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Review on FCA’s Shutdown of Wirecard Card Solutions Published by EPA

The Emerging Payments Association (EPA), which celebrates collaboration and innovation across the emerging payments industry, has today launched a review paper, ‘Avoiding a payments lockdown’, to present to the Financial Conduct Authority (FCA) and the Treasury following the shutdown of Wirecard Card Solutions Limited.

The paper seeks to identify the current vulnerabilities of the business models that underpin the payments industry, highlight how the direct implications of the FCA’s intervention left consumers vulnerable, and aims to further discussion with the FCA to consider such regulatory processes in the future.

The EPA’s Project Regulator spoke with representatives from major banks, e-money issuers, processors, former regulators and other stakeholders across the industry to consider how institutions were impacted and how the industry can help regulators tailor their actions to the current business models and practical realities of the industry as it continuously evolves.

On 24th June 2020, the FCA halted the operations of Wirecard Card Solutions in an attempt to protect customer deposits and to prevent the company transferring any assets to its parent company, Wirecard AG. The scandal, spotlighted by investigations carried out by the Financial Times, led to the termination and arrest of Wirecard CEO Markus Braun, who is now suspected of committing $3.7 billion in fraud.

The EPA recognised the FCA’s need to act swiftly to safeguard customer funds. However, the decision led to a number of customer accounts being frozen and inaccessible for partner companies such as Curve and Pockit which together hold over 1.8m accounts. This caused huge reputational damage to the UK’s fintech scene, with millions of customers unable to receive wages and essential benefit payments, or even pay direct debits. Importantly, it has highlighted fault lines in the payments ecosystem when a key industry player faces fraudulent behaviour.

The paper, presented in eight sections, provides a reference guide from the point of view of the payments industry to the complex business models which underpin today’s e-money and Bank Identification Number (BIN) sponsorship industry. A collection of insights from the eight authors also analyses the effects and causes of the shutdown, including:

  • How firms and regulators can avoid getting into a similar situation
  • Alternative means of dealing with similar situations as they arise
  • The impact of regulatory intervention on different groups of customers
  • Communication priorities and strategy
  • Repatriation of funds
  • Concerns around safeguarding

Tony Craddock, Director General of the Emerging Payments Association, commented: “There’s a problem and it needs resolving. The payments community has rallied round to help ensure that the regulator does not throw out the Fintech baby with the bathwater.”

The Emerging Payments Association (EPA), established in 2008, sets out to make payments work for everyone. It achieves this by delivering a comprehensive programme of activities for members with guidance from an independent Advisory Board of 15 senior executives that addresses the main problems facing the industry. These activities include a programme of digital and face-to-face events including an annual conference and awards dinner, numerous briefings and webinars, and networking and training activities. It also produces research papers and reports to shed light on the big issues of the day. 

It has over 130 members from across the payments value chain including payments schemes, banks and issuers, merchant acquirers, PSPs, retailers, and more. These companies have come together to join our community, collaborate, and speak with a unified voice. This latest response was delivered as an output from the EPA in support of a group of syndicates including Mastercard, Refinitiv, Token and Chargebacks911.

Chris Hill, Commercial Technology Partner and EPA Project Regulator member, added: “The sudden shutdown of Wirecard came as something of a shock to many in the payments industry, and their customers. Whilst that particular case is very unusual there are lessons to be learned from it, and we hope that this paper will help the industry and the regulator to work together to lessen the negative effects of any similar situation in future”

In a recent Open Letter to the FCA, the EPA supported the FCA’s concerns in trying to protect customer funds but urged the FCA to unfreeze Wirecard Cards Services accounts to prevent further significant and lasting damage to the industry. The EPA cited a potential crisis in confidence amongst consumers and clients of emerging payments companies, as well as the UK’s leadership on the world stage of financial technology.”


  • Gina is a fintech journalist (BA, MA) who works across broadcast and print. She has written for most national newspapers and started her career in BBC local radio.

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