Wirecard goes bust: what it means for prepaid card and Curve customers

A scandal at German payment provider Wirecard had worldwide repercussions over the weekend, leaving UK customers of a number of prepaid cards struggling to access their cash.

After Wirecard's payment provider filed for insolvency, UK regulator the Financial Conduct Authority (FCA) ordered Wirecard's UK operation to halt 'all regulated activity', effectively locking millions of prepaid card customers out of their accounts.

Today (30 June) the FCA has lifted restrictions on Wirecard, and cards that work with it - such as Curve, Anna Money and Pockit - are gradually reactivating.

Here, Which? looks at what happened and what it means for your money.

What happened with Wirecard?

Finance firms' behind-the-scenes battles with auditors don't always have a concrete impact on consumers. But this one very much did.

Auditors unveiled accounting irregularities at German firm Wirecard AG that left u20ac1.9bn unaccounted for on its balance sheet. This kick-started a chain of events that saw CEO Markus Braun stand down, Wirecard file for insolvency, and finally the FCA impose restrictions on its UK arm, Wirecard Card Solutions Ltd.

Many UK money cards and apps that don't have banking licenses themselves operate using Wirecard to handle some of their processing. These include:

• Curve - the 'smart' card that lets customers combine multiple credit, debit and prepaid cards into one
• Anna Money - a mobile business account
• Pockit - a prepaid card with 500,000 vulnerable customers, many of whom use it to receive benefit payments
• FairFX - a prepaid foreign currency card
• Dozens - a money app that offers savers a 'guaranteed' 5% interest rate.

The FCA froze Wirecard's UK activity to protect consumers' money, but the move had adverse knock-on effects.

Distressed customers took to social media over the weekend sharing stories of being unable to access funds.

Some had issues receiving benefit payments they sorely needed - a problem confounded by the Department for Work and Pensions' phone lines being closed on Saturday and Sunday. Several struggling customers spoke to the BBC.

Is it all fixed now?

Yesterday, the FCA announced that it would lift some restrictions on Wirecard from 00:01 on 30 June (today).

A statement on the FCA's website says: 'We have been working closely with Wirecard UK and other authorities over the last few days to ensure that the firm was able to meet certain conditions required to lift the restrictions we imposed on it. We are now in a position to allow Wirecard to resume operational activity.

'This means customers will now, or very shortly, be able to use their cards as usual.

'If any customers are still experiencing difficulties in using their card, they should contact their card provider directly and should do so using the contact details on their website.'

More details are promised on the FCA website for those who faced difficulties over the weekend.

Since this announcement, prepaid card providers have said that service will return to normal, though some features may take slightly longer than others to return.

Curve restored the majority of its services one day earlier after making 'backend changes'. It says it is now '100% Wirecard-free' after changing the way it processes transactions.

• Find out more:Curve adds cashback - should you get it?

Is my money safe?

You may be able to use your prepaid card once again, but customers now have the knowledge that events beyond their control could freeze their accounts without warning.

Considering the fallout, it's possible the FCA might find a way to better protect customers if something like this happens to another money firm.

Even though customers couldn't get at it, their money itself did have some protection. Albeit not as much as it would have had in a bank.

Bank balances up to £85,000 are protected by the Financial Services Compensation Scheme (FSCS), meaning you'll get it back even if the bank collapses.

Prepaid cards are run by what are known as 'e-money' companies. The FSCS does not apply to them. Instead, money you have with an e-money firm will be safeguarded by being held separately from the firm's own funds. In theory, this would mean you'd still be able to get your money if a prepaid card folds, but this protection is far less robust than the FSCS.

Since it has been allowed to continue operating, the FCA might believe that Wirecard's safeguarding approach is still reliable.

However, if you want the full protection of the FSCS, you'll need to open a full bank account. If you've been rejected for an account by any of the big banks, you may still be able to bank with a challenger bank.

• Find out more:challenger and mobile banks explained

_{Editor's note: This article was updated to remove a suggestion that Curve customers would be unable to access their cash while Wirecard was suspended. Since Curve works by combining cards from other accounts into one 'smart card'/app, customers would still be able to access their cash via other means.}