Transaction Methods in Forex
This article will explain a few of the transaction methods that are available to traders to enable them fund their Forex accounts and withdraw any profits that they may have made from their trading activity.
The commonest methods for depositing to Forex accounts and withdrawing from them are as follows:
a) Credit/debit cards
b) Wire transfers
c) E-wallets e.g. Skrill (formerly Moneybookers)
e) Country-specific payment solutions
For most of the developed world and a few countries in the developing world, credit or debit cards remain the easiest way to transact on a forex account. Most of the major brands are accepted. These brands are MasterCard, VISA, JCB, Diner's Club and Discover. A few other brands like Carte Bleue and Maestro are also accepted, though not as widely as the other brands mentioned earlier.
Traders who use credit/debit cards to transact on a forex account are assured of being able to do the following:
a) Fund accounts with the minimum balance required to open an account.
b) Virtually no transaction fees, and where fees are charged, they are very low.
c) Fastest transaction times. Usually deposits are processed and accounts funded instantly while withdrawals are processed within 24 hours.
To be able to use credit/debit cards for transactions in forex, the account holder must verify the card. Usually, a picture of the card (front and back) with the card number or a section of it blacked out, must be sent to the broker in order to ensure that the account holder is the owner of the card. The disadvantage to credit card usage is not forex-specific: credit card/identity fraud can occur if card users do not protect themselves by ensuring that they install the latest antivirus and internet security software to protect against hackers and spyware.
This has been the traditional means of money transfer and serves citizens of countries that have been locked out of most methods of international transactions. The benefits of using wire transfers are that they are accessible to everyone and are very safe. Only the account holder can ever get hold of funds that are transferred from a forex account. In addition, the amount of money that can be moved is much more than the allowable limits for credit card transactions. The drawbacks to the use of this method is that it is very slow (5-7 working days) and requires a lot of paperwork. It is also the most expensive method of transaction as it could cost as much as $100 to send money to an account or to receive a withdrawal, depending on your country of origin.
The best example of an e-wallet solution is Skrill. Formerly known as Moneybookers, Skrill offers a channel through which several methods of transaction in forex can be achieved.
a) Skrill conducts third-party credit card processing, so it is possible to process card payments using the Skrill platform.
b) Skrill partners with some brokers to offer a prepaid debit card that can be used to withdraw from your Skrill accounts using the local ATM.
c) Some of the country-specific payment methods we shall discuss in the next paragraph (GiroPay, Sofort, CartaSi, Bonifico, etc) can also be processed using Skrill. Skrill offers integration for more than 100 payment methods. If there is any e-wallet you should be using for your forex transactions, it should be Skrill.
Other e-wallet solutions include WebMoney, Neteller, CashU, Ukash and Liberty Reserve. The exact e-wallet offered differs from one broker to another.
Country-Specific Payment Methods
There are other methods which are specific to a particular country. These methods apply to citizens of European countries and Arab/Middle Eastern states. Conditions for using some of these methods are summarized below:
a) GiroPay: Used in Germany.
b) Nordea: Used in the Scandinavian countries of Norway, Denmark and Sweden.
c) Giro Online: Used in Spain and Spanish territories.
d) Sofort: Used in Spain, Switzerland, UK, Netherlands, Italy, Belgium and Austria.
e) Virement Direct and Carte Bleue are used in France.
f) iDEAL is used in the Netherlands.
g) Bonifico is used in Italy.
h) eNETS is used in Singapore.
Some of these methods can be used on the Skrill platform to process payments on forex accounts that are Skrill-compliant. These country-specific methods all operate as e-wallets and confer the users with the same advantages of other e-wallet solutions.