Just as holiday makers started to rely on prepaid travel money cards for their transactions abroad, the crisis at Wirecard has caused confusion and frustration.
Using travel cards seem like a sensible, modern alternative to traditional traveller’s checks and envelopes. They also help you avoid the excessive fees of using your regular debit card abroad.
It’s difficult to deny that travel cards are a particularly tempting banking service giving you less to worry about when you leave the country. However, since Friday, June 26, using certain travel cards has become impossible
What is Wirecard?
Wirecard AG is a German financial technology company which went into administration following an array of bad news over the last two weeks.
The company admitted to losing €1.9 billion (£1.7 billion), and a lengthy search for the money hit a dead end in the Philippines. Auditors Ernst and Young later suggested the money never existed and accused Wirecard of “intricate fraud” spanning over three years.
The company’s Chief Executive, Markus Braun, resigned and was later arrested in Munich on fraud charges. The firm had no option but to go into insolvency.
As matters got worse in Germany, the Financial Conduct Authority (FCA) decided to freeze the licence of Wirecard’s UK subsidiary, Wirecard Card Solutions. They load money onto several company’s prepaid cards, including several travel money card companies.
The FCA freeze means any account or card managed by Wirecard in the UK is still blocked from it’s owner’s.
Which travel cards have been affected?
Prominent UK companies like Asda, British Airways and Sainsbury’s use Wirecard to load their customer’s holiday spends onto MasterCard cards which they also issue for them.
Once loaded the travel cards behave like any normal bank debit card and give you all the perks of one whilst you’re abroad.
Because the FCA have frozen Wirecard’s services until further notice, it’s partner companies’ travel cards are also frozen. This means customers cannot take their own money out of their accounts or load any new funds.
You’ll find notices on their websites to say that all services are currently unavailable.
To find out if your travel card companies is affected look out for the small print at the bottom of their websites that says: “the card and account is issued by Wirecard Card Solutions Ltd (“WDCS”)”. If it does you should get in touch to see if they have been affected by FCA measures.
As well as travel cards, other UK prepaid card companies like Pockit, CardOneMoney and U Account have also experienced outages.
What does the freeze mean for your money?
FCA’s freeze will stop money being transferred in and out of your account until they have finished investigating. This renders your card unusable at the moment.
If you have loaded any money onto a card issued by Wirecard before Friday, June 26 you will be unable to take it back out again. Any attempts to load funds on since will bounce back.
In the meantime, if you’re planning on traveling as soon as lockdown is eased you need to load more funds onto another card.
Any funds left over from a previous holiday will be blocked from leaving the account, you will not be able to access this until the FCA has finished.
If you’re already abroad it could be disastrous, especially if you relied on a travel card to pay for essentials.
Unfortunately, the FCA’s actions suggest that your money might not be safe. The authority required Wirecard to keep it’s customer’s money in a third-party bank account so, if they went bust, your money would be protected from creditors. The freeze implies that Wirecard might keep the money in their pooled accounts putting your funds at risk.
Before getting the money back, if you need a fast alternative you will need to find a firm that does not use Wirecard Card Solutions. The Post Office travel card, for example, hasn’t been affected.
If you’re already abroad you may have to use your regular bank card and face the fees applied at ATMs and at point of sale. If you haven’t brought alternative methods of payment you need to contact both your travel card company and your bank to see if they can help provide alternatives.
Check your inbox for messages from your travel card providers and their social media fees for updates. You can also check the FCA website for updates on measures imposed on Wirecard.