Payoneer Prepaid Debit Cards Freeze and the Wirecard Fintech Scandal

Attention: Due to the ongoing investigation and sudden changes, the information here can change at any moment, and we’ll update it as soon as we get new information. 

Payoneer Prepaid Debit cards freeze – what happened?

If you are working as a freelancer for companies that pay using Payoneer, and you are using the Payoneer Debit Mastercard, you might have noticed last week that your card no longer works…nowhere. No, it’s not just you, it is everyone that has a Payoneer Prepaid Mastercard. 

The problem started to show itself on June 25th, 2020 as people were noticing their cards were being denied at ATMs, markets, and all other merchants. At first, Payoneer was stating online that this only affected European Payoneer receiving accounts. However, that is not true. ALL Payoneer Prepaid Debit Mastercards have been temporarily frozen. 

The important thing you need to understand is that it is not Payoneer who has frozen the Prepaid Debit Cards, but the FCA who we will talk about later.  

This whole calamity was due to a scandal that involved the German payments group ‘Wirecard’ when it was discovered that around $2.2 billion dollars suddenly went missing from its balance sheet. That is HUGE news and it really has everyone with a Payoneer balance on edge. 

The Wirecard scandal intensified when the CEO of the company, Markus Braun left the company the following Friday. An arrest warrant was then issued by the Munich police for Braun, the former paper billionaire who is now in trouble for market manipulation and making false statements with data that showed Wirecard was more financially stable than it really was. 

Business for Wirecard at the moment doesn’t look good, and it will be a miracle if the payments group will survive this scandal as shares plunged by as much as 80%. And for the record, Braun did turn himself in to Munich authorities after the arrest warrant was issued. It is not known if Braun was released by paying the $5.6 million dollar bail. Wirecard has filed for insolvency which means that legal action will be taken against the company, and any assets it has will be liquidated to pay off the outstanding debts. However, Wirecard doesn’t have easy access to $2.2 billion dollars. 

The Financial Conduct Authority has now shut down Wirecard UK which has affected more than just Payoneer and many people are unable to use any cards that are tied to Wirecard Card Solutions. 

Now you know what has happened and why, you probably just want to know what has happened to your money and when you are going to have access to it. Everyone is concerned and afraid of what is going to happen to their funds. However, you should understand that Wirecard Card Services does not physically keep your money. These funds are actually kept in different banks, and so funds are kept safe. 

The Payoneer Prepaid Mastercard is issued by Wirecard only, and they do not have access to your physical funds. 

There have been some reports that people have checked their accounts and have found money missing, and in one case, a freelancer reported that over $15,000 was missing from his account, and that he could only see the cards’ $10,000 limits. The reason we bring this up is that Payoneer was stating that if you had money over the cards actual limit, you could withdraw this. Regardless, some freelancers have tried to withdraw their funds to their connected bank accounts, but these transfers have been denied. 

This brings up an important point! If you have over $10,000 USD in your Payoneer account, do not try to withdraw this money to your bank account! Some people have reported they have tried to do this and they received an error message that the transfer didn’t happen and the funds disappeared. It is likely that these funds are safe, but it is recommended to just leave your Payoneer account alone until this mess is cleaned up. 

Is money safe on Payoneer Prepaid Debit cards?

And chances are, Payoneer will get this whole mess taken care of. We have been keeping a close eye on developments and Payoneer is now in the process of replacing Wirecard Card Services and is said to be working with another bank right now in order to get accounts unfrozen. Payoneer is trying to address the problem directly, and as we stated before, your funds are securely held in segregated bank accounts and you should not worry. 

Payoneer actually works with a lot of different banks and financial service providers worldwide. What that means for you is good news. And for the record, Payoneer is fully responsible for ensuring that your money is safe and protected from the moment you receive it. Once again to be clear, any funds that you receive on behalf of the Wirecard Bank AG are held on your behalf in segregated Payoneer accounts at other banks, not Wirecard Bank AG. 

So take a sigh of relief, because the funds held by Payoneer in these segregated banks will remain secure and will not be adversely affected by the big Wirecard. After the dust settles, it is likely that Wirecard will pay dearly for this. 

We understand that you are probably without money at this time, and it has to be frustrating when you are a freelancer to be in a situation such as this. 

And even though it says on the Payoneer blog that Wirecard Bank AG continues to operate normally apart from Wirecard Card Services, and that you can withdraw your funds to your bank account, we would advise against it at this time due to people saying that they are now missing funds after trying this. 

There are a lot of questions out there about what you can and can’t do with your Payoneer account. There is some conflicting information on the Payoneer website which claims that people are still able to receive payments, however, this is not true as another section of their blog says that until the FCA completes their investigation, anyone with a Prepaid card issued by Wirecard will not be able to use their card, AND will be unable to receive new payments, even though a Payoneer has previously stated otherwise. 

If you are strapped for cash, we would recommend that you try to get a client to pay you in a different way, such as PayPal, at least until this mess is over. 

We know that not everyone has the luxury of being able to just get a PayPal account, and in some countries it is not possible to get PayPal at all. However, if you can get a PayPal account temporarily until this is all over, we say go for it. Transferring money from PayPal directly to your home bank account is almost always free, unless of course your bank charges you a transfer fee. And PayPal is quick and easy to set up. At this point we feel it’s the best solution for freelancers who have no access to their funds with Payoneer. 

We do have some good news that just came hours ago from this writing. Payoneer is working closely with the Financial Conduct Authority and Wirecard Solutions and they claim to have seen good progress in meeting conditions for the freeze to be lifted. Once again, it is not Payoneer that has frozen any funds, but the FCA. 

The interesting thing is that the freeze might only be temporary and Payoneer is trying to get it lifted as soon as possible so that the card can operate as before. However, there could even be some problems with this and if something isn’t worked out soon, Payoneer would have to go with another payments bank, an option they are looking at now, and the card you were issued would no longer be valid. This would mean that, eventually, new cards would have to be issued by Payoneer in a way they reached everyone as soon as possible IF the Wirecard freeze is not lifted. And yes, the FCA knows the urgency of the situation which is leaving hundreds of thousands of people without access to their funds. 

As far as pending payments, until the card is either unfrozen or replaced by another card, these pending payments will go to your Payoneer account and go into your virtual currency balance, where they say it can be withdrawn to your local bank account. 

Payoneer account funds and bank withdrawal

Payoneer is now saying that any future payments that you receive from marketplaces, platforms, and clients will not be affected by the freeze, and that you can now add a local bank account to withdraw any future incoming payments. This is great news for those who can simply transfer their funds to a bank account, but not such great news for those who use Payoneer exclusively with the Payoneer Prepaid Debit Card. 

The one thing you should not do is panic. Keep in mind that the FCA put this freeze in place to ensure the protection of all cardholders money. 

Scott Galit, the CEO of Payoneer has said that the company fully understands the hardships that this freeze has created for many people, and that they have enabled alternative solutions for payment withdrawal and they are working on any technical issues that have come up, such as people trying to withdraw funds and having those funds coming up missing. 

You could say that this is Payoneers’ fault, but it couldn’t be farther from the truth. This company seems to be working as hard as it can on your behalf. We hope that this situation gets handled quickly, and we understand you might be frustrated. The best advice we can give at this moment is to hold on and see what happens. It could be that the freeze might be lifted in a week or so, or it could take longer. 

We’d like to hear from you if you have been affected by this freeze, or if you have had any unusual things happen to your Payoneer account. Leave us a message in the comments. 

Update as of 30.06.2020: Wirecard to resume issuing e-money and providing payment services

On 29 June 2020, the FCA provided written consent to allow Wirecard to resume issuing e-money and providing payment services. The restriction on activities will lift at 00.01 on 30 June 2020. It means that Payoneer Prepaid Debit cards work as normal.

Sources:

https://www.fca.org.uk/news/news-stories/requirements-imposed-wirecard-authorisation

https://www.euronews.com/2020/06/25/wirecard-goes-bust-amid-german-accounting-scandal

https://markets.businessinsider.com/news/stocks/wirecard-scandal-numbers-financial-forensic-expert-breakdown-2020-6-1029332810

https://pk.mashable.com/tech/3873/all-payoneer-prepaid-mastercardr-cards-frozen-as-wirecard-ag-files-for-insolvency-amid-ongoing-accou

https://blog.payoneer.com/home-page/wirecard-in-the-news-update-regarding-wirecard-and-your-prepaid-card/

Advertisements

Leave a Reply