The nightmare continues for Forex brokers as transfers are being attacked from more angles. It’s been an ongoing battle with card payments giants like Visa and Mastercard blocking transfers and making brokerages operations difficult. Recent news signals that PSPs are freezing transfers as well as they also come under more ESMA pressure. What now?
No industry has been the target of increased scrutiny from payment providers as much as forex. On top of heavy regulation from ESMA, hostilities from payment service providers push FX companies on edge. The news is sudden as PSPs decided on this significant offensive move overnight given the EU regulation is also forcing their hand. Many brokerages halted some operations, and are facing substantial challenges. As a consequence, many market players are forced to look for offshore options, and even regulated entities feel the pressure as options are slimming day by day.
Many have voiced their concerns on ESMA’s new rules as it would have a massive impact on brokerages. It becomes more evident that PSPs are among the first consequences as they have the authority to keep client funds on hold. With clients questioning FX companies managing their trading funds, brokers need to move swift in finding payment providers that can fill the void.
In an ever-changing industry, payments have evolved too quick for brokers to adapt. New approaches and solutions are needed fast to keep the conversions coming. PSPs are declining transactions for various reasons from client’s bank, credit card company and specific jurisdiction laws.
Such delays are not beneficial for FX companies, and the outcome took the industry by surprise as it happened quick. For many brokers, a backup plan is not starting to shape up as a crisis is overshadowing operations. The freeze over the entire industry puts things in perspective for C-levels, but also for payment providers who are now looking at offering flexible solutions to brokerages.
With more key players blocking payments for FX companies, a binary is in sight – massive restructure and outsource payments processes or go home. The latest attack from the regulations, in the form of the PSPs, will test the industry as alternative payment solutions are needed to keep the ball rolling.