Payment priorities for the forex industry
According to the Triennial Central Bank Survey of FX and OTC derivatives markets, The Forex industry is the biggest financial market globally – even larger than the stock market, with a daily transaction volume of $6.6 trillion. One of the main reasons as to why the volume of daily transactions is enormous is the fact that the Forex industry is a global market: anyone who has access to a phone or a computer can start trading. The Forex market is the largest, fastest, and easiest to access for trading investors globally. As Forex brokers experience a vast amount of daily transactions, it is essential for them to provide a quick, smooth and efficient payment process to their customers.
In this blog, we will discuss the various solutions that Forex brokers need to look for when considering which payment gateway to partner with. Huge transaction volumes for the Forex industry attract fraudsters trying to take advantage of non-secure payment processes. Additionally, the Forex market experiences a substantial level of chargebacks. This is one of the reasons why card schemes consider the Forex industry as high-risk. Hence, it is of utmost importance that Forex brokers establish a partnership with a payment gateway provider that understands the market and the concerns of the participants within the industry.
Speaking of fraudulent transactions, Forex brokers need to consider the Secure Customer Authentication (SCA) implementation based on the recent Payment Service Directive 2 (PSD2). One way to implement SCA is through 3DS, which aims to increase the security of electronic payments. Besides being PSD2 compliant, 3DS also counters fraud while increasing transaction success rate. These solutions protect brokers from high 3DS acquirer fees when transactions are declined. Additionally, 3DS also provides a frictionless checkout experience for customers.
We have been hearing more concerns of issues arising from 3DS2 implementation where it is causing friction within their payment process. Therefore, it is important for Forex brokers to partner with payment gateways who can provide 3DS2 solution and help combat these frictions. One way payment gateways can oppose these frictions is through 3DS routing. This allows Forex brokers to implement their very own 3DS2 strategy and maximise success rates. This strategy entails choosing between 3DS2, 3DS1, Low Value and Transaction Risk Analysis exemptions, and no 3DS. 3DS routing sends transactions to the most efficient authentication protocol while also taking exemptions into account.
Multi-acquirer setup & Intelligent Transaction Routing
It is crucial that Forex brokers choose payment gateways with a multi-acquirer setup. If a specific acquirer is down, having another acquirer helps them establish business continuity as payments can still be done through cascading. Cascading is a process in which failover transactions reroute automatically to a secondary acquiring bank.
Forex brokers can also enhance their strategy on selecting the acquiring banks they prefer for different kinds of customers. This is done by using Intelligent Transaction Routing (ITR). With preferred customization and automation levels, ITR automatically determines every transaction’s optimal route, subsequently allowing merchants to achieve the most optimal payment success rate. One will reap three main benefits from using ITR: Increased payment success rate, minimised transaction costs, and improved online experience.
Instant transfers: one-click payments
The Forex market is proven to be very time-sensitive. Therefore, it is imperative that payment gateways allow investors to execute instant transactions. One feature that Forex brokers can utilise is the ability to execute transactions through a single click. This is called one-click payments. Forex brokers should be able to provide a frictionless payment process for their customers through this feature.
A competent payment gateway will have this solution and the ability to monitor real-time transaction data for Forex brokers. This solution can help Forex brokers greatly improve customer retention, boost conversion rates, and reduce app abandonment rates.
Recent developments in technology have allowed easier access to Forex brokers. Subsequently Forex brokers are experiencing increased demands of customers located in different countries. It is therefore essential for one to provide transactions for international investors in their local currencies. We have observed increased purchase abandonment rates due to the failure in providing localised payment currency and language. Forex brokers need to establish a partnership with a payment gateway which can provide both multiple currency transactions and support for their local language.
We have discussed some of the features that Forex brokers need to consider when they seek to establish a partnership with a payment gateway. While multiple payment gateways can offer the mentioned features, it is absolutely essential for Forex brokers to partner with payment gateways who fully understand how to implement and optimise 3DS2.