Mastercard Targets Online Trading

Mastercard cracks down on binary options and unregulated forex

In what seems like a well-synchronized effort, MasterCard has seemingly shut the door on a loophole that unregulated forex, binary options and CFD brokers have used to solicit their fraudulent “products” to unsuspecting investors. The company recently sent out an email to numerous payment processors notifying them about the imminent changes.

Binary options, CFDs, forex, cryptocurrency options and ICOs are considered “high-risk” according to MasterCard. However, that will soon change. According to the letter any high-risk business that operates without a license in their given jurisdiction will fall into a new category.

High-Risk Securities Merchants

In the past, Mastercard mandated that any business that is designated aa a “High-Risk Securities Merchant” all transactions are cast into a special group that has the number 6211 as the card acceptor business code. This number indicates that clients have a 540-day period to execute a chargeback.

Beginning, October 12, 2018, (a total of six months from when the payment processors received MasterCard’s letter) revised standards for high-risk securities merchants will officially commence. Additional monitoring will be applied to any “high-risk securities merchant” that uses Mastercard, Debit Mastercard and Maestro.

New set of rules

All brokers whether they be forex or CFD and ICO issuers will only be allowed to execute transactions in areas where they are legally permitted to operate. Additionally, any payment processor who is processing the transactions of a high-risk securities merchant must demonstrate to Mastercard that adequate due diligence has been applied. Brokers and ICO issuers will be required to present evidence of legal authority to operate in a given jurisdiction.

Such evidence can be a copy of the merchant’s license to operate issued by the official authority in the given country and a copy of a licensed exchange or licensed trading platform with which the broker is operating. Payment processors will be required to cease all processing of high-risk securities transactions from such merchants until presented with the said documents.

If the local regulatory agencies are not authorizing such operations in the given country, a legal opinion from a reputable local company must be presented by the brokerage or the ICO issuer that identified all relevant trading laws and other laws applicable to the brokerage. Furthermore, the legal opinion must contain all pertinent trading rules and other laws related to credit or debit cardholders that may conduct transactions with the broker or the ICO.

Is this the nail in the coffin?

After years of conducting rogue operations binary options, forex and CFDs and the relatively fresh ICOs are finally being besieged not only by the regulatory agencies but key corporations such as Mastercard and Google.

With VISA and Mastercard usually feeding off one another, it is incredibly likely that Visa will follow suit and target these online trading companies as well. Will this ultimately put an end to online trading scams being perpetrated by binary options and forex brokers? We will find out in due time.

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