Forex Merchant Account
A forex trader or foreign exchange trader; buys and sells different currencies on the foreign exchange market. Brokers accepting payments from these merchants will need the services of a forex merchant account. Regardless if these traders are private, amateur investors or professional investors who work for an investment company, accepting payments can be challenging.
Prior to the internet, the foreign exchange market was reserved for international banks, wealthy individuals and investment firms. Today, forex trading is readily available to retail traders all over the world. These traders are now able to open an account with one of the online brokerages and trade currencies from their home.
The growth of forex has been due to a number of factors but accessibility and technology have led the way. Residential internet speeds have become faster and less expensive and retail traders are now able to open a trading account with as little as $50 or $100 and trade dozens of currencies on their smartphone, tablet or laptop.
What is Forex?
Forex or the foreign exchange market is a global market where all of the world’s currencies trade. It is the largest and most liquid market, with over $5 trillion in daily trading volume. The market offers the ability to exchange one currency for a different one and is open 24 hours a day, 5 days a week.
An example of a forex transaction would be if you traveled from New York to Rome; you would find a currency exchange office to convert your US Dollars to EUROs. At this exchange office, they will have screens showing the real-time exchange rates they are offering. The current exchange rate is dependent on the supply and demand of the currencies you are exchanging.
When trading forex, traders are simultaneously selling one currency while purchasing another. The currency pair (i.e. EUR/USD) denotes what is being sold and what is being bought. In the EUR/USD example; EUR is being purchased and US Dollars being sold. Retail traders usually want to profit on the price differences in currencies. They do not want to take actual delivery of the currency. This virtual trading is the reason why forex merchant account services are deemed high risk.
Types of Forex Merchant Processing
- Credit Card Processing; is the most sought-after payment processing solution for forex brokerages however; Visa and MasterCard regulations make these solutions very unstable. Most forex merchant account solutions do not last more than 6 months and once they are closed, forex credit card processing banks will keep their merchant’s funds.
- Check Processing; is becoming the most popular method for accepting forex payments. Payments and deposits are all processed within one company, with no middlemen, and paid out within days, not weeks. There are no Visa/MasterCard restrictions and payments are not categorized with a Merchant Category Code (MCC) code. Canada and the United States make up most of the check processing traffic.
- Cryptocurrency; is one of the least popular payment solutions since most forex traders do not want to transfer their funds to Crypto before depositing it to trade forex. As a broker, do you really want to send your clients to another website in order for them to process their deposit?
- Wire; one would think that bank wire transfers are the forex brokerages’ preferred payment method however; bank wire transfers pose a risk similar to credit card processing. Add this to the fact that the trader has no payment recourse, and this is a very unfavorable payment method for both traders and brokers.
Why are Forex Merchant Account Services Considered High Risk?
Forex payment processing is considered high risk for a number of reasons. Unlike other industries, forex brokerages are usually required to be licensed, when they are not, it becomes a gray area.
Forex merchant account payments have a high average transaction amount; with most transactions over $1,000 and $2,500 regularly. These higher the transactions, the more likely it is a chargeback will take place.
Over the past 20 years there has been a crackdown on anonymous financial transactions. Brokerages and banks are required to collect KYC (Know Your Customer) documentation which verifies that traders are who they say they are. Their information much match their brokerage account, the bank account the trader is using with the brokerage and then all of this information is cross-referenced with different government terrorist watchlists. If a bank or processor makes a mistake, they could lose their license because of facilitating money laundering.
Forex is an international business with traders and brokerages in many countries and jurisdictions. A broker that is licensed in one country may not be considered licensed in another country. Likewise, a trader may be in a country where it is not legal to trade forex but the broker’s license does not specify if it is legal or illegal to open an account for a trader in that country. This burden lands on the shoulders of the processor and the bank. They are left with the job of blocking certain countries from trading and consistently reviewing new laws and regulations for countries around the globe.
Is Forex Credit Card Processing Available?
We enable foreign exchange brokers to accept payments with a forex merchant account. Offering the lowest rates, fastest payouts, and easy account approvals; merchants have a good track record at Allied Payments.
- Lowest Rates: No matter how much you process each month.
- No Monthly Volume Cap: No need to turn away traders because you have reached your monthly limit.
- High Transaction Limit: Allow your large traders the ability to make large deposits with ease.
- Fraud Mitigation: Minimize fraud by utilizing our suite of fraud prevention tools.
- Easy Approval: Account approval is usually completed within 72 hours.
- Simple Integration: Quickly and easily integrate with our gateway.
Forex Payment Processing with eCheck
Are forex card processing companies charging your brokerage high fees? Are your payouts delayed 1-2 weeks? Forex echeck processing is the solution to your brokerage’s card processing problems.
New forex echeck accounts are easily approved and setup. Our proprietary echeck payment platform is operated 100% by firm. We approve the accounts, manage risk, clear payments and pay merchants.
- No Visa/MasterCard restrictions: Regulations placed by the card associations do not affect echecks.
- Fast payouts: Payments are wired to the merchant once they clear.
- No middlemen or third parties: No platforms, no card issuing banks and no acquiring banks to hold your funds.
- Echeck processing is the most consistent and stable forex payment processing solution.
Forex Bank Wire Solutions
Forex brokerages have always preferred bank wire transfers over any other payment method; mainly because of the lack of recourse the trader has and faster receipt of funds. When a brokerage accepts a credit card, it could take up to 3 weeks for them to receive only 80% of their funds. A wire transfer makes their receipt of funds a much quicker process and usually the fees are only a few percentage points.
The problem with bank wires is that the brokerage is relying on a third party to process their payments; they rarely receive the funds directly into their brokerage bank account. The brokerage is left trusting sometimes millions of dollars with a money transfer agent who is usually not licensed. A very risky payment alternative to a forex merchant account.
Forex Merchant Account Application Requirements
There are several documents that will be required to approve and setup forex merchant services for your brokerage. Once the processor has them, approval will take a day or 2.
- Completed Application
- Government Issued ID (Passport)
- Corporate Documents
- Utility Bill (Confirming Address)
- Screenshot of Domain Registration (Proving Domain Ownership)
Providing the underwriters with a complete application will help increase the approval time of the account. Similar to other types of financial products, banking organizations need to know who they are working with to prevent the risk of any illegal activities including money laundering and terrorism. After a quick check of a companies financials and corporate history, most underwriters can approve an account in days and set the forex brokerage with forex merchant account services.
Start your Forex Merchant Account Services Today
Businesses looking for a merchant account for forex brokers anywhere in the world are welcome to apply for a payment processing account. Our simple application process will allow your brokerage to be approved within a few days. Our firm requires a simple application to be completed while submitting a few supporting documents. Our forex merchant services underwriters will review the account and provide feedback, usually within 24 hours. Contact one of our forex payment processing specialists today to get started.