How to effectively organize a Forex broker payment system in 2024

Anton Ananich -

A Forex broker's trading platform is a complex structure that performs a variety of the most complicated tasks. These functions include, among others, servicing clients' payment deposits. The smooth operation of this important process requires a well-organized collaboration with payment systems, which is one of the most time-consuming tasks that an emerging business may face. We asked the financial department of FXOpen, a broker that uses Soft-FX solutions to handle client deposits, how to properly set up a payment system for a Forex broker and what aspects need to be taken into account along the way.

Capturing the basics

Let's first get the key concepts out of the way. What are FX payments from the viewpoint of the business owner? In essence, we are talking about connections to international payment systems that can process deposit and withdrawal FX transactions for customer accounts. Robust FX payment solutions are necessary for the comfort of traders and to ensure a satisfactory trading turnover on a platform, and are also mandatory to maintain a global business presence.

The first obstacle: negotiations with the payment provider

Unfortunately, the foreign exchange sector is still considered by most payment providers to be a high-risk niche. This prejudice dates back to the times when there were plenty of unscrupulous companies on the market, and a lot of providers are still guided by this bias when making decisions. Among the rationales that influence the negative outcome of negotiations, there are two of the most commonly used:

  • A large number of chargebacks (requests for payment refunds);
  • A high level of fraudulent activity (e.g., payments from stolen cards).

We often come across the situation when payment providers set the higher rates for FX businesses than for gambling companies. For us, this kind of treatment looks a little odd, but we attribute it to the activity of market maker brokers, which do not always show up in the news in a decent state. As an ECN/STP broker, we work on a different model and we are interested in ensuring that our clients have no problems with deposit and withdrawal. Generally, if your provider understands this difference, it will be much easier to establish cooperation.

Alexey Gabinet

Deputy Chief Financial Officer

Possible steps

Be prepared for the possibility that you will have to prove your worth as a partner in negotiations with the payment provider. Reliability of the software solutions used, and also a business model and licensing information, which will be discussed below, could prove helpful.

Licensing and how it affects your payments infrastructure

Your relationship with a payment solution provider can be greatly influenced by your regulation and type of license. For instance, companies that are established in offshore jurisdictions are now finding it more and more difficult to build operations with traditional payment channels. Being under the close supervision of regulators, banks and payment providers do not always want to see brokerage businesses with an offshore license among their clients, and this trend is also understandable.

The setup of payment channels very much depends on the region where you plan to do business. Many payment companies limit the list of countries for which they can provide solutions, precisely because of regulatory requirements. For example, only recently, due to government decisions, Russia has become a rather difficult region for brokerages to connect payment systems. Because of state protectionism, it is very difficult to get a widespread payment solution in China as well.

Alexey Gabinet

Deputy Chief Financial Officer

Possible steps

Keep in mind that the lack of a license will significantly limit your choice of payment solutions demanded by traders. Also, for regions, where it is difficult to obtain a payment solution due to state restrictions and severe regulations, it may be a good idea to establish an additional payment channel, which can work as an exchanger. For example, the connection of crypto payments can be a good way out for brokerages, which are limited in their choice of options for fiat payments due to relations with regulators. However, when choosing a crypto service, one should be very careful and pay attention both to the technical state of the proposed solution and the commission rate. Whichever solution you resort to, you need to comply with all the security measures of each payment channel, as we'll talk about below.

Forex Broker Turnkey from Soft-FX is an off-the-shelf software solution that incorporates a crypto processing service that can be utilized as an additional payment channel for regions with complex regulatory conditions. None of the software components impose deposit or withdrawal transaction fees, and converted fiat funds can be automatically credited to the client's personal account.

Ensuring payment channels security

Virtually all procedures for securing deposit and withdrawal transaction channels are the responsibility of the broker, so significant resources must be devoted to this area of activity. Payment system security in brokerage infrastructure includes a whole range of activities:

  • KYC/AML procedures that verify customers and verify their relevance to real-life individuals;
  • The anti-carding system, which may involve a ban on the withdrawal transactions anywhere other than the card they were made with and other;
  • Client account monitoring for suspicious activity, which may involve deposits and withdrawals without trading activity, ID mismatch in the trader's cabinet and the account engaged in FX transactions, etc.
  • Anchoring the deposit size to the verification procedures intensity, all the way up to the documentary confirmation of the funds’ origin.

The experience of financial department personnel plays a significant role in ensuring the security of FX payment channels. This includes both dividing the regions a brokerage business works with into less and more risky ones and tracking and sifting out relevant information that might raise red flags. For instance, when a potential client in 2024 claims to be unable to pass a live check due to lack of a camera, it is bound to make an experienced financial officer suspicious. We also had a case where our department received information that an individual in a city in our jurisdiction was trying to get personal information from people at a shopping mall to register them in our system. Of course, such episodes will not always prove to be true, but they must always be checked very carefully because our clients' money is at stake.

Alexey Gabinet

Deputy Chief Financial Officer

Possible steps

As hard as it is to admit, any developed FX brokerage business will sooner or later face the scam threat. And as long as this state of affairs persists, it is essential to reduce the possibility that your business may be damaged by fraudsters by all available methods, because the loss of client data and funds may be a blow from which your trading platform simply cannot recover. Financial officers should investigate when there is the slightest doubt about credibility, and make an informed decision based on all collected data, not excluding the denial of client registration in the most extreme cases. Here you will also benefit from knowing your target audience, which we will talk about as we conclude this publication.

Exploring the target clientele

Ultimately, you must not forget why you are organizing payment channels on your brokerage business. They will be used by your clients, and the extent to which you are aware of their needs will determine how much you spend on connecting the FX payment channels and how much you save on unnecessary costs. Most clients will expect Visa and MasterCard to be available on your site, as well as bank transfers. But is it worth the time and effort to connect terminals? Do you need WebMoney in the very first iteration of the service? In order to answer these questions, you need to analyze your client base.

Virtually all clients have cards and bank accounts, and losses in the customer base are most often caused by problems with these two channels. But the presence of all other FX payment systems can be justified by your vision of the target audience. For example, if the core of your clientele is people under 30 years old, then you just need to connect cryptocurrency payments in one form or another.

Alexey Gabinet

Deputy Chief Financial Officer

Possible steps

Study your client base and find out which deposit methods your traders prefer. Then overlay this data with regulatory requirements, and you'll have a roadmap to implement the first iteration of your FX payments infrastructure. Also, be prepared to adjust implemented FX payment solutions according to changing market requirements.

Forex Broker Turnkey from Soft-FX is a white-label software solution that includes pre-installed connectors to popular payment systems. With the software delivery package, we can also provide consulting on setting up a payment infrastructure customized for your business.

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