Payone in the crossfire: scandal over dubious payments sparks a wave of outrage!

Payone in the crossfire: scandal over dubious payments sparks a wave of outrage!

In the shadow of the Wirecard scandal, the payment service provider Payone is now at the center of serious allegations. The company, which is 40 percent owned by the savings banks and 60 percent by the French financial service provider Worldline, is under observation by the financial regulator Bafin, which in 2022 found serious deficiencies in money laundering prevention and IT processes. Loud South German newspaper Payone was obliged by the Bafin to maintain higher equity capital and is now faced with a special representative who monitors the elimination of these deficits.

A recently published report by Spiegel and the European research network EIC brought to light a number of dubious transactions carried out by Payone. Affected customers include providers of dubious subscription models and pornographic content. The internal documents show that Payone processed payments in the hundreds of millions for “high-risk customers”, although some of these providers are said to have switched from Wirecard to Payone.

Criticism and internal investigations

The wave of criticism increased after the Bafin uncovered serious deficiencies in money laundering prevention during its audit. Commerzbank had already examined Payone's internal processes in 2021 and identified several warning signs of possible risks. A report by accounting firm Mazars criticized the superficial screening of high-risk customers and documented that suspicious payment transactions, including daily transactions on unaccessed websites, were often ignored.

Another key point is Payone's connections to business partners with criminal records, including Ruben Weigand, who was convicted of bank fraud in the USA in 2021. After his arrest, the portfolio switched to a new company run by Weigand's brother. Despite these stressful circumstances, Ottmar Bloching took over management in April 2023, but was already aware of problematic customer relationships.

Consequences and first measures

The measures ordered by Bafin meant that Payone had to terminate hundreds of business relationships, which threatened a possible loss of sales of up to 130 million euros. The decision to prohibit transactions for certain high-risk customers shows the seriousness of the situation. Internal documents show that some controversial companies remain active and process payments through other Worldline subsidiaries.

Trading in Weltlinie shares was temporarily suspended due to the reports about Payone, which led to a decline in the stock market value of over 20 percent. The current market value is around 1.3 billion euros. The company emphasized that the Executive Board and Administrative Board are committed to complying with regulations and standards for risk prevention and that controls within the company have been significantly tightened since 2023. The proportion of risk customers was reduced to around 1.5 percent of the total payment volume.

Determining the exact impact of the allegations and Payone's future actions remain to be seen. However, the situation highlights that payment service providers are faced with strict money laundering prevention requirements in an increasingly regulated environment.