Pockit account, pros and cons. Is it safe?

NickZurich

I've had a Pockit card for a few weeks and would like to compare notes with other customers.

So far it's been profitable, because the 6% cashback from M&S exceeds the fees. I buy nearly all my food at M&S so if the 6% continues I'll be very content.

Using the account has been pretty much niggle-free, except for some confusion in the early days when I couldn't work out how to pay cash in. I was going to Paypoint locations on the map, expecting to find ATMs to feed notes into. I had no idea that you give the cash and the card to the person on the till who uses a counter terminal. It's not explained on the Pockit site. Eventually the Pockit support people revealed the mystery of the counter terminals, so I went back....and found that the Paypoint map is hopelessly out of date, and more than half the Paypoint premises in my area have given up on Paypoint altogether.

My big worry is that my money may not be safe. If Pockit goes bust I'm supposed to get my money back from Pockit's bank. But if that also goes bust, I get nothing. And Pockit refuses to say which bank they use. This seems very odd. Presumably they're only being secretive because this bank has a weak balance sheet. I can't think of any other reason.

The exact wording of the Ts and Cs is: "In the unlikely event that Wirecard Card Solutions Limited becomes insolvent, your e-money is protected and held at a regulated credit institution. Your funds will not be used by Pockit or Wirecard Card Solutions Limited for any other purpose. In the unlikely event that the credit institution becomes insolvent your funds may be at risk."

The maximum account balance is £5,000, and I would like to deposit that much...but if Brexit-related shenanigans cause a recession I can easily imagine numerous institutions going belly up.

londoninvestor

NickZurich wrote: »

"In the unlikely event that Wirecard Card Solutions Limited becomes insolvent...

I honestly don't know what to make of the reports about Wirecard's accounting troubles (you can find quite a bit on Google) - but the risk seems like it might lie there rather than with Brexit, or with the depositary bank.

Remember that with all e-money institutions, the firm promises that it will deposit money in a ring-fenced bank, but if it accidentally or deliberately fails to do that properly, you have no FSCS protection. In most cases I reckon the more likely scenario is that the e-money provider messes up the ringfencing, rather than the depositary bank going under.

DCFC79

Move your money to a high street bank or move most of it and use Pockit for the cashback.

NickZurich

Loot, which went into administration last month, is underwritten by Wirecard. The FCA has advised Loot customers to withdraw their money by 26th July https://www.choose.co.uk/news/2019/loot-prepaid-customers-warned-withdraw-money/ I wonder how much damage this will do to Wirecard? It's having quite a dramatic year. Its share price seems to be holding up.

Ben8282

Why do you want to deposit so much money? Pockit don't pay interest on credit balances so it makes no sense whatsoever to keep £5000 in their account.
If you have concerns, keep your money in a proper bank preferably in a current account which pays interest and top up as necessary to do your M&S food shopping.
If you can afford to do almost all your food shopping at M&S, then probably your financial situation is not such that you would suffer any great loss if you were to loose a single top up in the unlikely event that Pockit should suddenly become insolvent. Just top up as you go and keep the amount of money on the Pockit card to the minimum needed for your shopping.
A question. The Pockit website says 'get up to 10% cashback' but nowhere does it state the individual cashback rates for specific retailers, so how did you know you would be getting 6% at M&S when you signed up and how can this be verified?

Terry_Towelling

Perhaps not advisable to view it as profitable, as such. 6% cashback on M&S spending minus the fees means you are effectively getting your M&S shopping at a small discount. You could probably save more with a conventional bank account (maybe one that pays credit interest) and shop at Aldi or Lidl.

jonnygee2

Loot, which went into administration last month, is underwritten by Wirecard.

This isa common misunderstanding abounding at the minute about the relationship between Wirecard and the various payment cards it supports.

Wirecard increasingly provide the technology behind digital startups. Basically they provide the digital infrastructure that small fintechs can't afford to build themselves in their early stages.

But they are NOT a bank. They are also an e-money institution. As with any e-money institution they must keep any deposits in an actual bank, ringfenced, so that if a business goes down the money is still there.

Because all customer deposits are held in a ringfenced account, there is no loss to wirecard when they need to be repaid other than the administration costs of making the refunds.

The long term problem for wirecard is that their main customers have left them. In 2016 they were supporting Monzo and Revolut, who were growing rapidly, and smaller fintechs were signing up in droves. Their share price rocketed and they expanded rapidly. But now the larger, successful customers have built their own platforms and moved on, and the smaller ones are mostly struggling or going bust, their whole business model is under question.

NickZurich

If everything is so safe, why did the FSA recommend people to withdraw all their money from Loot?

NickZurich

Ben8282 wrote: »

A question. The Pockit website says 'get up to 10% cashback' but nowhere does it state the individual cashback rates for specific retailers, so how did you know you would be getting 6% at M&S when you signed up and how can this be verified?

The percentages were there until a few days ago. Perhaps they'll come back. The editing of their site content is pretty sloppy.

I started using the account on May 10 and my cashback for May was credited to my account on 3rd June - quite impressive speed. But the amount isn't broken down so I don't know whether it's accurate. Very annoying, but typical Pockit.

SnowTiger

NickZurich wrote: »

If everything is so safe, why did the FSA recommend people to withdraw all their money from Loot?

Because Loot is in administration and will close down completely on 26th July 2019.

NickZurich

Pockit are now refusing to say what the cashback rates are. All they'll say is "up to 10%."