According to the new rules, payment processors dealing with transactions of such high-risk securities merchants must demonstrate to Mastercard that adequate due diligence has been applied. This means that brokers and ICO issuers will be required to present evidence that they operate legally in a given jurisdiction (a copy of the merchant’s license issued by the respective authority).
Probably because someone would use one of these brokers offshore, use their MasterCard to fund it, get ripped off, and expect MasterCard to be responsible for their decision and refund their money?
credit-card companies sometimes lead the way where governments eventually follow (several already have, actually, regarding unregulated brokerages and binary options “brokers”, as you know yourself from other stuff you’ve kindly posted here)
(i doubt, myself, whether anyone silly enough to fund a trading account by credit-card is ever trading profitably, anyway)
Actually that sounds pretty legit. Although, I’m not sure if anyone could hold the card issuer liable unless he has some kind of additional insurance negotiated as protection from scams or hackers. Besides, if MasterCard clearly stated this in their policy, I don’t think that the clients will have the option to expect any responsibility from the issuer. It will be solely their loss.
They will ill require all forex and CFD brokers, providing services in the European Union, to show an official copy of their license, allowing them to offer financial services to retail clients.
Slowly but surely we’re getting more and more regulation. This is a good thing, IMHO.
The harder it is for shady brokers to work, the better.
Less chance for the newbies and experienced traders to get lured in by bucketshops.
In the UK, credit card issuers are legally liable if you use the card to buy an item or service from a supplier registered with the card company. So if e.g. the supplier goes bust and you don’t receive what you ordered, the card issuer is liable to re-fund you if the transaction was between £100 and £30,000.
The reasoning is that the card issuer went into a profitable arrangement with the supplier before the consumer eve got involved, so they have a responsibility for the suppliers they allow to accept payments using their cards.
I can’t right now confirm if this applies also to cash deposits made to a broker through a card but the way I read the blurb I believe it does.
Yes, but on the other hand scams still can be made through online wallets and payment providers like PayPal, Skrill, etc. I don’t think if they strictly regulate the credit card providers, this will decrease the frauds but it’s a good start I guess.
For one, currently offshore brokers have to pay a much higher fee for processing card transactions, compared to the one payed by brokers, regulated in the European Union, USA, Canada, Australia or Japan.
What is more important, however, now offshore brokers will have to prove that they are allowed to charge the cards of overseas clients.
I dont think that this will stop illegitimate brokers to operate. There are other means of payment that are in use for many years and are preferred by many traders. All of them are either card payment processors or online accounts. So, there is variety of ways to switch MC payments
