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Wirecard's Collapse Touches Adult Sector

Wirecard's Collapse Touches Adult Sector

Wirecard's Collapse Touches Adult Sector

Monday, June 29, 2020

A major financial sector crisis surrounding the implosion of German e-commerce bank Wirecard has affected some adult industry merchants, mainly in Europe, according to sources in the payment processing sector.

Wirecard, as Forbes reported today, “collapsed yesterday with debts of almost $4 billion, after the company admitted that around $2 billion of cash on its books didn’t actually exist.”

The solidity of Wirecard, started in 1999 and with a long history in processing payments for adult businesses, had been questioned by investors surrounding a series of reports by the Financial Times regarding their business practices and accounting.

Wirecard describes itself as “a fully integrated, digital financial commerce platform.” It is part of the fintech sector.

This week Wirecard’s CEO and CTO Markus Braun resigned and was arrested over the missing $2 billion.

Wirecard and Adult Sector Merchants

In the adult sector, a source explained to XBIZ, merchants typically received two kinds of services from Wirecard: the e-bank would set up payment processing and perform Visa/Mastercard transactions; or help set up a European bank account for funds settlement.

Several merchants, mostly in Europe, had bank accounts through Wirecard.

These two areas, the source added, are where merchants are getting impacted by Wirecard’s collapse.

Both merchants and payment processors are keeping an eye on the development of the Wirecard collapse, particularly on the German authorities and courts' decisions regarding the next steps in deciding the status of the bank.