UTIP specialists have developed recommendations for forex brokers on how to get out of the crisis, circumventing the situation that has developed in the market.
Cryptoprocessing stands out for its lack of restrictions, low commissions, and ability to perform secure transactions. That’s why the tool is great for trading.
Since the beginning of winter, card processing for high-risk businesses has become virtually inaccessible. This happened due to a series of events initiated by the Central Bank and VISA. This freeze especially affected Forex brokers, as well as payment aggregators and a couple of banks.
At the end of the next year, the Central Bank imposed sanctions on “KIVI Bank” which included 11 million dollar fine and restriction of a number of transactions. Also, control purchases of VISA were made. Afterward, sanctions were imposed on one more financial organization, and large aggregators “FinTech” and “Onego” had to part with their license. It was these companies that performed processing through many payment systems in Russia.
At the moment traders are trying to get out of the current situation and are looking for new banks providing such services for Forex brokers. While no solutions have been found, we should evaluate the possibilities of cryptoprocessing, which has several advantages when compared to classical banking operations.
The standard commission for unlicensed traders for cryptocurrency transactions is about 4-6%, while payment aggregators working with VISA and MasterCard charge up to 10%. Bank commission is higher due to a number of objective reasons, such as sending option, selected currency, country of transfer, etc.
There are no delays in transactions with cryptocurrency, which acts as the second plus of such transactions. All transactions are carried out almost instantaneously, the slowest system is considered bitcoin, where it takes on average 10 minutes to credit funds. Latency in Litecoin rarely exceeds 2-3 minutes, while XRP transactions take several seconds.
VISA and MasterCard are also very fast, but there are several nuances in the high-risk segment that affect the success of a transaction. Sometimes payment systems cancel transfers due to misquoting or untrusted traffic. At the same time cards issued in certain countries are not suitable for transactions at all.
The third advantage of cryptoprocessing is the complete absence of miscoding. If a transaction raises certain suspicions, the financial institution can cancel it or hold it for additional scrutiny. Misscodding is referred to as situations where the firms receiving the transfer have their 4-digit number changed, indicating their specialization. For example, casinos without licenses rewrite the code 7995 (gambling) to 7994 (computer games).
Cryptocurrency has no regulator, so transactions are never blocked or canceled. There is no authority that can affect the transaction.
But it should be remembered that cryptocurrency also has a disadvantage – the conversion process. To exchange any coin, the owner needs to buy it, send it to the right address, and then receive fiat money back. Transferring cryptocurrency into dollars or rubles is quite a time-consuming process, and it is not always profitable and convenient to perform such operations.
On the other hand, card processing somewhat mitigates this disadvantage. To accelerate the work of high-risk traders in the crisis, payment aggregators conduct cryptoprocessing through VISA and MasterCard. Now the conversion of coins into fiat money and back for withdrawals is automatic.
There can be no miscoding when using bitcoins, etc. These transactions are conducted under a special number that does not require licensing.
For example, in the case of buying crypto with a VISA card, the payment system automatically chooses the rate based on the type of currency and volume of transactions. A special widget is used for this purpose, which translates coins into fiat money that gets to the aggregator’s trading account. The result combines the comfort of card processing with all the benefits of crypto.
Recently interviewed managers of payment systems believe that this method will become standard by the end of 2021. This will happen due to the fact that VISA and Mastercard have no plans, but the penalties for forex-processing will be more substantial and stiff.