Payoneer blocks funds to thousands of Eastern European freelancers amid Wirecard fraud. How and when they can access the funds

Payoneer card users have begun complaining en masse about losing access to their funds; they are unable to withdraw their money. The problem at Payoneer is due to the issues with the company Wirecard: about a week ago, it was found to have falsified reports, inflating its financial results by €1.9 billion.

AIN.UA’s editor briefly explains why you have no access to your money on Payoneer and when you will be able to access your funds again.

Backstory in a nutshell

In 2019, Germany’s Wirecard went through an audit showing there was a lack of €1.9 billion, which is one-quarter of the company’s balance sheet. The top management was fired; the stock dropped tenfold. The auditors found out that Wirecard’s managing team had been purposely manipulating its accounts to increase capitalization and make the company more attractive to investors.

An external audit of Wirecard was conducted by KPMG, which in the course of a six-month investigation, did not find any transactions that should have generated the same additional profit in the period since 2016. After KPMG’s investigation, E&Y also published its findings. Financial Times writes that Wirecard’s employees could have been communicating false data to E&Y for ten years.

The point is, there are $2 billion of overreported financial results due to the fraud with accounts, but that money did not exist as such, in the first place. This was done for the sake of stock growth. As for Wirecard’s 3.5 billion loans, they do exist. The company has already filed for bankruptcy.

What does it have to do with Payoneer’s problems?

The problems with Payoneer are because its cards, as well as accounts, were provided by Wirecard. In other words, when you transfer money to a Payoneer card, you are most likely sending it to Wirecard’s accounts. That is why Wirecard’s problems affect Payoneer’s work directly.

Importantly, a few days ago, Payoneer assured its clients that their accounts would be fine, with allegedly no problems to be expected: you can view the messages here and here. But, on June 26, everything changed.

So, what has happened?

The thing is, Germany’s Wirecard AG has a subsidiary in the UK, called Wirecard Card Solutions, which had been issuing cards, including those for Payoneer that Ukrainians use. And the British Financial Conduct Authority has frozen the activity of this company until the end of the investigation/audit/inspections. The FCA said that all was done to protect the customers’ money.

In other words, Payoneer account holders had no access to their funds because their accounts were frozen.

Ukrainian Payoneer customers have confirmed the same fact in their complaints to AIN.UA.

This has affected not only Payoneer but also a number of other companies.

Good news for Payoneer customers – FCA allows Wirecard to resume activity

Meanwhile, the FCA allowed Wirecard to resume regulated activity. This means that Payoneer customers will be able to access their funds. According to the FCA, starting from June 30, funds on Wirecard cards will again be available for customers.

“We are now in a position to allow Wirecard to resume regulated activity and on 29 June 2020, the FCA provided written consent to Wirecard to resume issuing e-money and providing payment services. We continue to monitor Wirecard’s activities closely and certain requirements continue to remain in force. These should not, however, affect the services Wirecard provides to its customers. This means customers can now or very shortly use their cards as necessary,” the regulator said in a statement.

According to the FCA, the requirements for Wirecard regarding where the company holds its customers’ money, as well as restrictions on the transfer of its own assets, remain in force. These requirements do not apply to users.

What does Payoneer say?

According to the company’s latest statement, as the FCA has lifted the card freeze, customers will be able to access the money within the next 24 hours. As explained by Payoneer, this delay is because the company is working with Wirecard and MasterCard to lift some technical restrictions. According to Payoneer:

  • Customers will be able to withdraw the funds or spend them online and in-store. “The FCA has assured us that no further problems are expected,” the company says.
  • The company promises that from July 6, customers will once again be able to withdraw their funds to their local bank accounts, as well as use the Make a Payment and Manage Currencies services. Until that date, Payoneer will waive ATM withdrawal fees.
  • All future payments will continue to be received to Payoneer’s currency balance and not to the card. Even considering the FCA’s statement that there will be no problems with Wirecard cards, Payoneer will soon offer customers a new bank card issuer.