Exclusive: VISA and Mastercard Continue Global Crackdown on Forex

The card Payments Payments One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonl One of the bases of mediums of exchange in the modern world, a payment constitutes the transfer of a legal currency or equivalent from one party in exchange for goods or services to another entity. The payments industry has become a fixture of modern commerce, though the players involved and means of exchange have dramatically shifted over time.In particular, a party making a payment is referred to as a payer, with the payee reflecting the individual or entity receiving the payment. Most commonl Read this Term giants are continuing to crack down on the global Forex Forex Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Foreign exchange or forex is the act of converting one nation’s currency into another nation’s currency (that possesses a different currency); for example, the converting of British Pounds into US Dollars, and vice versa. The exchange of currencies can be done over a physical counter, such as at a Bureau de Change, or over the internet via broker platforms, where currency speculation takes place, known as forex trading.The foreign exchange market, by its very nature, is the world’s largest tradi Read this Term and CFDs brokerage industry. The latest proof comes from a particular change in the business environment for regulated brokers in Belarus and other jurisdictions offshore.

Brokers operating across Vanuatu, Marshall Islands, Belize and others have been recently facing increasingly tight restrictions from payment service providers. Card payments are the most materially affected and are becoming more and more difficult to process.

In the resulting race between PSPs, there is no long-term winner - the only consistency over the past several months is the rising cost of processing card transactions for brokers which are not regulated in major jurisdictions.

While we have long known that VISA and Mastercard are aiming to curtail the operations of brokers globally, we are getting a glimpse of how far they are willing to go with the latest actions directed at monitoring the client flows of Belarus-regulated brokers.

VISA and Mastercard demanded from the companies to show that they are allowed to charge the cards of overseas clients. The brokers have been asked to provide legal proof to the card companies that they are allowed to service customers from outside of Belarus.

“The demand is absurd, the service of overseas clients on the territory of Belarus can’t be constituted as an action which is carried out outside of the country,” a senior executive from the industry commented to Finance Magnates.

Rules & Regulations vs. Conditions

Brokers which are operating in Belarus are technically only required to conform with local rules and regulations. In the case of Australia however, recently the local regulator asked firms to provide legal advice that they are allowed to be on-boarding clients from overseas jurisdictions.

The latest demand from VISA and Mastercard to the locally operating brokers in Belarus only serves to prove how deep is the effort to curtail forex and CFDs trading outside of appropriate channels. Brokers regulated offshore have already started to experience significant difficulties to process card transactions.

The card deposit processing fees for brokers have also increased quite significantly with solutions to the issue rarely being widely available and long-term.

While brokers which are regulated in the EU, UK or the US can freely onboard clients from Belarus, the local brokers are pressured by the card processors to avoid on-boarding overseas clients. The asymmetric treatment of brokers is regardless of existing laws and regulations.

Brokers in Belarus have suspended processing card deposits from overseas since about a month ago. The main alternative provided to clients is a bank wire deposit which is slower and typically less convenient for customers. For the time being some companies have offered to reimburse their clients for the wire transfer costs when withdrawing funds from their accounts.

Over the past six months, parts of the regulated forex and CFDs brokerage industry has been coming up with ways to go around the European regulations. With the market remaining very lucrative, some solutions have worked for a time. In the long run however it appears that financial authorities are closely working with payment providers and big tech to close any prospective loopholes regardless of the official laws.