Effect of Wirecard on the Trans-boundary Payment Industry

In the world of global finance, the recent collapse of Wirecard, a European fintech giant, has sent shockwaves through the industry. The company, once worth over $20bn and listed in Germany's prestigious DAX30 market, has now admitted to fraudulent activities and missed a deadline to file accounts.

The timing of Wirecard's collapse is coincidental with the Covid-19 pandemic, adding to the financial turmoil that many businesses are experiencing. The allegations for fraud in Wirecard are now a criminal matter, with the Financial Times reporting on these issues for years, facing criticism and lawsuits.

The collapse of Wirecard may lead to a re-evaluation of trust in fintechs. It has been argued that Wirecard was more like the bank behind the fintechs rather than a fintech itself, processing payments for companies like Payoneer, Curve, and Revolut.

Revolut, another European fintech, has been affected by the Wirecard crisis. In response to Wirecard's bankruptcy and temporary freeze of UK assets, Revolut had to turn to banks for comforting its customers. Daniel Webber, the Founder and CEO of FXC Intelligence and presumably a representative of Revolut, made a statement on LinkedIn regarding the situation with Wirecard.

Despite the challenges, it is important to note that many regulators, such as the UK's FCA and Singapore's MAS, have been supportive of fintechs, helping them grow. The recent fundraising by Revolut, which raised over $500m and reached a valuation of $5.5bn, is a testament to the faith investors have in the sector.

However, the Wirecard collapse raises questions about the need for more oversight and potential limitations on freedoms for fintechs. As the industry continues to evolve, it is crucial that regulations are in place to ensure the stability and trustworthiness of these companies.

In conclusion, the collapse of Wirecard serves as a reminder of the importance of transparency and accountability in the fintech sector. While the industry has shown resilience in the face of adversity, it is essential to learn from this event and implement changes to prevent similar incidents from occurring in the future.