As a Broker solutions specialist, I often encounter a situation where a broker who is just starting his business in the forex industry thinks that purchasing a trading platform is enough to start accepting clients. Of course, the right technology is crucial for a broker to operate, but even the best platform will not provide an influx of traders if they cannot quickly deposit and withdraw funds from their accounts. The matter seems quite obvious, money transfers are nothing complicated, but the forex industry is subject to many restrictions.
In fact, accepting payments by the Broker is a matter from which you should start planning this type of business because the process requires preparation from the formal and technological side. Without proper preparation, the Broker will incur operating costs for the White Label platform, still unable to accept clients. This text will show what solutions exist for every novice forex or crypto broker to handle clients’ payments. In particular, I will focus on so-called offshore brokers. As the statistics show, most brokers decide to start their forex business by registering in the SVG (where there are no specific regulations for forex business). Even well-established European brokers open offshore entities to offer their clients better conditions.
Why are there any problems with Forex payments?
Every customer has a bank account and a credit card – if they want to invest in Forex, they can simply transfer their funds to a chosen Broker, which, unfortunately, sounds seemingly obvious. But around 2018, banks and credit card payment operators have tightened their requirements for registering bank accounts for the forex industry. VISA and Mastercard completely blocked their services for forex businesses operating without a recognized license. The most popular banks worldwide introduced similar precautions. The forex industry is associated with huge financial risk for investors; therefore, many countries have introduced regulations to protect their citizens against fraudsters and prevent money laundering. That is why most banks and credit card providers do not want to cooperate with companies registered in unregulated areas to protect themselves from involuntary involvement in criminal activities. In practice, novice brokers who are just building their position on the market and temporarily using a company registered on SVG have been blocked from using their services. Not being able to handle customer deposits and withdrawals through a bank account may be a bit of a hardship, but there are various methods that you can use in place of a bank account.
What are the payment options for offshore brokers?
Get a legal opinion for your forex business
The first thing an offshore broker should do is obtain a legal opinion that confirms the legality of the Broker’s operation. This legal opinion can be issued by the legal offices in the country of company registration – in this case, we are talking about SVG – and it can give several advantages. Banks often seeing such a statement allow novice companies to open an account and accept customer deposits via bank transfer. Legal opinion involves additional costs, but unfortunately, it is the only way for novice brokers to increase their chances of receiving bank transfers from their clients.
Offer your clients cryptocurrency payments
The second option that appears is the use of cryptocurrency transfers. Match-Trade Technologies has developed its own crypto payment technology to ensure all of the clients can blast off their brokerage and accept clients’ deposits without any delay. So let me describe the whole process using Match2Pay Crypto Payment Gateway as an example.
This solution gives brokers several possibilities. Firstly, it allows you to accept deposits using cryptocurrencies. At the start-up stage, the Broker may decide whether he wants to collect cryptocurrencies from clients in his portfolio and bear the risk of changing the exchange rate or performing automatic conversion and having Stablecoins at his disposal. Thanks to the integration with crypto exchangers, an additional option in our M2P is the ability to purchase cryptocurrencies using a credit card or bank transfer and deposit the purchased cryptocurrencies to the Broker’s wallet. This solution eliminates the problem with deposits with the Broker. The Broker gains 3 deposit options for its clients, Cryptocurrency, CC and Wire transfer. In addition, thanks to the integration of M2P with crypto Exchangers, the Broker does not have to register with individual providers. This reduces the time it takes for his client to make the first deposit. Match2Pay is very popular due to our offer’s wide range of networks. At this point, we have BTC, ETH, TRX, BNB, USDT (TRC20, ERC20, BEP20), USDC (ERC20), and BUSD (BEP20, ERC20). Depending on the market in which the Broker operates, it must consider local cryptocurrency regulations.
From my professional experience, Crypto payments, at least as one of the options, is a must. Traders expect that no broker without crypto payments can compete in the forex market. Adding Crypto Payment Gateway to other payment solutions gives more flexibility to your clients; hence can significantly increase monthly deposits and reduce your costs (fewer fees). The most crucial advantage of collecting deposits in cryptocurrencies is the independence from the banking system, the speed of transactions and the overall growing popularity of the metaverse.
Open an account with the local payment provider
The third option that the Broker has is opening an account with a local online payment provider. If the Broker sets up a business account, the next step is to integrate the payment provider with the CRM used by the Broker. Match-Trade Technologies assumes that this type of integration is an inseparable part of the Broker’s cooperation with the technology provider and allows, depending on the chosen package, one or two integration of payment systems with our CRM. Additionally, our company already has a base of integrated PSPs on every continent. Currently, we offer the possibility of using the PSP on the Asian, South American, European and African markets, servicing about 40 local currencies. All this makes our CRM a highly competitive tool that often becomes an inseparable choice of beginner brokers.
In conclusion, the tightening of regulations on the forex market has complicated the procedure of accepting deposits by novice brokers. However, the industry still offers several solutions that allow convenient and safe deposits to trading accounts with offshore brokers. In the 21st century, the development of digitization and the growing fees for international transfers made more and more people more and more willing to use the possibility of cryptocurrency payments.
However, the banking services remain the most trusted form of making deposits; therefore, it is crucial that the Broker uses only recognized and proven solutions from trusted partners. If you would like to consult on what solutions will be best for your business, and I am not talking only about payments, please get in touch with us to discuss your needs.