Millions of dollars belonging to Pakistani freelancers stuck indefinitely amid Wirecard fraud
Thousands of Payoneer users in Pakistan are expected to lose
access to money in their prepaid cards with the company owing to the fallout
from a devastating scandal that hit German fintech firm Wirecard AG.
Payoneer is a global payments company that enables millions
of businesses and professionals from more than 200 countries to make seamless
cross-border payments. One of its products is Payoneer Prepaid Mastercard,
which is issued by Wirecard AG’s UK-based subsidiary Wirecard Card Solutions
Limited (WCSL).
On Thursday, Wirecard AG filed for insolvency after it was
revealed that the company was involved in the accounting fraud and reported
that 1.9 billion euros from the company account were missing. Subsequently, the
UK regulator of WCSL, the Financial Conduct Authority (FCA), ordered WCSL to
freeze all prepaid card activity for the time being.
The FCA has communicated that they have taken these measures
with the primary objective of protecting the interests and money of consumers
who use Wirecard services. Pending further actions from the FCA, all payments
services, including Payoneer, that subscribe to Wirecard, their cards will be
blocked temporarily and the users will not be able to withdraw the funds on
these cards, nor receive new payments.
Payoneer CEO Scott Galit stated, “We understand that the
developing situation with Wirecard has created a lot of concern and challenges
for Payoneer Prepaid Mastercard®️ card users. We have been assured by the FCA
that the freeze was put in place to ensure the protection of all cardholders
funds. We have also been given repeated reassurances that all funds are
properly safeguarded. Progress is being made to lift the freeze, and we will
continue to update you as soon as more information is available. This situation
has impacted the customers of many companies, and we believe that it will be
resolved soon.
In the meantime, incoming funds to Payoneer users can be
withdrawn to bank accounts, or held in a Payoneer Account which remains safe
and secure. All funds held in Payoneer are fully liquid and available and held
in global leading banks. Our company is strong and stable, and committed to
safeguarding our customers’ funds in accordance with all relevant global
regulations.
We know that our customers depend on these funds, and that
this freeze has created hardships for many people. We have enabled alternative
solutions for payment withdrawal, and are working to address any technical issues
that have come up, and to help our customers in any way we can.”
Payoneer, in its blog, also assured its users that the funds
stored on individual Payoneer Prepaid Mastercard users were safe and secure.
“Although Wirecard Card Solutions Limited is a subsidiary
within the Wirecard group and shares the same brand, they are an entirely
independent entity with their own board, their own regulatory and capital
requirements and are subject to regulatory oversight and accounting standards
in the UK,” the blog post read.
“As they are independent, your card is not impacted and you
can continue to use it as usual. Nonetheless, we work with other issuers
including our own, and are working on contingency plans to ensure we maintain
continuity and redundancy now and in the future. Even in the unlikely event of
insolvency of Wirecard Card Solutions Limited, funds held on your card remain
secure as they are held in trust in safeguarded accounts at regulated credit
institutions in the UK and the European Economic Area (EEA) and designated as
your funds,” it read.
Payoneer prepaid cards are mostly used by freelancers in
Pakistan to receive payments from offshore clients for the projects they
deliver. Besides freelancers, small companies also use Payoneer’s services for
international payments.
The payment can be retrieved into a prepaid card or an
app-based virtual account. People who use prepaid cards have temporarily lost
access to cash as the cards have been blocked for an indefinite period of time.
While no timeline has been given by Payoneer for resumption of card services,
the company says that users are able to transfer money from their virtual
accounts to local bank accounts for withdrawal.
There is no reliable data on the number of Payoneer card
users in Pakistan. Industry experts however estimate that there are between
50,000 to 100,000 total Payoneer users in the country. Payoneer did not respond
to Profit’s queries about the number of Payoneer card holders in Pakistan.
“In the context of Pakistan, this should be a wakeup call to
have multiple fall back plans and payment options for freelancers and small
companies so that they are not reliant on one or two key providers to minimise
the risk for freelancers,” said senior consultant and former P@SHA secretary
general Shehryar Hyderi.
Freelancers in Pakistan have long been decrying the absence
of secured payment options for international transactions. There had been a
forceful demand from freelancers to bring payment platforms like PayPal to
Pakistan.
On Friday, the Islamabad High Court (IHC) also issued
notices to commerce and information technology sectors for failing to meet the
requirements quoted in the e-commerce policy, which has kept mega-companies
like Paypal and Amazon at bay.
The government had made an effort last year to bring PayPal
into Pakistan. PayPal, however, refused to start operations in Pakistan.
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