SINGAPORE: Consumers trying to use their credit cards may encounter difficulties after Wirecard ceased services in Singapore, prompting local businesses to look for other payments providers.
The Monetary Authority of Singapore (MAS) had earlier this week directed the troubled German firm to stop payment services here and to return all customers’ funds by Oct 14.
Wirecard’s primary business activities in Singapore are to process payments for merchants and help companies issue pre-paid cards.
Visa said it suspended payment authorisations for Wirecard on Oct 1, following the direction by MAS.
“This means there may be some disruption for Visa cardholders when transacting at a number of merchants that use Wirecard services in Singapore,” said a Visa spokesperson on Friday (Oct 2).
“Visa is working closely with partners and clients who are affected by the cessation of Wirecard’s acquiring services in Singapore by supporting them with migration to alternative service providers to ensure disruptions are kept to a minimum,” the spokesperson said.
Visa added that its priority is to maintain the integrity of its payment system and “protect the interests of consumers, merchants, and clients”.
Mastercard similarly said it is working to limit disruptions.
“Our priority is ensuring people are able to continue to use their Mastercard cards,” said a spokesperson. “We will continue to work with all parties to take the necessary action to limit disruption to transactions.”
Mastercard referred merchants to a list of acquirers - service providers who help businesses process debit and credit card payments for customers - on its website.
Munich-based Wirecard collapsed in June after its auditor EY refused to sign off on its 2019 accounts because it was unable to confirm the existence of €1.9 billion (S$3 billion) in cash balances on trust accounts, representing around a quarter of its balance sheet.
The firm later said that the amount likely never existed. It filed for insolvency, owing creditors €3.5 billion.
Wirecard’s clients in Singapore include taxi giant ComfortDelGro, which in 2008 outsourced the development of the cashless payment system for its taxis to the German firm.
"We are aware of the directive by the MAS with regards to Wirecard services. We are currently working with several alternative providers to minimise impact to our customers,” said ComfortDelGro group chief corporate communications officer Tammy Tan.
Contactless payments firm EZ-Link noted that it previously worked with Wirecard to provide cashless solutions and card top-up services.
“Since Wirecard first filed for insolvency in June, we started to actively communicate and reach out to our partner merchants to help ease their transition to other acquirers,” said an EZ-Link spokesperson.
“While there may be some disruption for merchants who have yet to make the switch, we will continue to work closely with them to ensure a smooth transition and business continuity,” said EZ-Link, encouraging customers to top-up their cards via the EZ-Link mobile app in the meantime.
BANKS RECEIVING MORE QUERIES FROM AFFECTED MERCHANTS
As Wirecard’s clients seek alternatives, banks told CNA that they have received an influx of queries from merchants looking to switch out.
“Since July, we have been getting queries from merchants who are looking to switch from Wirecard to OCBC. We have since on-boarded several new merchants from the retail, F&B and even education industries,” said OCBC Bank’s head of cards business Vincent Tan.
He added that OCBC Bank had also seen more queries on Friday morning, as Wirecard ended its services the day before.
The bank has already “stepped up” manpower to deal with the higher number of requests during this period to ensure that merchants can resume payment operations as soon as possible, said Mr Tan.
“Many new merchants have sought our guidance in the last two months on how to create more certainty around their payment processing options or to become part of UOB’s merchant network,” said UOB’s head of card and payments Singapore Choo Wan Sim.
The merchants come from a range of sectors, including retail, e-commerce, supermarket, food and beverage and insurance, she said.
UOB advises merchants on payment acceptance options like a unified point-of-sale terminal which accepts a wide range of payment schemes in a single terminal. The bank also shows merchants how to accept new payment schemes like Alipay and WeChat Pay.
Meanwhile, a DBS spokesperson said: “DBS has been working with merchants to help with their transitions for several months, and they also have access to alternative payment methods if needed.”
The end of Wirecard’s payment service would “temporarily” disrupt the payment processing market, said Dr Emir Hrnjic, head of FinTech training and senior research fellow of the Asian Institute of Digital Finance at the National University of Singapore (NUS).
Wirecard’s bankruptcy in Germany “spooked” customers of its subsidiaries around the world, said Dr Hrnjic, with merchants switching to other payment processing companies “immediately” after the news broke.
“The first customers to jump ship were low-risk businesses that should have been easily onboarded by competitors.”
These competitors include NETS, PayNow and SGQR, which are “able and willing” to take on Wirecard’s customers.
However, small businesses could be affected if they switch to NETS because it is more expensive, he said.
Nevertheless, Wirecard’s competitors could come up with “innovative solutions” to lower costs, Dr Hrnjic said.
Germany will hold a full parliamentary inquiry on Oct 8 into the collapse of Wirecard.