Let’s take a look at one of our clients, Twisto. They provide payment cards and services, which let you choose if you pay straight away or later. Many of their payment cards were rendered useless at the end of last week because they were using Wirecard, so they immediately accelerated the launch of new cards powered by Marqeta. Many customers can already use virtual cards and they will receive new physical cards soon. But many aren’t in their situation and there are now dozens of fintechs stuck with just one provider and many are now aware of the catastrophic impact of such an outage or freeze.
So what can you do to get unstuck and be ready for the worst? Are you the victim of Wirecard foul play or has this motivated you into action? In both cases, you have to do the same exact thing. Find backup providers and consider integrating them if the economics of it all make sense. Easy, right?
Actually, it is a lot easier than it used to be. With the advent of banking-as-a-service and proliferation of various card processing platforms, you now have dozens of providers to choose from to use as primary and secondary card issuers and banking service providers like Marqeta, Railsbank, Stripe, Bankable, Contis, Treezor, Rapyd, Solarisbank, Starling Bank and many others.
So which should you start working with? I hate to use this standard answer but it really depends on your needs. You might have your own banking licence or you might even be able to issue cards yourself. You might not have the capability to do either and you need help setting things up from the beginning. We worked with Cledara to launch a subscription management service using virtual cards from scratch to live cards in under two months with Railsbank.
Do you want to build your own custom app or can you live with a whitelabel frontend with medium complexity. We built the prepaid SKPAY card in the cloud in just a few months using a whitelabel app. Or we built a completely custom mobile app on top of Thought Machine core banking system for Standard Chartered Bank’s Mox, one of the first virtual banks in Hong Kong. There are many options, so please keep in mind that your situation might be very different from other fintechs.
The most important thing to do is to not remain stuck. Regardless of whether Wirecard has affected you or not, this is the time to put together a contingency plan, talk to multiple providers about alternative options and discuss with them for whether their services are appropriate for you. And if you don’t know, come to a company like us at Vacuumlabs. We have done this before and we can guide you through the decision making process.
Faith in Wirecard has been eroded and some of us have been left shaken. We are living through turbulent times and end consumers are rightfully alarmed when they hear their card is no longer working due to an infrastructure company like Wirecard going down. After all, as the consumer, you have a relationship with your fintech or challenger bank, not their providers. You should not be a victim of foul play and yet millions were left without access to cash for days.
While some might see this as an opportunity to throw fintech under the bus, we believe this is an opportunity for the innovators of financial services to plan for more contingency and become more transparent about the providers powering their apps.
As founders and creators, we don’t want to be stuck in the mud as our competitors rush past us. So let’s commit to building more resilience into our fintechs and challenger banks.
And let’s remember that we are finally giving underserved communities the ability to bank, so when things fail, let’s give them access to their cash in the most painless way possible. Your customers will love you for this.
This is a contribution to the debate from an EPA member, and does not necessarily represent the views of the EPA or other members