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Wirecard Collapse

Wirecard Collapse
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by
Managing Director

One thing guaranteed to upset people, is to mess with their hard-earned money. The news of Wirecard’s collapse has dealt a devastating blow to the many thousands of people who have lost their money. The nature of the institution means they have little hope of ever seeing any of it again. As many will have used these as an alternative to a bank account because they have not been able to access one, this means the collapse has directly affected some of society’s most vulnerable people.

Wirecard is a FinTech company providing cash cards that could be loaded with funds and then used as a regular debit card. They are intended as an alternative to a bank account for those whose credit history means they did not qualify for a regular account. As a recruitment agency working with a significant number of temporary workers, arranging payments to staff is something we do a lot of. Over the years, a number of our ‘temps’ registered with us have not had their own bank account due to insufficient or poor credit history which has precluded them from opening one. In the past, we’ve found various ways around this: paying into a friend or co-worker’s account (having obtained written permission) wasn’t ideal, but it was one way, however, the Modern Slavery Act has put a stop to that. We also occasionally issued cheques which could then be cashed at a nearby ‘payday loan’ type shop. We weren’t keen on this method either as the recipient would typically have to pay a not insignificant fee to obtain their money. A third alternative we considered was prepay debit cards.

These cards seemed, on the face of it, ideal. Many of us have used them with our children for when they go on excursions for going on trip with the school or a friend’s family. After all, it is much safer than carrying actual cash around. However, when we delved into the implications of using these as a regular method for paying our temps, we discovered some practices that made us less comfortable with the idea. For example, there is usually a monthly management charge for having the card. Often there is a charge both for transferring money on to the card and for using the card to make cash withdrawals. Sometimes the withdrawal charge would be a percentage of the amount withdrawn and sometimes it would be a one-off fee. This has a secondary implication as it encourages users to withdraw a larger sum than they might need to avoid paying the charge twice - not to mention the withdrawal fee the ATM operator often places on these cards! Whilst the various charges were not necessarily high, over the course of a month, the amount tots up and, given most people using these cards tend to be on the lower income scale, that did not seem particularly fair.

The final and most worrying aspect of these cards is they are typically run by financial technology (FinTech) companies and not by banks. FinTech organisations generally are not subject to the same rules and regulations as banks and neither are they protected in the same way: bank accounts are guaranteed up to £80,000 by the Government, so if a bank collapses, you will be compensated for the money you had placed with the bank up to the amount of £80,000. FinTech companies do not usually have such robust protection in place. So, if the company collapses, your money disappears, permanently. Just like it has with Wirecard.

Wherever possible, we have avoided these cards as anything other than an emergency stop gap measure for our candidates precisely because of the danger of this happening. Instead, one of our team took it upon herself to research the various banks and determine which were the most likely to be less stringent with their account applications and then she began developing relationships with them. We also write letters of introduction, confirmation of job offers, and help candidates with filling out forms and collecting the appropriate identification documents. In certain cases, we have even accompanied a worker to the bank to stand witness for them.

Candidates who work with us appreciate we take the time to help them out, even outside of the expected boundaries normally assumed by an agency. It’s a two-way street, we look after them and they, in turn, look after us and by default, for the clients with whom we place them. Many of our temps stay with us for years, leaving us only when they transfer to permanent positions, often with the company they have been working with. Our motto is “because people make the difference”. We stand by that though our actions as well as our words.

 

ASL Recruitment was established in 1999 and has been serving Hastings and the surrounding area ever since placing temporary and permanent roles across a variety of sectors including Industrial and Manufacturing, Legal, Finance, Marketing, Technology and Office Support, from junior up to board level. Our co-founder and Managing Director, Jason Perry is a HR specialist and a Chartered Fellow of the Chartered Institute of Personnel and Development. For further information on our recruitment or consultancy services, email [email protected] or call us on 01424 452999.

 
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