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The fallout from the Wirecard AG financial scandal has hit the U.S. market as the processor’s North American unit announced late Monday it is seeking a buyer. Wirecard North America Inc., based in Conshohocken, Pa., said it has engaged an unnamed investment bank to assist in the transaction.
In the meantime, competing providers see a chance to attract Wirecard clients put off by the company’s difficulties.
In its announcement, the U.S. Wirecard unit stressed its financial strength and maintained it is a “separate legal entity” from its parent and “substantially autonomous” in its operation. “Wirecard North America continues to operate without any disruption to clients and cardholders,” said Seth Brennan, managing director of Wirecard North America, in a statement. “The strong, independent cash flow and financial position of Wirecard North America allow us to operate the business on a completely standalone basis.”
A major payments processor in Europe, Munich-based Wirecard AG filed for insolvency last week after it was discovered that $2.1 billion in cash was missing from its balance sheet and likely never existed. The discovery forced chief executive Markus Braun to resign and led to the firing of chief operating officer Jan Marsalek.
Wirecard acquired the Pennsylvania unit for an undisclosed price in June 2016 from Citigroup Inc. The operation up to then had been known as Citi Prepaid Card Services, which issued and managed cards primarily for corporate uses such as incentives, disbursement, and compensation. It still concentrates on large-enterprise clients with an added focus on digital payouts to mobile wallets as well as virtual and physical cards. The deal allowed Wirecard “to acquire a bona fide U.S. beachhead,” says Eric Grover, principal at Minden, Nev.-based consultancy Intrepid Ventures.
In yet another twist on Wirecard’s travails, payments companies are sensing an opportunity to pick up business. On Tuesday, i2c Inc. announced what it calls an “easy migration package” to enable Wirecard clients to move to the 19-year-old, Redwood City, Calif.-based provider of payments and open-banking technology. The program is designed to help migrating clients re-establish prepaid, debit, and credit card programs, i2c said.
“We are accustomed to transitioning client accounts without incident in record time and have a global footprint with banks and network providers in [more than] 200 countries around the world,” said Kevin Fox, executive vice president and head of sales for the Americas at i2c.
