A client of digital cash provider Papaya has been awarded damages for the “considerable stress” caused when he was unable to freely access his money. 

The client was awarded moral damages of €1,000 by the financial arbiter after he and a company he owns had €72,000 effectively blocked by Papaya. 

Papaya was criticised by the financial arbiter for the “inconvenient and unorthodox” alternatives offered to the client after it was cut off from the SEPA network, which is a system for transferring funds between European bank accounts. These alternatives fell well short of the level of service expected from a licensed payment service provider, the arbiter said.

Papaya’s Gżira offices were searched by the police last year as part of an international investigation into an alleged “Russian-Eurasian criminal network”.

The payment provider started facing problems processing client funds soon after the February 2024 search.

A company representative told the arbiter in October that the problem with SEPA transfers had not yet been solved.

“We are trying to solve them but it does not depend on us only but also on other third parties,” the representative said.

As an interim solution, Papaya has been raising the limits on card-based transactions to allow its customers to withdraw more cash.

The representative said Papaya had immediately responded to the complainant’s queries and had tried to fix the problem “in any possible way that it could be fixed”.

Papaya was ordered by the arbiter to communicate its “failings” to the Malta Financial Services Authority, seeing that the problem processing payments impacted all its customers and not just the complainant.

The company has previously insisted with Times of Malta that the international investigation had not impacted its business, stressing its operations continued as normal.

Customers, however, told Times of Malta in July they had been unable to make SEPA payments for months.