Wirecard: what went wrong and what BaaS need to do about regulations

Wirecard has been one of the biggest accounting scandals in German history and certainly in Europe, so what went wrong? Here is my quick guide and some alternatives.

In 2015, the Financial Times began to publish a series of articles called “House of Wirecards”, investigating inconsistencies in the Wirecard’s accounts. The FT suggested there was a whole of €250m in the group’s accounts, Wirecard responded with letters from a UK law firm denying allegations.

That was just the beginning of a stream of allegations and Wirecard’s denial of wrongdoings.

In 2016, anonymous short sellers published a dossier of allegations related to money laundering, which Wirecard denies and German financial regulator - BaFin - started to investigate other allegations of market manipulation. But that didn’t hit Wirecard’s price shares.

Wirecard shares hit a peak price in August 2018, valuing the group at €24bn. At the time Wirecard group had 5,000 employees and processed payments for around 250,000 merchants, prepaid cards and provided contactless technology for smartphone payments.

Fast forward to June 2020 and Wirecard is supposed to publish audited results of 2019 - that’s when things started to come to light about Wirecard’s accounting. To everyone’s dismay, he group had €1.9bn missing from balances, leaving the fintech sector in turmoil.

How could this happen to a company that had been around 20 years, constantly expanding? The first concrete allegation came about last October when the Financial Times reported that Wirecard staff would be conspiring to fraudulently inflate sales and profits at Wirecard subsidiaries in Dubai and Dublin and also misleading EY, the group’s auditor for almost a decade.

So, EY went to finally check Wiriecards subsidiaries in Singapore, Philippines and Dubai, and surprisingly (for EY),  none of these banks had any dealings with Wirecard. In fact, they never had even dealt with Wirecard’s group. And that’s how the missing €1.9bn was discovered.

The group consisted of the holding company,  Wirecard AG, that went bust but they had many subsidiaries like Wirecard Solutions in the UK, Wirecard Bank in Germany, Al Alaam in UAE, just to name a few.

How come all this could get passed BaFin? Well, BaFin claimed that they only regulated Wirecard Bank, the German subsidiary, not Wirecard AG - the holding company.  Many experts found it strange that BaFin said the Wirebank is fine but didn’t check the balance sheet of the holding company. Also, nobody believed the FT and no-one looked at EY and their procedure for years. 

Now, those who have been hit hard by Wirecard AG going bust were the many startups that used them as their payment system. 

Only in the UK, 70 fintechs that used Wirecard Card Solutions (WCS) got their operations suspended and hundreds of thousands customer accounts were frozen by FCA (Financial Conduct Authority), with well known fintechs - Curve, Pockit, Anna Money and Soldo, being affected. 

The UK fintech community didn’t see FCA’s decision coming as many fintechs relied on Wirecard solely.  In a recent interview, Nigel Verdon, founder of open banking platform Railsbank, said: “I think the UK will be hit more than Germany”.  

As of 30th June, the FCA’s restrictions on Wirecard clients were lifted but It might take weeks, if not months, for the UK fintechs to recover. For instance, Curve has been working hard to migrate their services away from Wirecard and return to business.

Some fintech experts said that the current model of “Banking-as-Service could implode” because of Wirecard. I’m not sure if I completely agree with this statement because the problem isn’t BaaS per se but regulations around it.

Like Chris Skinner said in a recent post:  “More granular regulation would reflect the world of BaaS. Regulations would work at process levels rather than at entity levels, and accountability would be at the process level not at the entity level.”

In your opinion, what kind of new regulations should be implemented?

Leave your suggestions in the comments section!

Alternatives to Wirecard

Here is my round up of alternatives to Wirecard:


Railsbank is a global open banking and regtech platform based in London. Railsbank was the pioneer and innovator in the global Banking as a Platform (BaaP) sector, enabling banks, businesses and brands to define the future of consumer and SME finance.  Currently, Railsbank is live and enabling customers in the UK, Europe, SE Asia and the US. It is the only global BaaP player.


Founded in Paris, Treezor owns a European License and is one of the approved suppliers for MasterCard Prepaid.

Treezor positions itself as a one-stop shop solution, is an electronic money institution with payment services accredited by the French Prudential Supervision and Resolution Authority (ACPR). As an e-money issuer and a payment institution, Treezor is a white label solution dedicated for prepaid cards, e-wallet, marketplaces, crowdfunding and collaborative consumption platforms.


solarisBank is the first Banking-as-a-Service platform with a full banking license that enables companies to offer their own financial products. Through APIs, partners gain access to solarisBank’s modular services including payments and e-money, lending, digital banking as well as services provided by integrated third party providers. The company is able to passport the license to other EEA countries in order to serve business partners in nearly any European country.


Bankable provides Banking as a Service solution. Their core virtual account management platform is available in white-label or via APIs enabling anyone to deploy payment solutions – including virtual account services, e-ledgers, virtual & plastic card programmes, and e-wallet & light banking solutions.

Their key competitive advantage lies in their technology, where their virtual account management platform is core to the broader payment services that they enable. 


Contis is an FCA regulated Electronic Money Institution and the principal member of Visa, providing end-to-end banking and payments solutions, including BIN sponsorship, card issuing and payment processing.

Contis also offers its own alternative banking and payments products direct to customers.


PPS is a Mastercard and Visa Principal Member and an FCA regulated Electronic Money Institution, offering a range of services including processing, UK and SEPA banking solutions, BIN sponsorship, eWallet provision, compliance and fraud services, supply chain management, customer services and end-to-end program design and management. It also offers innovative programmes across multiple media and form factors, including physical, virtual and NFC, PPS process from a global in-house processing platform.

Viva Wallet

Viva Wallet is a European Fintech disruptor on a mission to change how businesses pay and get paid. They  are the first European payment services provider entirely cloud-based, over Microsoft Azure. Viva Wallet is a Principal Member of Visa and MasterCard for acquiring and issuing services with direct connectivity to the Card Schemes providing processing services through our own platform.


Rapyd does for fintech what the cloud did for IT - providing “Fintech-as-Service”. Their Global Payments Network connects the company to all the ways the world likes to pay and the infrastructure to create each client’s own fintech solutions, like ewallets, cards and financial services. 


Marqeta brings speed and efficiency to card issuing and payment processing with the world's first open API platform. Their platform was built from the ground up to power an innovative payment experience for many of the apps and services you enjoy daily. Today, Marqeta has 350+ employees and operates globally in the US, UK, EU, Canada and soon APAC.

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