A few days ago, freelancers all around the world didn’t imagine that the Wirecard scandal would affect them at all, but they were wrong.
The fallout of Wirecard, the giant fintech company that was the biggest jewel in Germany’s financial system crown, has sent shock waves around the globe. The company filed for bankruptcy after admitting that there is a $2 billion hole in its financial statements.
In recent years, Wirecard erected as one of the most valuable fintechs in Europe, so powerful that the German authorities defended the company when some observers sounded the alarms about shady procedures and figures that did not add up. Now it turned out that the company had to admit that the money audits could not find anywhere probably wasn’t anywhere to be found.
That would not be a problem at all for many freelancers if UK’s Financial Conduct Authority, also known as FCA, had not ordered Wirecard’s British branch to cease operations, freeze all account, including all the Mastercard and Visa cards they had issued, to avoid any money funneling to their German parent company.
Many e-money wallets that serve the freelancer communities of all countries have used UK Wirecard’s card services to provide these independent workers with financial instruments that otherwise they would not be able to have access to. Payoneer, for instance, is a company that allows inernational freelancers to send invoices and collect money from clients. Many of their users are in South America, Africa, Asia, the United States, and Europe. Payoneer Mastercard cards are issued by UK Wirecard.
On June 26th, Payoneer users were stunned when they tried to use their cards to pay for groceries, or when they tried to transfer money from Payoneer to their bank accounts. They found their transactions were declined. Many clients report that at some point during the day, they couldn’t log into their accounts on the Payoneer website either.
This situation has caused an outcry on social media. Payoneer customers fear their hard-earned money might be lost. Their worry stems from the fact that, apparently, all the money in Payoneer freelancers accounts under $10000 is automatically deposited in the debit cards to cover the electronic transactions, and this money is in Wirecard bank accounts. Only any surplus over ten thousand dollars can be used to make transfers because this extra money rests in bank accounts in Payoneer’s control.
Most freelancers have balances smaller than ten thousand dollars, so they say they don’t have any money to buy groceries, pay their rents, or cover any other basic needs. That causes more distress given the COVID-19 situation around the world.
Freelancers affected by this problem have opened a Change.org page, asking Payoneer to free their money so they can transfer it to a bank account they can use to make payments.
Nevertheless, Payoneer has declared that they have to wait for the FCA to end an audit they will run soon to learn about the financial health of Wirecard’s branch in Britain.