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Merchant accounts are component of the payments ecosystem that are essential for the brokerage business.
These allow the company to accept multiple types of payments but namely credit and debit cards.
In contrast to a traditional bank account, the regulations for merchant accounts are less stringent.
A merchant account is established between the company accepting the payment and a merchant acquiring bank.
Per merchant agreement directly with an acquiring bank or via an aggregator, ay agreement contractually binds the merchant to obey the operating regulations established by the card associations.
Sometimes the payment processor or other parties in the payments ecosystem may be participating in the agreement too.
The merchant can traditionally establish a direct relationship with a bank or use an aggregator in order to comply with the regulatory framework of card associations.
Brush with FX Industry
In April 2019, Visa and Mastercard took aim at the FX and CFDs industry with tighter regulations.
The legislation was part of a globally coordinated effort to reign in the respective industries, resulting in difficulties in processing card transactions.
In tandem with this move, card deposit processing fees for brokers also increased quite significantly with solutions to the issue rarely being widely available and long-term.
The impetus behind this trend was an emphasis on regulated brokers and the transactions that they require.
However, the efforts have proven uneven in their impact in certain jurisdictions.
Looking ahead, additional regulatory efforts will likely be coming, taking aim on payments within the FX sphere.
This could further define or strain the relationship between payments providers and brokers.