Wirecard Failure Shows That Merchants Need to Future-Proof

German payment processor Wirecard’s recent insolvency filing has shone a spotlight on the industry and highlighted the need for greater oversight. The high-flying fintech firm ran into trouble after auditors found a €1.9 billion black hole in its accounts, causing the company’s share price to plummet from €104.50 per share to just €17.16.

As an acquiring bank responsible for executing payments for clients in a host of sectors, Wirecard almost seemed too big to fail. And yet the house of cards tumbled rather quickly when the black hole, which auditors EY are calling “an elaborate and sophisticated fraud,” was uncovered. Incidentally, EY haven’t covered themselves in glory either: the auditor failed for more than three years to request crucial account info from a Singapore bank where Wirecard alleged it had €1 billion in cash. 

When Payment Providers Fail: A Cautionary Tale

Needless to say, the fallout has been devastating, with millions of customers’ accounts and bank cards frozen, leaving them unable to withdraw cash, buy essentials or pay bills. And it could scarcely come at a worse time given the bleak economic picture and widespread job losses.

When a trusted payment service provider (PSP) tanks, the businesses that depend on it lose revenue streams and shed customers, while having to source a replacement and begin the onerous process of rebuilding trust. Merchants might also lose access to their clients’ payment data, stretching back years. 

If Wirecard’s failure has taught e-commerce operators anything, it’s that reliance on a single centralised PSP is not just bad for business but potentially disastrous. Doubtless there are many banking apps and payment platforms licking their wounds and thinking the same thing right now. Companies such as Pockit, Curve, Wirex, FairFX, CardOneMoney, Payoneer, Anna Money and TenX have been blindsided by the events of recent weeks, scrambling to find a Plan B. Lessons must be learned.

Eliminating a Single Point of Failure for Merchants

Sad as it is, the Wirecard saga reaffirms Infinity Pay’s belief in multi-acquiring for our merchants. By diversifying in this way, and employing market-leading technology, we enable merchants to tap into the rich resources that our payment gateway is connected to. As a result, we eliminate the single point of failure that the aforementioned companies have found themselves rueing, reducing exposure and reliance on one provider.

An ability to quickly adapt to changing circumstances is essential in these uncertain times, and the best payment solution for businesses is surely one that comprises multiple PSPs, features such as cascading, smart routing, customer data vaults and the flexibility of introducing alternative payment methods in response to a crisis.

At Infinity Pay, we help merchants in various sectors accept fast, secure online payments, connecting them with proven PSPs and acquirers throughout the UK and Europe. By integrating our trusted payment solutions, you’ll future-proof your business against the next Wirecard-esque failure and safeguard precious customer funds and customer data. It’s the least your clients should expect.