Bad news for freelancers and companies using Payoneer Prepaid Mastercard to receive and transfer funds. Payoneer Prepaid Mastercard has stopped working as the card provider Wilcard AG has filed for insolvency.
Let’s look into why this has happened and what are the alternatives now?
Hundreds of Payoneer customers across the globe are unable to deposit, withdraw or transfer funds through their accounts using the Payoneer Prepaid Mastercard.
The card stopped working as Wirecard AG, parent company of Wirecard Card Solutions Limited (WCSL) – the prepaid Mastercard provider for Payoneer, has filed for insolvency in the UK.
The Financial Conduct Authority (FCA) which regulates WCSL, has frozen all prepaid card activity for the time being. According to their website,
On 26 June 2020, the FCA imposed a number of requirements on Wirecard including, that the firm:
- must not dispose of any assets or funds
- must not carry on any regulated activities
- must set out a statement on its website and communicate to customers that it is no longer permitted to conduct any regulated activities.
There are ongoing events in Germany concerning companies closely linked to Wirecard. Wirecard’s parent company, Wirecard AG based in Germany is currently the subject of law enforcement interest and insolvency proceedings. Wirecard AG is not supervised by the FCA.
Why did the FCA take this action now?
The FCA grants permissions to to undertake e-money activities and payment services. in the UK.
Following last week’s news of €1.9 billion missing from the accounts of the German company, Wirecard, the FCA immediately placed requirements on the firm’s UK business so that it should not pay out or reduce any money it holds for its customers except on their instructions. The FCA also took additional measures to require the firm to cease all regulated activities in order to further protect customer money. This means customers can not access money in their prepaid cards.
What does this mean to Payoneer Customers?
Pending further actions from the FCA, Payoneer customers will be unable to withdraw the funds on the card, nor receive new payments onto the card.
Payoneer claims that it holds the funds in excess of maximum balance of the card and FCA’s temporary freeze does not impact these funds.
Any future payments from marketplaces, platforms and clients will not be affected by the freeze. Customers can add bank accounts for withdrawal of future incoming payments.
What are real chance of retrieving frozen funds from Payoneer Prepaid Mastercards?
Almost None! Payoneer has already mentioned this in its legal speak [link]:
22. FUNDS PROTECTION
The Prepaid MasterCard is an electronic money product and although it is a product regulated by the Financial Conduct Authority, it is not covered by the Financial Services Compensation Scheme. No other compensation scheme exists to cover the losses claimed in connection with the Prepaid MasterCard. This means that in the event that Wirecard Card Solutions Ltd becomes insolvent Your funds may become valueless and unusable and as a result You may lose Your money. However, as a responsible e-money issuer, Wirecard Card Solutions Limited ensures that once it has received Your funds they are deposited in a secure account, specifically for the purpose of redeeming transactions made by Your Prepaid Card. In the event that Wirecard Card Solutions Limited becomes insolvent funds that You have loaded which have arrived with and been deposited by Wirecard Card Solutions Limited are protected against the claims made by creditors.
How Payoneer customers are taking this?
Payoneer customers are in shock and anger. Some of the frustration is evident from these tweets:
Bad news from @Payoneer. Payoneer Prepaid Mastercard issued by Wirecard Card Solutions Limited UK has been frozen by FCA. This means the card can't be used to send and receive payments or withdrawal.
Big blow for freelancers using #Payoneer. Should seek alternatives now!
— Kashif Aziz (@kashaziz) June 27, 2020
this is fucking hell
— Alex Kukharenko (@AlexDeardream) June 27, 2020
For 3 years, working day and night, sleeping only 2 hours most times in a whole day due to different time zones. That money was hewn out of my blood, out of a long strenuous sweat.
I had everything in there.
Just been down since yesterday. You guys just killed a man.
— Newman (@innocent_agbo) June 27, 2020
Payoneer alternatives and the way forward:
This incident has yet again proved that cashless and digital financial instruments have high risk involved. One must always have a backup and contingency plan in place.
Here some Payoneer alternatives. I have not personally evaluated them yet.
Update: According to a blog post by Payoneer, the FCA has completed its audit and confirmed that it has lifted the freeze on Wirecard-issued Payoneer Prepaid Mastercard. Which means that Payoneer Prepaid Mastercard is now active once again. Initially it will be available for online transaction and ATM withdrawals while bank withdrawals will be available from July 06.
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