The use of credit and debit cards as a payment channel by forex brokers is not new and has been around since the early days of retail forex trading. However, the main issue with the use of credit cards has been that of acceptability and uniformity of acceptance. While citizens and residents of Western societies can use their credit cards freely, the same cannot be said of citizens of many developing countries. However, the changing financial landscape of the world has improved credit card usability by many traders on forex brokerage platforms.
What Forex brokers accept Credit/Debit Cards?
There is a huge number of forex brokers that accept credit and debit cards for deposits and withdrawals and for that reason, it is also important to consider other aspects when selecting a forex broker. These aspects can include fees (spreads, overnight fees), reputation, regulation, trading platform etc. Here is a list of popular CySEC regulated brokers who are all accepting credit and debit cards.
*Spreads were recorded for the currency pair EUR/USD.
What are Credit & Debit card brokers?
Credit & debit card forex brokers are FX brokers that offer the credit/debit card payment channel to deposit and withdraw funds from a forex trading account. Forex brokerage companies commonly accept cards from Visa, MasterCard and American Express. This funding method was adopted for use by forex brokers for a number of reasons. First, deposits could be made seamlessly and immediately. Statistics have shown that 60% more sales could be closed when the prospect can pay with a card immediately. From the broker’s perspective in a market where hundreds of brokers are competing for a trader’s patronage, this is a good thing. From the trader’s standpoint, it also helps reduce the time, stress and expense of a bank wire.
Why Deposits and withdrawals via Credit & Debit Cards are so convenient
Credit/debit cards make forex account deposits very easy and seamless. I will use myself as an example, I am based in Africa. If I want to fund my account with $500 from my credit/debit card, I can do that in a matter of minutes. So if I scan the markets and I see an opportunity to trade, I can easily and quickly fund my account and the game is on. But if I were to do this with a bank wire, my bank would ordinarily not sell me foreign currency because of regulatory controls. So I would have to buy it from the Bureau de Change operators at a much higher rate. That is just the start of a 7-day stressful process. I would then have to fill a very lengthy form where I would have to provide answers to all sorts of annoying questions. Then I would have to pay value-added tax (VAT), a telex charge and a commission. So on a $500 transfer to my broker, I would have had to spend $100 in additional fees. No forex trader I have met in my country enjoys this process. I forgot to mention that one time, the banker passed my transfer form to his boss, who forgot to work on it and put it in his drawer where it was forgotten for two weeks!
Traders in other countries also have some very bad stories to tell when they have to use bank wires. You may not have an experience as bad as mine, but you will have to fill a lot of paperwork, work through a maze of regulatory restrictions and endure a waiting period of at least two business days for the transaction to be processed. The credit cards came along on forex platforms and everything changed. No more waiting for holidays to pass or weekends, which allows traders who want to trade on assets like cryptocurrencies that can be traded on FX platforms on weekends to do their thing. Also, waiting for public holidays and other bank holidays before bank wires could be processed is now a thing of the past. Forex brokers that accept credit/debit cards know they can now offer faster transactions without all the stress of filling forms at the bank or trying to secure foreign currencies for the transaction.
Benefits of Using an FX Broker That Accepts Credit Cards
The benefits of using an FX broker that accepts a credit card are as follows:
- a) Faster deposit times: Credit card deposits made with credit cards are instantly processed. You can fund your account on Sunday night, trade from Monday to Thursday, withdraw your profits on Friday (if any) and use it on Saturday. Good luck trying this with a bank wire.
- b) Fast withdrawals of profits are also the order of the day.
- c) Some brokers have provided an opportunity to allow the user to save card details the first time they are used. So you only need to enter the details once. Next time you need to use these details, you just go through the process without entering any details, making your card transactions secure.
Drawbacks of Using an FX Broker That Accepts Credit Cards
What are the drawbacks of using forex brokers that accept credit cards?
- a) The process of card verifications can be strenuous. Some brokers will demand things like a selfie photo of you holding the card with some vital details blocked off.
- b) The method is not available to everybody. Some parts of the world are still locked out from using card deposit options. Profiling of traders is an issue.
- c) Card transactions come with limits. You will be unable to deposit or withdraw more than a certain amount.
Choosing a Credit & Debit Card Forex Broker
For a trader wishing to make a deposit for the first time, the distinction is clear. It is either your forex broker allows you to use your card to make a deposit or not. Those who live in emerging markets of Africa and South America are already at the point where they do not have many options in terms of brokers that accept their credit cards (The only exception is South Africa, where the acceptance of cards with FSCA regulated forex brokers is usually not an issue).
If you find yourself in a position where you are able to choose from several FX brokers that accept credit cards, it is best to seek information on the quality of service from online forums. This is where you get to hear the experiences of other users in terms of security of your card details and processing times. These are the two most salient features that will determine which credit card FX broker to go for.
Popular alternatives to Credit/Debit cards
If you do not fancy using credit and debit cards when funding your forex account, you can consider other popular payment methods like M-Pesa and other Mobile payments (Especially popular in Africa with the exception of South Africa), ADV Cash, Payoneer, Paypal, Skrill or Neteller.