So you have made up your mind to start a forex brokerage business and have sorted out everything like company formation, forex license, forex white label, website, etc. and the final thing that remains is the payment solution that you would like to offer to your clients?
You need to choose from different FOREX BROKER PAYMENT SOLUTIONS.
We understand why you are searching for information about the payment methods for your Forex brokerage business. The KYC requirements and approval process make everyone anxious especially when you hear the stories of how a Forex Merchant Account with large deposits in it is put to freeze by a bank or payment gateway because of some regulatory intervention.
This is where most start-up Forex brokers get stuck as there is very limited information available about how to receive payment from Forex trader clients.
At the very beginning, a start-up forex broker can accept payment in BTC & USDT and then should get the Forex Merchant Account from a bank that allows the fund transfers (deposits and withdrawals) for forex trading purposes and when they have set their feet, they should go for a complete payment gateway solution that not only supports bank transfers but also accepts all majors cards and payment wallets like Skrill, Neteller, etc.
Of course, all these different payment methods for forex brokers come with a caveat;
- They need to be compliant with the jurisdiction under which the brokerage business is incorporated and
- They need to be compliant with the laws of lands from where their clients are going to make the deposits and get withdrawals.
Ignoring these important things can seriously jeopardize your forex brokerage operations.
Top 5 Forex Payment Methods for Brokers;
There are different Forex Payment Methods available for Brokers right from traditional methods to modern and advanced solutions.
Here are the Top 5 Forex Payment Methods for Brokers;
- Bank Transfers
- Debit & Credit Cards
- Digital Wallets
- Cryptocurrencies like Bitcoin, ETH, USDT, etc.
Let’s understand them all one by one but the sequence is to be rearranged as per the ease of the method.
1. Payment by Cash
The cash Payment method might sound pretty primitive and traditional for a high-tech business like forex brokerage but it still is the easiest way when you are starting up. Think it this way, when you are going to start your forex broker business, your initial capital could be contributed by you, your partners, and some close friends.
Not only this but most of your initial clients are going to be from within your network. You can get the deposits in cash from them and make payments in cash wherever possible.
Cash Payments are quick and easy but have limitations when it comes to scaling up. You will have to move quickly to more convenient payment methods we are going to discuss ahead.
2. Payment through Crypto Currencies like BTC & USDT
If you want to start receiving deposits quickly for your forex brokerage, you can start accepting payments in crypto like BTC, USDT, ETH, etc. Payments in Bitcoin are getting very popular as it’s faster, low cost, and very convenient.
While doing the initial research of your target market, you could just check whether your target forex traders would be comfortable in making transactions in crypto.
It shouldn’t be difficult as most forex traders are already trading in cryptocurrencies and they understand the benefits of making transactions in them.
In fact, we have noticed that most forex traders prefer to make deposits and get withdrawals in their favorite Cryptocurrencies like BTC, ETH, and USDT. But they need to have trust in you.
3. Forex Merchant Account
Forex Merchant Account is a class of banking solutions for different forex solution providers offered by retail and commercial banks. These merchant accounts are issued specially for the following two classes of forex businesses:
- Forex Brokerages and Trading Platforms
- Ancillary Services & Solutions like forex trading education, software, technology and other solution providers.
4. Payment Gateways for Forex Brokers
While the forex merchant account helps a forex broker to send and receive payments using different credit cards, debit cards, and bank wires, when it comes to integrating other payment modes like digital wallets (Neteller, Skrill, etc) and crypto (Bitcoin, Ethereum, USDT, etc), a comprehensive Payment Gateway is required.
There are different Payment Gateways for Forex Brokers that help them get the deposits and make withdrawals not only by bank transfers and cards but different modern and trending payment methods of crypto, digital wallets, etc.
Why should a Forex Broker get Merchant Account or Payment Gateway?
Depending on your forex brokerage business stage and requirement, you may opt for any of the payment processing methods mentioned above. See, when you start and run a forex brokerage firm, you need to make different transactions:
- Getting deposits from your trader clients
- Giving them withdrawal
- Payments to forex brokerage solution providers and other vendors who could be located across the world
- Fee & Tax payments to regulatory authorities
- Salaries to employees
Things to consider before getting Forex Merchant Account or Payment Gateways
Forex Brokerage business falls under the high-risk businesses for banks and payment gateways. When it comes to merchant accounts and payment gateways, high-risk businesses are typically those which have higher chargebacks, spamming, fraud, and scam complaints.
FX Brokers are considered high-risk merchant accounts which not every bank or payment processor provides.
Since they know that some of these issues like higher chargebacks and complaints could be due to user issues also and therefore they do provide banking and payment processing solutions to forex brokers.
But their KYC Requirements, approval processes, and transaction charges are higher than other businesses.
Here is the list of key things you should consider before getting Forex Merchant Account or Payment Gateway for your Forex Brokerage Business.
- KYC Requirements & Approval Process
Every forex merchant account providing bank and payment gateways have their own set of KYC requirement which largely depends on the regulations and their own risk management team and compliance.
- Transaction Charges
Once the KYC requirements are clear, one must consider the transaction costs of a forex merchant account or payment gateway. As discussed above, the forex brokerage business is classified as high risk therefore the transaction charges are higher too.
One can expect 5-12% transaction charges for a forex merchant account and payment gateway.
- Bank Network
As you would expect the forex traders from different parts of your operating jurisdictions, you should expect a wider list of banks from which they would be making deposits. It’s a good idea to go with a payment processor that covers an extensive network of acquiring banks.
- High Volume Processing
While doing fx brokerage business research you must have made some estimations of a number of clients and expected volumes of deposits. Do share these estimates and future expectations of high volume processing with your payment gateway.
They should be able to handle high-volume processing.
- High Ticket Processing
Every Forex Brokerage has some high-ticket, high-volume clients. Your merchant account or the payment processor should be able to handle these high-ticket transactions.
- Multicurrency Processing Capabilities
Forex Trading essentially is a multicurrency business and a brokerage that caters to traders from different locations who will definitely have traders that would want to make transactions in different currencies.
You should go with the Forex merchant account that lets you accept payments and receive settlements not just in USD but in all major world currencies like EURO, JPY, AUD, etc.
- Multiple Payments Methods
When you a forex broker connect with potential clients; one of their common questions is about the payment methods and if they could make payments using a debit and credit card.
You should go with a merchant account that accepts all major card brands like Visa, Master Card, Maestro, AMEX, etc.
- Multi-Channel Payments
You should have multi-channel payment capabilities to accept payment via web browsers, mobile, etc. Ask for Unlimited virtual terminals for MOTO (Mail Order/Telephone Order) transactions. In addition to all these, they should allow you to upload bulk-processing files for rapid processing.
- Secure Features
PCI-DSS Level 1 Protection
White / Black Lists. White list customers authorized for high ticket transactions. Blacklist bad customers & fraudsters.
Address & Identity Verification. Match card data with buyers’ addresses. Add ID verification services to verify the identity of traders.
AI-Based Anti-Fraud Mechanism. Artificial Intelligence-based anti-fraud mechanisms should be in place to identify potential threats and fraudulent transactions.
List of documents required for Forex Merchant Account Opening:
- Passport Copies of a key person or signing authority
- Canceled cheque of the bank account to which processing funds will settle;
- 3-6 months’ business bank statements
- 3-6 months of payment processing statements
- Forex Company formation documents such as Company Certificate, Articles of Incorporation, Business License
- International trading platform Forex merchant accounts require processing history showing a minimum of $250K per month to qualify for an account.
Hope we could give you greater clarity on different payment methods available for forex brokers and how to choose the best forex merchant account or payment gateway for your fx brokerage.
There are several forex payment solutions available these days so forex brokers need not worry about it much.
Just know your Forex broker business plan and look for the payment processors that fit into your present and future plans.
Enquire as much as you can so that you know what you are going to get and there wouldn’t be any surprises when your account is getting regular funds.
Please feel free to contact us to ask any further queries. We will be happy to help you.