Nium is entering the Indian market through acquisition of Wirecard, which was hit by fraud involving $2.2 billion and decided to sell its foreign-exchange unit.
Singapore-based Nium has signed an agreement to acquire Wirecard’s foreign exchange unit in India, as part of its insolvency process.
Wirecard was hit by fraud involving $2.2 billion
The German firm Wirecard AG was involved in one of the largest financial scams in June last year, amounting to EUR1.9 billion ($2.2 billion) in cash that went missing from its books. The former chief executive, chief operating officer, two board members, and other senior executives were arrested and implicated in the criminal proceedings.
Several assets of Wirecard around the world have been up for sale. Since August 2020, the company has sold some of its subsidiaries in Brazil, Philippines, Europe, and United States.
Acquisition marks the startup’s entry into the Indian market
Wirecard Forex is licensed by the Reserve Bank of India as an authorised category II money exchange dealer. The acquisition also involves its licence.
“With its license, Nium will be stepping into the Indian market by directly engaging in various payment services activities across the country which include currency conversion, money transfer, and issuing prepaid cards,” Prajit Nanu, CEO at Nium said in a video interview.
India’s prepaid card market expects a CAGR of 40.5%
The fintech startup will apply for a prepaid payments instrument (PPI) license with the Reserve Bank of India (RBI) to issue its products such as travel cards.
Nanu said, “This acquisition comes at a time when India’s prepaid card market is expected to grow at a compounded annual growth rate of 40.5% between 2021 and 2026”.
“Our primary objective is the issuance of branded travel cards through Wirecard’s existing partnerships in India. We’ll use this foundation to build our business in India. We’ll leverage global brand and geographical reach and use them to disrupt this market in India,” Nanu said.
Michael Jaffe, insolvency administrator at Wirecard said, "Despite the (COVID-19) pandemic's negative effects, including the hard lockdowns in India, we have secured a growing concern over Wirecard Forex India's business and successfully conduct a sales process in the best interest of the creditors" .
Wirecard forex has 23 branches in India that include major locations such as New Delhi, Mumbai, Kolkata, Chennai, Hyderabad, Pune, and Bengaluru.
Pratik Gandhi, COO at Nium said after the post-acquisition, all the employees will join Nium.
“It will also start a rebranding exercise for Wirecard India, subject to RBI approval. It will conduct financial due diligence as part of its compliance process,” Gandhi said.
This is the second acquisition of Nium after acquiring Ixaris, which will close in the third quarter of 2021.
“We’re seeing an accelerated move to digital payments as companies modernise their infrastructures to capitalise on the post-pandemic economic recovery,” said Nanu.
More companies are turning to global payment stacks to immediately embed financial services. This acquisition broadens its licensing portfolio, extends the suite of digital payment services in India, and increases its physical footprint to provide more support in Metro areas.
Gandhi said the company continues to expand its global operations through strategic acquisitions. “Wirecard Forex has extensive reach throughout India and will enable us to deliver next-generation payment services across all major metropolitan cities.”