Withdrawal delays brought about by holidays rather than brokerage intent

It certainly appears that despite the highly automated method of transferring deposits to and from brokerages these days, inefficiency can still be brought about by something as analog as a large national or international holiday.

Whilst it is almost absolutely certain that hosting servers, payment platforms and merchant service vendors’ electronic processing systems do not celebrate Christmas, there have been some very concerned retail FX customers waiting unusually long periods of time for their withdrawals, even from reputable brokerages with a very loyal client base and a completely clean copybook.

During the weekend and early hours of this morning, a number of retail customers across the APAC region and in Australia have made references to delayed withdrawals from retail FX trading accounts, with the doubt initially being directed at brokerages over the possibility of delaying withdrawals to customers.

One particular customer, an introducing broker in South East Asia explained “I am having an issue with withdrawals from a large Australian brokerage for an international client. Just so you know, I have processed a withdrawal from them multiple time and it took almost 2 to 3 weeks. Is it normal? I am not sure if anyone else has experienced the same and I have attempted this via both wire transfer and credit card transfer. It makes me super frustrated and stressed out when I didn’t receive on time as stated by the broker’s representative which is 3 to 5 business days. I wonder any one else has experienced the same as me.”

FinanceFeeds spoke to a merchant services provider in London with regard to this, as it is a pattern that has made itself evident before in the approach and during major holiday periods. It was explained to us that “If this is a withdrawal to a Visa or Mastercard, and the money has been requested to arrive on a Monday, and there is bank holiday in another region via which the funds pass through, then the banks could be open on Thursday. I would not recommend becoming tempted to use Skrill, PayPal or Neteller and the brokerage that is concerned here is a reputable one indeed. It simply depends on country of your residence and which holidays are in effect, and how many staff already left the office to take their holiday.”

A brokerage we spoke to on this issue this morning in Australia concurred that holidays can also cause withdrawal delays. “Rest assured, your money will arrive. The holiday season is pretty much here, there will be some delays in transactions over the next few days as well and as many staff take significant proportions of their annual leave over the Christmas period especially here in the Southern Hemisphere, your money could be in the system by now, but from the bank side or any intermediary in between, there might be some delay. If it’s a large amount, it could take a while” said the brokerage executive.

One popular solution to this is to use PayPal, which is highly effective and often processes transactions within a matter of minutes.

The downside is that the price to be paid for this level of efficiency is that PayPal utilizes extremely stringent monitoring tools and conducts continual due diligence on its customers and transactions in order to keep it completely safe and effective.

Last week, FinanceFeeds spoke to a payment services provider who explained that the average establishment time for a PayPal account for companies is approximately six months and there are several examples of firms having their funds frozen in PayPal accounts pending due diligence checks. This is of course very important and maintains customer and corporate interest, however it renders PayPal a less than preferable facility for payment processing of withdrawals and deposits to and from retail FX trading accounts.

Yesterday, an introducing broker explained “I’ve heard many people say if you transfer large amounts of funds to PayPal though, the PayPal account may be flagged or frozen.” A further retail trader backed this up by explaining “I would avoid doing too much FX volume transactions via PayPal. They are a little account freeze happy. Skrill is better.”

“PayPal and Forex is kinda a grey area. Don’t send sums of cash that are out large and out of the norm to PP, they can and do freeze funds. If anything, drip withdraw, in a steady and repeatable way” said one source.

This demonstrates that despite the automated payment facilities that are in place at many brokerages and the mainstream methods in use by merchant services providers, there is still a very outmoded methodology which appears to create backlogs at holiday times.

Such operational flaws can also cause clients to distrust their broker through no fault of the brokerage, largely because several years ago, a series of unregulated offshore brokerages caused reputational damage by withholding withdrawals on a large scale before disappearing.

Thankfully this is no longer the case, however memories are long when it comes to the handling of client assets, and therefore rumors can easily begin.

Last year, a similar scenario stemmed from a large introducing brokers (IB) in China of large Australian retail brokerage IC Markets, a firm with over 14 MetaQuotes servers and vast customer base worldwide, and, as is often the case, made its way across brokerages and into retail FX forums, as this is how commercial grievances are often handled in China, concerning what was perceived to be withdrawal delays.

The rumor spread to include such allegations as “Currently, what we understand is that the head of the firm’s Chinese office has moved to Europe, and the Chinese branch will move to Hong Kong, and client support will be moved to IC Markets in Australia” is the supposition that has been published on Chinese media.

FinanceFeeds contacted IC Markets with regard to this matter, and explained that it is understood among many Chinese IBs that there is a backlog of over 100 withdrawals, which are not being executed in a timely manner. IC Markets response was “Unfortunately we cannot control the rumors. They may have stemmed from our competitors, and there is no backlog of withdrawals, only client emails due to the holidays.”

The holidays at the time were a week-long national holiday in China in which pretty much the entire country stops work.

At the time, some speculators publicly broadcast that there are up to 400 customers waiting for withdrawals, which is absolutely demonstrative of the escalation of dramatic guesswork that is currently pervading the airwaves from Shanghai to Shenzhen and equally demonstrative of the inefficiencies of payment processing systems at holiday times. IC Markets confirmed to FinanceFeeds at the time that there are no delays and they are covering the withdrawals, albeit slowly, citing a shortage of staff as a reason for this following the week-long holiday in China.

“There are no delays with withdrawals and all trading accounts are operating as normal” said the IC Markets executive.

“We are just trying to reassure clients that everything is fine. As you can see, you got straight through to us. If the withdrawal request is received before 01:00 GMT (12:00 AEST) it will be processed on the day of receipt. If your withdrawal request is received after this time it will be processed on the following business day” – IC Markets.

Merchant services providers are very quick to denounce certain online businesses, and to consider margin FX to be a high risk activity, however they must also take responsibility for maintaining service levels and ensuring that payment systems operate at all times, after all, that is why payments are automated after all, to ensure consistency.