This chapter examines the scandal at Wirecard AG, a German payment processing and financial services company, that became one of the most valuable companies on the German stock exchange in the 2010s. From 2010 to 2018, Wirecard reported consistent revenue growth and profitability. In 2019, the company reported revenues of €2.8 billion ($3.2 billion). As of September 2018, its market capitalization was over €24 billion ($27 billion). In late 2019, the Wirecard scandal was discovered through investigative reports by the Financial Times, which raised questions about Wirecard's accounting practices. The company faced a major scandal in 2020 when it was revealed that €1.9 billion ($2.1 billion) was missing from its balance sheet. Subsequent investigations revealed a massive accounting fraud that had been going on for years. Subsequently, the company filed for bankruptcy. Multiple Wirecard executives, including its CEO, were charged with fraud and market manipulation. German regulators and auditors were criticized for failing to detect and prevent the fraud.
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Wirecard AG was founded in 1999 by Markus Braun, a former consultant at KPMG, and Arndt Roller, a computer science expert. The company initially focused on providing payment solutions to online merchants, enabling them to accept payments through various payment methods, including credit cards, bank transfers, and e-wallets. This was a time when e-commerce was growing rapidly, and online businesses needed a secure and reliable payment processing service.
In the early 2000s, Wirecard expanded its services to include card issuing and acquiring, which allowed the company to offer end-to-end payment solutions to its clients. This meant that Wirecard could provide businesses with everything they needed to accept and process payments, from payment terminals to payment gateway software. The company also entered the mobile payment market, offering digital wallets and mobile payment solutions to consumers. Wirecard's growth accelerated in the 2010s, with the company becoming one of the most valuable companies on the German stock exchange. The company's revenue and profits increased significantly, driven by strong demand for its payment processing services and its expansion into new markets. Wirecard expanded its operations globally, with offices and subsidiaries in more than 30 countries. Wirecard's success was partly due to its innovative business model, which disrupted the traditional banking industry. By providing payment processing services directly to businesses, Wirecard bypassed the need for traditional banks and payment processors, offering faster and more cost-effective payment solutions. The company also leveraged technology to provide clients with real-time data and analytics (Breuer, Boronczyk & Rumpf, 2021), enabling them to make better business decisions. In 2018, Wirecard's market capitalization reached over €24 billion ($27 billion), making it one of the most valuable companies in Germany. The company's success was also recognized internationally, with Wirecard winning numerous awards for its innovative payment solutions.