By Paul J. Davies and Caitlin Ostroff 

U.K. financial regulators froze the British operations of Wirecard AG, stranding consumers whose payment cards rely on the insolvent Germany company's technology.

Wirecard Card Solutions, based in Newcastle Upon Tyne in northeast England, isn't allowed to dispose of any funds or assets, or carry on its normal financial business, the U.K.'s Financial Conduct Authority said Friday.

Wirecard's U.K. business issued prepaid cards and electronic wallets for consumers and served as a backbone for other digital payments businesses. Some customers in the U.K. won't be able to access money on existing Wirecard prepaid cards or held electronically.

The financial regulator also said Wirecard's U.K. business wasn't covered by the Financial Services Compensation Scheme, which protects consumers from financial businesses that go bad.

A Wirecard spokesman didn't immediately respond to a request for comment.

Curve, a U.K.-based fintech, said its customers would be temporarily unable to use their cards because Wirecard had been shut down.

Curve, which has called itself the Netflix of banking, links users' various banking accounts in a single card or app. The company said it was already in the process of moving customers to its own card-issuing and e-money operations rather than rely on Wirecard.

Curve announced a deal this week to run Samsung's phone-based payments app in the U.K. A Samsung spokeswoman said Wirecard's problems wouldn't affect the launch of the app.

Tom Findell, 32 years old, an emergency-services worker in Milton Keynes, northwest of London, had his Curve card declined Friday when he tried to buy a train ticket. He pays around GBP15, or $18, a month to use the card, which aggregates his various credit-card and banking accounts and comes with other benefits such as travel insurance.

"I convinced a load of friends to get it as well, and when I go into work tomorrow they're going to be like why did you suggest it?," said Mr. Findell.

"Curve customers have today been informed that they are likely to see a temporary disruption to their service and are advised to carry an alternative payment method," Curve said in a statement. "This disruption is expected to last for a limited time only."

Wirecard's prepaid card service was an add-on to its main business providing software and terminals that collect credit-card payments for retailers in stores and online.

Prepaid cards store a set amount of value and can be used for shopping like credit cards. The prepaid cards can serve as gift cards, and some employers distribute them as incentive bonuses for workers. They can also be used by people without bank accounts or as a type of modern travelers check.

FairFX PLC, a prepaid travel card provider that relies on Wirecard, said services were down Friday. FairFX said it was working to restore functionality and told customers that funds wouldn't be lost and were held "in a safeguarded account."

Laurelie Walter, who lives in south London, saved up EUR1,800 ($2,022) over six months on her FairFX card in preparation to take her grandchildren to Croatia and France before Covid-19 hit.

"I don't think for one moment everybody realized the implications of this," she said. "I'm glad I'm not there in France now."

In 2017, Wirecard purchased Citigroup's U.S. prepaid card business for an undisclosed sum.

Wirecard shares crashed after auditors revealed a $2 billion hole in its accounts last week. Its market capitalization plunged to EUR250 million from nearly EUR13 billion, and on Thursday the company filed for insolvency in Germany.

It didn't appear that Wirecard's troubles were rippling through the wider payments industry. Though it counted hundreds of companies as partners and customers, many are likely to have backup payment-processing providers.

It is also possible that Wirecard's business was smaller than it appeared. The company's auditor, Ernst & Young GMBH, said Thursday there were "clear indications that this was an elaborate and sophisticated fraud, involving multiple parties around the world in different institutions, with a deliberate aim of deception."

Germany's financial regulator said Thursday it had appointed a special representative to oversee Wirecard Bank, a company subsidiary with EUR1.7 billion in deposits that wasn't part of the wider insolvency proceedings. The company faces continuing government investigations in Germany, Singapore and the Philippines.

German prosecutors arrested Markus Braun, who resigned as Wirecard's chief executive last week, alleging he helped the company generate fake revenue and profit. He was released on bail Tuesday. His lawyer didn't respond to requests for comment.

Write to Paul J. Davies at paul.davies@wsj.com and Caitlin Ostroff at caitlin.ostroff@wsj.com

(END) Dow Jones Newswires

June 26, 2020 14:41 ET (18:41 GMT)