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Wirecard AG, founded in 1999 and headquartered in Germany, was a prominent FinTech company that provided electronic payment processing services. The company faced significant scandals involving fraudulent financial practices, including stock price inflation and round-tripping, leading to the revelation of €1.9 billion missing in 2020 and the arrest of its CEO. Ultimately, Wirecard's collapse resulted in substantial investor losses and a loss of market trust.

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6 views27 pages

group 9

Wirecard AG, founded in 1999 and headquartered in Germany, was a prominent FinTech company that provided electronic payment processing services. The company faced significant scandals involving fraudulent financial practices, including stock price inflation and round-tripping, leading to the revelation of €1.9 billion missing in 2020 and the arrest of its CEO. Ultimately, Wirecard's collapse resulted in substantial investor losses and a loss of market trust.

Uploaded by

shinde.samiya
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© © All Rights Reserved
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Presented by : Samiksha Dave(A054),

Samiya shinde(A013), Hiya a mehta(A012),


Anam khan(A002)
group-9

EX - German payment processor and financial


services provider
Introduction
Company Name: Wirecard AG
Founded: 1999
Headquarters: Aschheim, Germany
Industry: FinTech (Financial Technology)
CEO (Pre-2020): Markus Braun (CEO until his resignation in 2020)

Overview:

Wirecard was a global payment processing and financial services


company that provided electronic payment processing solutions.
It enabled businesses to process credit card payments, handle fraud
detection, and offer other financial services.
The company served clients across multiple industries, including e-
commerce, retail, and digital banking.
It was once a prominent player in the European FinTech sector and was
listed on the Frankfurt Stock Exchange.
FUNCTIONS
Payment
processing
Facilitated
Fraud transactions for Banking
Prevention businesses across Solutions
Provided security various payment Offered digital banking
services such as services, including the
methods like credit creation of virtual
risk management
and fraud
cards, mobile accounts and
management of
detection to wallets, and direct financial transactions
ensure safe transfers. for companies and
transactions. consumers.
TIMELINE OF THE COMPANY’S
IMPORTANT EVENTS
Shock Value: Wirecard’s Surge

Rapid Growth in Digital Payments

Expansion & Acquisitions

Strong Financial Reports

Market Trust & Hype


ASIA

wirecard
WHAT DO YOU NEED TO DRIVE?
WIRECARD DID NOT HAVE A
LICENCE IN ASIA.
SO WHAT DO YOU DO WHEN YOU
DONT HAVE A LICENSE ?
What showed?

s er vi ce Singapore
en t
paym e
servic
o r th e
e nt f
wirecard paym
Dubai

Philippinnes
Third party acquirers( TPA’s)- TPA’s
are external companies that
Al Alam process payments on behalf of
Solutions another financial institution or
payment provider. They act as
intermediaries, handling credit
Centurion
card transactions and other
Online Payment
payment processing services for
International
merchants in regions where the
main company does not have
PayEasy direct operations. However In this
Solutions case , many of these tpas were
either nonexistent or falsely
reported.
Asia:
The Catalyst for Wirecard’s Growth
Huge Market Opportunity

Acquisition of Local Companies

Partnerships with Big Brands

Investor Hype & Positive Reports


Stock price inflation- Wirecard
artificially boosted its stock value
by reporting fake profits, attracting
investors and able to get loans of
huge amounts. There was also a ban
on short selling of wirecard’s stocks
in 2019 by BaFin . This was also a
move to protect the company from
short sellers as getting huge losses
would distance the short sellers
from the company but it went the
other way and created more
suspicion.
Short selling - In this concept , a-short
seller borrows shares from a broker
and sells them at the current price.If
the stock price falls, they buy the
shares back at a lower price, return
them to the lender, and profit from
the difference.If the stock price rises,
they still have to buy back the shares
—but now at a higher price, leading to
losses. This loss due to unusual rise in
prices led the short sellers to suspect
wirecards dramatic growth as they
were getting loss out of it.
WHAT ACTUALLY HAPPENED ?
SERVICE

COMPANY A

10M
9.9M

COMPANY B

SER VICE
I

COMPANY B COMPANY A
9.8M
ROUND TRIPPING-Round-tripping is a
fraudulent practice where money is moved in
a circular manner between entities to create
the illusion of real transactions. It does not
generate actual profit but artificially
inflates revenue and manipulates financial
statements. In this case, wirecard was
sending money to a company A , company A
sending that money after deducting a
certain amount to company B, and company
B sending that money back to wirecard
which was recorded as a revenue or an
income. This difference between the amount
received and sent was the profit that
wirecard was making.
WHAT IS AN
ESCROW
An escrow account is a financial arrangement where a
neutral third party holds funds or assets on behalf of two ACCOUNT?
parties engaged in a transaction. The funds are released
only when predefined conditions are met, ensuring
security and compliance for both parties. Escrow accounts
are commonly used in real estate, mergers and
acquisitions, and online transactions to prevent fraud and
disputes.
1.9 BILLION MISSING !
• SUPERVISORY HOME COUNTRY BIAS
- Refers to the tendency of investors
to favor companies from their own
country over those from other
countries or regions. In this case,
Germany’s financial regulator, BaFin
exhibited such a bias by defending
Wirecard against allegations of
misconduct, particularly those
originating from foreign entities,
rather than conducting
investigations. It was Financial times
which later exposed the scam .
The Financial Times Exposé

FT’s Expose on Accounting Irregularities


(2019)

Missing €1.9 Billion & Auditor Concerns


(2020)

CEO Arrest & Insolvency Declaration


(June 2020)

Delisting & Total Investor Losses


THANKS FOR SURVING THIS
PRESENTATION,
LIKE I MANAGED TO SURVIVE
THE SCAM.

love, Jan Marsalek

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