As expected, card payments are becoming more and more difficult for some brokers. Those who are operating from unregulated or loosely regulated environments will need to find alternatives.
Sources with intimate knowledge of the matter confirmed to Finance Magnates that card providers MasterCard and VISA are proceeding with their actions against forex, binary, cryptos and ICOs.
Back in April Finance Magnates reported that MasterCard is the first company to classify the industry as high risk. The move effectively meant that chargebacks could be executed up to 540 days after the date of the transaction.
As we suspected at the time, VISA came up with a similar announcement to MasterCard. The company has sent out a letter to payment processors that starting from December, transactions to forex, binary, crypto brokers and ICOs are becoming high risk.
Changes to the Industry
Firms which are operating from loosely regulated jurisdictions are the primary target of the move. Some brokers and exchanges have already informed their clients that they will no longer be accepting credit card deposits.
MasterCard is implementing its changes starting from next Monday, while VISA will take its time until December. Payment processors are suspending their relationships with some clients until they find a viable solution.
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The Cat and Mouse Game
EU-regulated brokers are suffering due to significant changes to their operations stemming from the new regulatory framework. Meanwhile, offshore and unregulated companies are now facing a challenge from the new policies implemented by VISA and MasterCard.
The operations of some companies are set to get affected materially. That said, the eternal cat and mouse game between regulators and businesses is set to continue.
Over the past several months the number of call centers for unregulated companies has not declined. New locations are mushrooming across the Balkans, former Soviet Republics, and the Far East.
Payment processors are also preparing new alternative solutions to address the roadblocks for their clients in the coming months.
Alternative Payment Options
Clients of brokers who are operating from loosely regulated jurisdictions and unregulated companies are facing a tough time. They either have to become entirely reliant on bank wires and alternative payment providers or await a solution to the problem on the part of their payment processors.
Until such a solution becomes a reality, payment processors are set to suspend services to some brokers and cryptocurrency exchanges.