Home Market News VISA and Mastercard Proceed with Crackdown on Forex and CFD Brokers

VISA and Mastercard Proceed with Crackdown on Forex and CFD Brokers


VISA and Mastercard are continuing to ramp up their restrictions on forex and CFDs brokerages around the globe. The most recent evidence stems from a specific transformation in the business conditions for regulated brokers located in Belarus, as well as other offshore jurisdictions.

Forex and CFD brokers operating within Vanuatu, Marshall Islands, Belize and other locations have been dealing with increasingly tougher restrictions on the part of payment service providers. Credit and debit card payments are the most physically impacted and are becoming increasingly more challenging to process. In the ongoing race between payment service providers, there is no winner over the long term. The only consistent action over the past months has been the growing cost of processing card payments for brokers which do not hold any official regulation within major jurisdictions.

It has been clear for quite some time that VISA and Mastercard are making an effort to suppress the operations of brokers worldwide, we are now starting to see just how far they are prepared to go with the most recent actions aimed at overseeing the client statistics of Belarus-regulated brokerages. VISA and Mastercard are now requiring that companies prove that they are permitted to charge the cards of international clients. In addition, brokers have been required to supply lawful evidence to the card businesses that they are authorized to provide services to customers residing outside of Belarus.

Brokerages which are currently operating within Belarus are only officially required to abide by local policies and regulations. In the instance of Australia however, the area regulator asked brokerages to supply legal guidance showing that they are permitted to be taking on clients from overseas locations. The newest requirement from VISA and Mastercard on the brokers in Belarus only goes to prove how serious the efforts to reduce forex and CFD trading outside of proper channels truly are. Brokers which are currently regulated offshore have already begun to encounter considerable complications with processing card transactions.

The VISA and Mastercard deposit processing fees for brokerages have also climbed quite substantially with remedies to the problem seldom being widely offered or long-term. Whilst brokers which are currently regulated in the EU, United Kingdom or the United States can freely accept clients from Belarus, local brokerages are being pressured by card processors to steer clear of accepting overseas clientele. The unequal treatment of brokers is irrespective of current laws and regulations.

Brokers based in Belarus halted incoming card deposits from overseas clients since approximately one month ago. The primary alternative deposit method being offered to clients is a bank wire transfer, which is slower and generally not as convenient. For now, some firms are offering to refund their clients for any wire transfer fees incurred when depositing or withdrawing money from their accounts.

Over the course of the past six months, portions of the regulated brokerage sector have been developing ways to work around European regulations. As the market continues to be quite lucrative, some alternatives have worked over the short-term. Over the long-term, however, it seems that financial regulators are working closely together with payment providers to close any potential loopholes irrespective of the official laws and regulations.


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