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Local Wirecard sale hangs on loyalty of bank clients

13 August 2020 6:37AM

The administrators of Wirecard’s New Zealand operation have told Melbourne staff they hope to find a buyer for the troubled company by the end of the month.

Wirecard’s Australian business is a subsidiary of Wirecard NZ Limited, which means that the future of around 30 Melbourne-based staff is riding on the ability of the parent company’s Auckland administrator - Andrew Grenfell of McGrath Nicol – to hunt down a new owner.

In a phone conference with Melbourne staff on Tuesday, Grenfell said he was hopeful of finding a buyer in the next three weeks.

However, the prospect of completing a sale is likely to hinge on Wirecard’s existing bank clients agreeing to continue using a card management platform known as Cadencie.

The Cadencie software is used by Bendigo Bank, ME Bank and Cuscal to manage debit and credit card transactions.

Service contracts and licensing fees flowing from the Cadencie business account for most of Wirecard’s operating revenue in Australia and Asia.

A string of financial institutions in the Asia Pacific region use the platform including BDO Bank in the Philippines and payments giant, China Union Pay.

Cadencie is tailored to service small to mid-sized issuers with portfolios of up to five million card units.

One of the platform’s main selling features is it capacity to report card transactions in real time.

Given the uncertainty surrounding Wirecard’s future and its ability to continue servicing Cadencie clients, there is a risk that banks might look to migrate to providers of rival card management systems.

Such a development would likely erode the value of the local Wirecard operation.

However, existing Cadencie clients would find it difficult to migrate to other providers in less than 12 months.

Banks trying to migrate to other providers might need Wirecard to disclose the source code of the Cadencie software so that bank IT staff could service the system independently as they switch to another platform.

Banking Day understands that the source code underpinning Cadencie is a complex beast.

It appears that the source code is idiosyncratic as a consequence of being converted from the C+ programming language to Java several years ago.

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