Singapore Wirecard merchants scramble to jump ship

Singapore

SINGAPORE merchants that use Wirecard to process payments are quickly switching to the beleaguered fintech's competitors, spooked by the downfall of the Wirecard parent that has collapsed into insolvency.

Wirecard's market share here is likely sizeable, though the exact breakdown is not available. Its portfolio was bought from Citigroup a few years ago, with Citi then a major player alongside the three local banks in processing payments for merchants.

Several of Wirecard's competitors told BT on the condition of anonymity that businesses using Wirecard have been making enquiries and jumping ship in the past week. They range from micro-SMEs to large corporations. While there have not been actual disruptions yet, SMEs fear not getting paid on time, while the bigger players are concerned about reputational risk.

Businesses in Singapore told The Business Times that their move to use another payment processor is a pre-emptive move amid a loss of confidence, even though most have not faced problems with the settlement of funds or payment terminals.

Jamie Lim, CEO of Scanteak Singapore, said that the furniture retailer is "shopping around" for back-ups even though settlement funds by Wirecard are still made promptly.

"Many, many retailers" are doing the same thing, said Ms Lim, whose Scanteak has 11 outlets here.

Paradise Group's CEO Eldwin Chua said that the restaurant chain with about 45 outlets here is in the midst of switching from Wirecard just to "play it safe". This was decided about two weeks ago, shortly after news broke that Wirecard's parent has admitted to a missing 1.9 billion euros (S$3 billion) in cash.

The Monetary Authority of Singapore (MAS) said on Tuesday that credit card payments at merchants using Wirecard's services, as well as usage of pre-paid cards issued by Wirecard, will be affected if it ceases operations here. It said Wirecard should "promptly notify customers in advance of any disruption to their services".

Wirecard's entities in Singapore have complied with its directions to hold customers' funds in segregated accounts with banks in the Republic, MAS added.

Other payment processing options out there in the market are the banks, including Singapore's Big Three, as well as others like Global Payments, First Data and Stripe.

BT understands that smaller fintech players typically charge lower rates. In some cases, some - including Wirecard - undercut rates to the point of likely being loss-making. Established players such as banks typically also add services such as publicity tie-ups.

When queried by BT, DBS did not comment on the number of its merchants affected. It only said that it works with other payment gateway providers, and will be able to help transition merchants onto these providers if necessary.

As for UOB, only a handful of its merchants use payment gateways by Wirecard, said its spokesperson. Almost all use Mastercard and Visa. OCBC said that it uses its own payment gateway and that of Mastercard and Visa to process card payments, not Wirecard.

For some businesses, it is the lack of communication by Wirecard that led to their decision to switch.

Park Tan of Pagi Sore Indonesian Restaurant felt that Wirecard "has not been actively contacting merchants to clarify or reassure" them, with no official statement to its merchants here to date. As such, it "didn't make sense to stick with them", he said.

Mr Tan said he did not want to be caught off-guard, even though payments have still come on time.

"While MAS is still keeping tabs on them (Wirecard), it makes better sense to switch before it gets worse," he noted. "Business has been rough - (the) last thing we need is further disruption to the little income we are making at this point." He sees MAS's move as "buying time" before Wirecard - which he likens to a "sinking ship" - hits the bottom.

There was also one business that had problems getting funds back from Wirecard. Terry Tan, owner of Guitar Gallery, said that there were two instances when relatively larger sums of money - about S$13,000 and S$15,000 - were held back for a week earlier this year. He did finally receive the funds after several complaints, but he usually gets the money on the third working day after a sale is made.

Mr Tan also said that when he warned them of further action after the continued delay of funds, Wirecard stopped responding. He said that there were no such delays when the business was under Citi.

Back in 2017, Wirecard said that it would acquire the customer portfolio of Citigroup's merchant acquiring business in 11 markets in this region, including Singapore. At that point, its portfolio of clients translated to more than 20,000 merchants in the region.

MAS had said on Tuesday that it is "closely monitoring the operations of Wirecard". Wirecard had told Singapore regulators that it is "assessing" if it can continue providing services here.

Globally, Visa and Mastercard are reportedly looking to end Wirecard's access for payments processing.

When contacted here, Mastercard would only say that its priority is "ensuring people are able to continue to use their cards". Similarly, a Visa spokesperson said that its priority is "maintaining the integrity of the Visa payment systems and protecting the interests of consumers, merchants and our clients".

The Singapore police has been conducting a criminal probe into Wirecard's Singapore operations since February 2019. Investigations are ongoing. Wirecard did not respond to BT queries by press time.

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