A former business client of Wirecard Australia is suing the German-owned subsidiary for alleged misleading or deceptive conduct under NSW fair trading laws.
In an amended statement of claim lodged with the Supreme Court of New South Wales in the first week of April, Sydney-based bill solutions and factoring provider, Finstro Holdings Pty Ltd says that Wirecard Australia promised in 2018 to deliver it access to services operated by Cuscal for the launch of scheme debit and credit products to local customers.
Finstro, which currently provides bill payments solutions and debtor finance to business customers, had been aiming to widen its activities to include mobile and internet-based payments services.
In 2017 Finstro approached Wirecard Australia to assist it with the launch of a virtual prepaid card aimed at Australian consumers.
Finstro agreed to adopt the Wirecard-owned Cadencie platform to manage its planned digital cards business.
The plaintiff says in its claim that it entered a “binding agreement” with Wirecard to design, deliver and host the software system for a fee.
“It was proposed that the defendant would partially manage the day-to-day processing of transactions and that Cuscal Limited would also provide some services with respect to the virtual credit/debit card, including by supporting online paying services such as Samsung Pay, Google Pay and Apple Pay,” Finstro told the court in its statement of claim.
The plaintiff alleges that Wirecard backed out of an agreement to deliver its Cadencie card management platform after Finstro paid for some of the development costs.
Finstro also alleges that Wirecard was not able to offer an alternative system (known as the Consumer Cards Platform), which also required access to a range of Cuscal services, including BIN sponsorship through Visa, switching services and a connection to Apple Pay.
Finstro claims it was told by Wirecard in September and October 2018 that it could deliver such services through the Consumer Cards Platform(CCP) by March 2019.
However, Finstro alleges the representation was misleading.
“Wirecard was not able to offer, in CCP, the whole of the Cuscal Services, including BIN sponsorship through Visa, card issuing and associated services, switching services, float management and connection to payment programs including Apple Pay,” Finstro states in its claim.
“CCP was not at a state of development such that it was ready to launch/go live by mid-March 2019.”
In a written cross-claim against Finstro lodged with the court, Wirecard Australia rejects Finstro’s allegations and asserts they are likely to be misleading or deceptive under Australian consumer law.
Wirecard maintains it met its obligations under agreements to help Finstro launch a prepaid card to be marketed as the “Finstro Pay Virtual Card”.
However, Wirecard also maintains that Finstro did not hold necessary regulatory approvals and was therefore incapable of meeting Wirecard’s requirements, such as Know Your Customer standards.
“Finstro did not have and was unable to obtain appropriate licenses or approvals to launch its offering of prepaid virtual cards to retail customers either within a reasonable period of time or at all,” Wirecard states in its cross-claim.
Wirecard alleges that it suffered loss and damage as a result of representations made by Finstro.
It claims that Finstro was not in a position to issue a prepaid card because it did not hold an Australian Financial Services Licence.
“In reliance of the AFSL Representations, Wirecard continued to expend time, work and resources in its efforts to provide CCP to Finstro,” Wirecard states in its cross-claim.
Finstro denied this assertion in a response to Wirecard’s cross-claim filed with the court earlier this month.
The Sydney-based company argues that the requirements to hold appropriate licenses and to satisfy Know Your Client requirements had already been met and satisfied under its lending business.
Dentons is acting for Finstro in the court proceedings while Corrs Chambers Westgarth is acting for Wirecard Australia.