Why most Forex / Binary Options merchants fail – and why you don’t have to!
Forex and Binary options are two of the hottest financial markets in the world today. But many new companies are failing to cash in on these exciting growth industries. The problem isn’t expertise; it is that they are inadvertently driving away their own clients by doing business with payment service providers who don’t understand emerging investment markets. Instead of creating a customized solution, these inexperienced operators attempt to cram each clients business into a “one-size-fits-all” model.
The result: unreasonable merchant fees, inflexible payment options, dissatisfied clients, and ultimately, failure.
Regulation VS. Non-Regulation
According to the latest Bank for International Settlements’ (BIS) triennial survey, nearly 5.3 Billion US dollars are traded daily on the Foreign exchange (FX) market, making it one of the most fluid financial markets in the world. You can become highly profitable in these new markets, but before jumping on the FX bandwagon, there are many options to consider.
What kind of transactions will you be making?
Transactions in the foreign exchange market can be classified into two types – commercial and speculative.
- A commercial transaction is one that is backed by an underlying economic activity, such as payment for an import or a loan to an overseas entity.
- A speculative transaction is one undertaken with the pure purpose of profiting from currency moves. Speculative transactions greatly exceed commercial transactions in the sphere of foreign exchange, and they have accounted for a larger share of Forex trading over the years.
What are some negative setbacks to this manner of trading?
Aside from the possible risk of losses caused fraudulent activity, a retail investor also must weigh the following risk factors:
- Heightened Volatility: High frequency trading dominated by computerized or algorithmic trading, may contribute to higher currency volatility, which increases the risk of runaway losses for the investor or trader.
- Information Disadvantage: Retail investors are at a distinct disadvantage in the largely unregulated global Forex market, since they do not have access to information about large commercial transactions and capital flows only available to the biggest players who dominate the market. This unequal distribution of information makes it difficult for the average retail investor to gain any type of advantage over professionals and big business.
Taking these risks into account, who polices these markets, and what can be done to safeguard you and your clients business?
Unfortunately, no singular entity polices FX markets. A regulatory levy such as the Tobin Tax may curb runaway Forex speculation by retail and institutional traders and could offset the costs of additional Forex regulation. But, in doing so, any proposal to introduce regulation for the institutional Forex market is very likely to face heavy opposition by major currency traders. As a business owner or investor, you may occasionally have a justifiable need to trade Forex to hedge currency risk for your business. Increased regulation may have largely eliminated incidents of fraud in the retail Forex sector, but non-regulation of the institutional Forex market contributes significantly to the odds being stacked against the retail Forex investor.
The Secret of Success in Forex / Binary Options
To succeed, you need a payment service provider that will work for you and your clients to pave the way for success.
In these growth industries, most new clients are small-scale investors: those who don’t have much money to trade. You may ultimately attract large-scale investors, but possibly only once you’ve built your company’s reputation up over a number of years.
But that’s not necessarily a bad thing!
You have access to a unique clientele, who are excited about getting in on this brave, new world of investments, even if they aren’t coming in with a lot of money to invest. They are enthusiastic, eager to learn more and maximize their returns.
The foreign exchange market is globally dominated by major banks, while the world of binary option trading can be difficult to navigate compared to traditional investments. Your clients require guidance and assistance to play in this deep, global pool, and it’s up to you to make the experience as user-friendly as possible.
Small-time investors can add up to big-time profits – for your clients and for you.
The secret of success, for your business and how you handle payments, lies in volume: to become profitable, you will need to attract a large number of these lower-profile clients.
So how do you make your company’s investment services appealing to the small-time investor?
Simple: by building your entire payment system, online and offline, around the needs of those clients.
Four-step formula for success
Four simple steps will help you set yourself up to appeal to this potentially limitless client base. From the ground up, you’ll need to…
1. Start with a payment services provider that understands your business model.
2. Choose a “package” of merchant services, not just an individual product or one-time sale.
3. Aim for consistency through all sales channels: website, mail order, telephone, and bank wires to name a few. When your customer is ready to pay, make sure you are ready to accept their payment in whatever form they’re most comfortable providing it.
4. Build trust through multiple levels of security and fraud protection.
Most important of all: be flexible.
It’s the most obvious point in the modern business world – yet one often forgotten. Whether they prefer to pay by bank transfer, or credit card; in their home currency or in U.S. dollars; by telephone or over the Internet, your payment services provider should offer you the tools to accept your clients’ money as quickly, easily, and securely as possible.
Shopping Around for Success
Worried about doing the research to find an integrated payment services solution that does everything you want? A few very direct questions about how they plan to serve your business should deliver the answers you need with little legwork required.
Don’t fret if you don’t find many companies that have been in business long-term (over ten years), or have established solid relationships within the international banking industry. This is normal in this fast paced trading environment. When choosing a payment service providers, choose one that offers a diverse range of payment services (not just a single one-size fits all merchant account for every type of business!), and has a proven track record of responsiveness to multiple types of businesses’ needs.
The secret of success in Forex and Binary Options is at your fingertips. A few clicks, and careful questions can make the difference between failure and success for you and your clients in today’s exciting global market.