Prepaid Wirecard debit cards will work again after FCA lifts restrictions – This is Money
Hundreds of thousands of customers of mobile banking apps and prepaid currency cards will be able to access their money again after regulators unfroze restrictions on the British arm of German payments processor Wirecard.
The Financial Conduct Authority previously revoked the licence of Wirecard’s UK arm last Friday, after Wirecard had filed for insolvency following the discovery that £1.7billion was missing from its accounts.
The move had immediate consequences for customers of banking apps like Anna, Dozens, FairFX, Pockit and U, who have had no access to their money over the last few days.
German payment provider Wirecard’s UK subsidiary had its permissions revoked by the Financial Conduct Authority last Friday. This means millions of prepaid cards are unusable
Since Friday morning customers have been unable to use their cards, issued by Wirecard, send or receive money out of their accounts and have seen direct debits frozen.
‘The FCA ordered the firm’s UK arm to stop any “regulated activities”, which includes not paying out or reducing any money it holds’, Jon Ostler, the chief executive of comparison site Finder said.
‘As Wirecard is the payment processor for a number of finance brands in the UK, like Pockit, Curve, FairFX and Anna Money, this resulted in some customers’ payment accounts and prepaid cards effectively being frozen.’
The FCA’s actions, which it said were designed to protect customers money, coincided with the last Friday of June, payday for millions, while some customers of the likes of Pockit were unable to access benefits paid into their account.
Many of the apps, like Pockit and U, are aimed at so-called ‘unbanked’ people who did not have access to a bank account with a mainstream high street bank.
But the FCA said in a statement late last night that it was lifting the restrictions it imposed on Wirecard’s UK in the early hours of Tuesday morning.
‘We are now in a position to allow Wirecard to resume operational activity’, it said. ‘This means customers will now, or very shortly, be able to use their cards as usual.’
The FCA added: ‘If any customers are still experiencing difficulties in using their card, they should contact their card provider directly and should do so using the contact details on their website.’
Reading the fine print: Pockit is one app-based card provider which has been caught up in the freezing of Wirecard’s activities in the UK. It offers services similar to a current account to more than 500,000 people who can’t get accounts with mainstream banks
Can customers access their money now?
Many of the apps and card providers which used Wirecard to issue cards or process payments have also published updates late last night or early this morning, although they have warned customers things might not return to normal straightaway.
Pockit, which has around half a million customers, said it would email users when their accounts were active and cards ready to use again.
It wrote in a tweet this morning that customers were now able to transfer money in and out of their accounts, and would hopefully be able to use their cards again and deposit cash ‘over the next hour’.
The city regulator said late last night it was lifting restrictions on Wirecard, meaning customers of apps it provides payment services for can access their money
Fellow banking app provider U, owned by doorstep lender Morses Club, said in a statement on its website at 8am this morning that customers could transfer money out of their accounts and receive BACS payments, but could not currently use their cards.
Anna, a business banking app, said it expected all its functions to work properly either later this morning or early this afternoon, but card payments currently do not work.
Pockit tweeted this morning that it was bringing back services, but customers would not be able to use their cards straightaway
It also urged those who could afford not to make payments not to do so, to avoid overloading its systems.
The app previously said it would waive June’s fees for customers as a result of the inconvenience
And FairFX, one of around 18 prepaid currency travel money cards which use Wirecard, said this morning its services were resuming but may take a few hours for all cards to work again.
Prepaid foreign currency card provider FairFX said this morning its cards would soon begin to work again after the FCA lifted the restrictions on Wirecard
Curve, an app with 1.3million users which allows users to load multiple cards onto one piece of plastic, brought its payment processing in-house over the weekend and so customers were able to use their cards again yesterday.
Many of the apps sought to reassure customers over the weekend by telling them their money was safe, as under Wirecard’s e-money licence it must hold money in a separate ring-fenced bank account, as it is not a bank itself.
What about FSCS protection?
Normally, money in a bank or savings account is protected by the Financial Services Compensation Scheme up to £85,000 per bank.
However, this does not apply in the case of apps which use Wirecard, because they are not banks, even if they do offer many similar services.
Instead, under a different licence called an e-money licence, customers’ money must be held in a ring-fenced separate account with an actual bank.
This means customers’ money cannot be used to pay off the app or card providing company’s debts if it becomes insolvent.
This is why the FCA and many of the apps which rely on Wirecard to issue their prepaid debit cards are keen to stress money appears to be safe.
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