Blog: After Brexit and Wirecard, An Post switches issuer for currency card – Siliconrepublic.com

The impacts of Brexit and the collapse of Wirecard caused many headaches for fintech services in recent months.

An Post recently switched issuer for its An Post Money Currency Card, several months after the Wirecard debacle disrupted its services and as Brexit loomed.

Like many payment and card services, An Post’s prepaid Money Currency Card had been using a UK-based issuer, in this case Wirecard Card Solutions (WCS).

Last June, WCS was temporarily suspended by the Financial Conduct Authority (FCA) in the UK amid the storm surrounding its parent company Wirecard – the German fintech giant that was embroiled in a €1.9bn accounting fraud scandal.

As a result, the services of many WCS customers, including big fintech players like Revolut and Curve, were disrupted. An Post was caught in the crossfire, with around 50,000 Money Currency Cards being temporarily frozen.

The FCA would go on to restore WCS’s operations but the fintech industry wasn’t out of the woods yet. Wirecard’s dramatic fall from grace saw the company collapse into insolvency with assets sold off. The disruption to other divisions of the Wirecard business also hit taxi app Free Now.

In August, British open banking start-up Railsbank swooped in and picked up WCS and its clients in the process.

But there was another challenge for many fintech companies and services. As Brexit fast approached, some would also need to switch from a UK issuer to an EU-based one as passporting rights for financial services were to be lost.

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For its Money Currency Card, An Post engaged with electronic money institution PrePay Solutions (PPS), first in the UK and then switching again to its Belgian authorised entity at the end of December, days before the Brexit transition period ended.

“The switch was made on 5 November from Wirecard (UK) solutions to PPS UK and subsequently on 20 December from PPS UK to PPS EU. There was no disruption to customers. All customers were communicated with in advance in relation to both events,” a spokesperson for An Post said.

“The move to PPS EU was required because, post-Brexit, PPS UK could no long passport their payments licence to EU countries.”

Me2You, Retail Excellence’s gift card which also experienced disruptions last June, decided to stick with WCS’s new owner Railsbank, according to someone familiar with the decision. The UK company shifted the Irish gift card service over to one of its subsidiaries, PayrNet, a Lithuanian licensed card issuer.

The rush for licences

All of this to and fro has been a typical feature for fintech start-ups, payment providers and card issuers since 2016, seeking new licences to ensure their services could continue to operate in Europe once Brexit took effect and the transition period ended.

Several companies have turned to Ireland for alternative approvals, with the Central Bank of Ireland issuing more than a dozen e-money licences in the last three years. Companies including Coinbase, Square and Soldo have all secured approvals in Ireland to keep the lights on for their EU services.

Lithuania’s central bank has also emerged as a popular destination for companies and their European operations. E-money licences can be secured in around three months in Lithuania, while other regulators can typically take 12 to 18 months. Curve, Google Payments and Revolut have all obtained licences in the country.

Revolut said last year that it was moving Irish accounts to its Lithuanian e-money business due to Brexit, but the company is in the process of applying for a licence from the Central Bank of Ireland.

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