Visa and MasterCard run the global payment markets and any major decision they make undoubtedly had consequences for the rest of the industry. The two major card providers have started a crackdown on the global forex and CFD industry and it is causing quite a stir throughout the world.
Brokers in Belarus and Belarus-licensed brokers who operate in Belize, the Marshall Islands, Vanuatu and others are reporting that they are facing tighter restrictions from the two payment service providers.
Forex and CFD brokers in the country are finding it difficult to run their business as credit card processing has been the most affected.
What is interesting to note is that while Visa and MasterCard are major competitors, they are carrying out similar operations in Belarus with regards to the crackdown on the forex and CFD industry. The two companies are raising their transaction fees for brokers who are not regulated in major jurisdictions. This is an obvious move directed at slowing down the flow of clients to these brokers.
Both payment providers are demanding proof from offshore brokers which show that they are authorized to charge the cards of overseas clients. Additionally, they have been asked to present legal proof that they are allowed to accept customers from outside Belarus since their license is restricted to Belarus.
One of the interesting things about the request for proof is that, technically, Belarus-licensed brokers are only required to meet with the rules and regulations imposed by Belarus. It was only in Australia recently where brokers were forced to meet with overseas regulations in order to service overseas clients.
This demand from Visa and MasterCard is quite unreasonable but still well within their rights. However, it is bad news for brokers who depend on their license to accept business from outside regular channels. They have already reported difficulties in transactions. It also doesn’t help that card processing fees have gone up with no alternatives available.
It should be noted that brokers who have licenses in the EU, the UK, and the US are having no problems in accepting clients from Belarus. Only Belarus-licensed brokers are having problems taking on overseas clients. This is why many brokers in Belarus have already stopped processing card payments. Right now, the only way to accept payments for CFDs and forex is via bank wire deposit, which is slow and very inconvenient.
However, this new move from payment providers is just a symptom of the struggle between forex/CFD brokers and European regulators. The brokers have been finding alternatives for the past six months but it seems that the regulators have the payment providers on their side.