Forex Merchant Accounts
The foreign exchange market is the largest and most liquid financial market in the world, with over $5 trillion traded daily. Since there is no central foreign exchange market, all forex currency trading is done electronically over-the-counter (OTC). This means that all transactions are performed through computer networks, between traders throughout the world, 24 hours a day, and 5 days per week. Over the past decade, forex trading has increased exponentially, with thousands of new firms and millions of new traders. Foreign exchange firms have become extremely competitive, from the leverage they offer traders to the payment methods they accept.
Expanding Your Forex Company
The competition between forex brokerages has grown considerably in recent times and forex firms have begun extending traders nearly every possible convenience to gain their business. One of the most popular benefits provided is the acceptance of debit and credit cards.
Accepting credit cards at your forex brokerage is a great way of earning your customer’s trust and building a successful business. Traders are more likely to deposit money when using their credit card versus a bank wire. When a customer uses a credit or debit card as their payment method, it is more secure in addition to the fact that investors are more likely to not only deposit funds faster but the deposits will also be larger when compared with other payment options. It is no surprise that all leading forex brokerages accept card payments.
Many forex companies will begin their search for a forex merchant account after they repeatedly hear from their clients “Do you accept credit cards?” This may seem like the optimal time to find a provider but for the clients that ask for the service, there are many more that just go to a different brokerage.
Most new FX companies will search for a forex merchant account when they open their brokerage, however; they soon realize the burdensome process of opening a forex card processing account.
Typical Forex Merchant Account Obstacles
Many forex brokerages struggle to find stable forex credit card processing services. Payment processors are worried about accepting large ticket transactions and typically will hold funds and cancel merchant accounts when they realize that the brokerage is accepting large ticket transactions.
Forex brokerages looking to open a merchant account quickly recognize a number of hurdles in their way. These hindrances include; their startup status, lack of licensing and regulation or an absence of strong financial documentation. In most cases, it is a combination of all three.
Most payment processors will avoid working with new forex brokers for a number of reasons. Normally, it is because there is no track record of performance in addition to the fact that startup brokerages have low volume, equaling low profits. Banks and payment processors want to work with established brokerages with volume that make the process of approval and setup worthwhile.
Brokerages without a track record increase the risk for the bank and payment processor. The underwriters are unaware of how the merchant operates their business. There are more hands on account management required along with an increased amount of scrutiny to make sure the account performs correctly or is closed down before it can cause any serious harm to the processor. All in all, the processor needs to spend more time managing the account while the upside is minimal since there is likely to be only a little volume processed.
Licensing and regulation is a difficult task for most forex brokerages. Most jurisdictions make it cost prohibitive to be a licensed or regulated forex broker. This is done on purpose; sifting through financial companies and only allowing the most capitalized companies, traditionally the most stable. It makes sense that financially established countries would impose the highest fees and toughest scrutiny as a tactic of weeding out fraudulent brokerages.
The result however is a handful of countries that offer forex licenses, obtainable by most startups. Instead of having to pay hundreds of thousands or millions for licensing, companies may obtain licensing in countries such as; Belize and Vanuatu for $20,000-$30,000. This of course is still a lot of money however; brokerages will find it much easier to be approved for a forex merchant account after they are licensed.
The last option for forex brokerages that are unable or unwilling to pay for licensing is to open their forex company in a country that does not require licensing or regulation. The tradeoff being that most financial institutions will refuse to work with unlicensed financial companies. The simple tasks of opening a business bank account or a forex merchant account are now turned into daunting projects.
For both new and old forex brokerages alike; a lack of strong financial documentation is a common reason for decline. When a bank approves your merchant account, they have accepted the risk your business poses. Banks are able to make this decision only after reviewing your company’s financial standing against other businesses that they have/had profitable (or unprofitable) relationships with. If your business is a cookie cutter example of a company that the bank will make money from with minimal hassle and risk, you will be approved quickly. If your company sorely depicts a previous merchant that the bank lost money with or made very little from, you can be sure your account will be declined. But how does a bank know what category of merchants a new applicant will fall into? If you answered “financial documentation,” you would be correct.
Financial documentation (for forex brokerages) includes; bank statements, payment processing statements and it is the easiest way to decide whether a merchant will be an asset or a liability to the bank. If your forex brokerage operates with a sizeable bank account, minimal chargebacks and high sales, it is a certainty you will be approved very quickly. Normally, the fastest approvals are for the companies in the best financial shape. On the other hand, small forex firms and startups will have a much more drawn out underwriting process since there is no proven track record to review.
Forex Merchant Accounts
It is very important that forex brokerages partner with a payment processor that specializes in providing forex merchant accounts. This will ensure that the forex brokerage’s account will maintain open and the broker will maximize their profits by working with a stable and reputable solution.
When a company applies for a merchant account, it is a process similar to applying for any other financial product or service. There is underwriting, approval or decline and setup/activation. Customers with stronger applications are normally approved and applicants with weak applications are quickly declined.
Offshore banks are notorious for cherry picking the best forex merchants, leaving behind the lower volume and smaller forex brokerages. Global Pay LTD avoids this hurdle by offering merchants a number of different solutions that cater to small and large companies alike. From start up brokerages to brokerages that have been operating for years. Competitive pricing is part of each forex merchant account. Global Pay sets rates on a sliding scale that decrease as the brokerage’s volume increases. Your forex brokerage will be rewarded with a pricing discount as your business grows.
Forex merchants are able to process large ticket transactions without any issues. There is no pre-set monthly volume cap and individual traders are allowed to deposit multiple times throughout the day. If their funds are available from their bank; their transactions are approved.
Benefits Of Partnering With Global Pay LTD:
• Large Ticket Processing
• Discount Forex Processing
• No Volume Limits
• Multi-Currency Processing
Being Approved and Setup
Global Pay LTD has been setting up forex credit card processing services for brokerages since 2007. Forex merchants are able to receive the most competitive rates while being able to accept both debit cards and credit cards with real-time approval and declines.
Forex merchant accounts are approved and setup quickly. No need to wait months for underwriting or setup. There is a simple application and a list of required documents; once they are received, your account will be submitted into underwriting. Underwriting is normally completed within a few working days and is followed by the agreement and rate sheet. Once the merchant reviews and signs this document, login credentials are created and the forex brokerage is ready to integrate and start processing transactions.
Forex brokerages are able to process as much volume as their business requires and will receive weekly, on time bank wire transfers. Larger forex firms will be eligible for receiving twice weekly wire transfers.
An additional client service is available, allowing brokerages to send funds to any Visa or MasterCard, anywhere in the world! This service is great for merchants who normally send funds to their customers (forex traders) and want to avoid expensive wire transfer fees. The fees are minimal and the funds show up on the recipient’s card within 2-3 business days.
Global Pay’s technical support is unmatched with any other payment processor. Forex merchants will receive quick responses to their technical problems. Global Pay has a full time technical support staff that can be contacted by using the ticket system in your control panel in addition to Skype and email.
One of the main concerns of any online business is minimizing their chargebacks. A chargeback occurs when a cardholder disputes a transaction and too many chargebacks can be damaging to a business. Global Pay offers a full suite of fraud filters that are able to be customized to meet the requirements of your individual business. Brokerages are capable of adjusting the settings themselves, allowing only legitimate clients to deposit funds.
Working with Global Pay LTD
Global Pay is a leader in the high risk payment processing industry. They specialize in setting up forex merchant accounts to clients based all over the world. Contact Global Pay today and speak with one of their account representatives to learn how quickly your business can be approved and setup.
Click the apply button below to quickly enter your information and an account executive will contact you back within 24 hours.