Visa and Mastercard are reassessing whether to allow Wirecard to process payments on their networks after its huge accounting scandal, according to a Bloomberg report.
Visa and Mastercard have informed several Wirecard clients that the company’s access to their payment networks may be revoked. Neither credit card firm commented directly on the Bloomberg report, however, both are said to be closely looking at the situation. The loss of two of the giant payment networks in the world would be another blow to Wirecard, which gets revenue by helping companies and businesses process payment from clients.
A Visa spokesperson said in an emailed statement that they are continuing to monitor developments as well as assessing new information as available. They also said that their priority will always be maintaining the Visa payments system integrity and protecting the interest of merchants, consumers, and clients.
Similarly, Mastercard said that it is currently tracking the Wirecard news. They said in a statement that their priority is ensuring people are capable to continue using their cards. Mastercard also said that they will continue to work with all parties, standing by to take any necessary action.
Meanwhile, Wirecard didn’t immediately return comment for these statements. However, they announced that the company and its IT systems are still working without limitations.
The Wirecard Scandals
Wirecard was founded in 1999 and was once considered to be one of Europe’s most promising tech firms. It processes payments for businesses and consumers and sells data analytics services. It has almost 6,000 employees from 26 countries across the world.
Recently, however, Wirecard has been in the spotlight for several scandals over accounting irregularities which have drawn comparison to the American energy giant Enron which filed for bankruptcy in 2001.
Markus Braun, CEO of Wirecard resigned after an auditor found out about $2 billion in cash missing from the firm’s accounts, delaying the publication of its 2019 financial results and firing fraud accusations.
Then, on June 22, the company acknowledged that the missing $2 billion probably never existed after further examination.
Braun was then arrested the following day on suspicion of having inflated the company’s balance sheet and sales via fake transactions to make it more attractive to customers and investors.
The company is now in a major crisis, one that could worsen if the major payment networks— Mastercard and Visa— were to revoke its access. Since the last week of June, the share value of Wirecard plummeted over 96 percent. On June 25, Wirecard filed for insolvency because of over-indebtedness.