on the part banking as a service. For a “small” fintech, this expensive and long option is therefore not really possible. “It can be dramatic. Boxes could end up bankrupt because of this Wirecard affair. The fintechs that started a short while ago and have little money cannot relaunch a blind project while finding money. money “, is alarmed Cyril Chiche.
“Only big fintech can afford this kind of project”
There is a second option to separate from Wirecard: create your own banking technologies. This site is obviously very expensive and takes time. The neobank for professionals Qonto, a Treezor client, created its own core banking system in 2018 but has still not finished migrating all of its former clients. Lydia has also started this work. “It is quite a project, which includes the migration of customers, of stock … The customer must agree, we must change the Terms. We must put at least three or four people on it full time”, illustrates Cyril Chiche . “Only big fintech can afford this kind of project,” he adds. This is the case for the British bank card aggregator Curve. “We are now a partner of Mastercard and we have almost finished the work to become our own transmitter, which has already been underway for several months”, says Nathalie Oestmann, COO of Curve, whose decision was pushed by the delay in the audit of Wirecard’s accounts. According to Sifted, the Financial Times tech site, Revolut started leaving Wirecard six months ago for “integrity” reasons.
For lack of budget, the small fintech are therefore likely to find themselves “stuck” with Wirecard. Sifted has contacted several European fintech companies who have all claimed to be Wirecard customers. No wonder since they are either too dependent on the German provider or they assume that the storm will eventually pass. “I think that when the situation has calmed down, they will stay. In the end, their fists are tied,” comments Alexandre Louisy. Unless the end users of these fintech are aware of the scandal. The company Crypto.com, which offers a bank card with cashback in crypto, faced a salvo of messages from its users on Twitter, worried about their funds. Worried about the future.
* Non-exhaustive list of fintech clients of Wirecard: Anna Money, Crypto.com, Payhawk, PFC, Soldo, Stocard, Tymit, Varengold Bank…
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