Changes brought about under the latest Payment Services Directive, PSD2, mean that Marketplaces will no longer be exempt. For Marketplaces to remain exempt under PSD2, they should act only on behalf of the payer or the payee or not at any time enter into possession or control of client funds. Addressing this challenge, Saxo Payments has launched Banking Circle Marketplaces which enables Financial Tech businesses to help their Marketplace clients with regulatory changes under PSD2, as well as provide local International Bank Account Number (IBAN) accounts for Marketplace sellers.
The new solution for FinTech businesses opens up the global market by connecting sellers with international buyers without the need for multiple banking relationships. Banking Circle Marketplaces allows Financial Tech firms to accept payments from Marketplace buyers via a virtual IBAN account, bypassing the Marketplace itself so that it remains exempt from the new regulations. Both Buyer and Seller also benefit from good exchange rates provided by Banking Circle, without paying high FX fees or waiting days for payment to clear.
Anders la Cour, Chief Executive Officer of Saxo Payments Banking Circle commented: “We wanted to create a solution through which FinTech businesses could help online Marketplaces as they are faced with the regulatory changes under PSD2. We also wanted to give FinTechs the added value of enabling their Marketplace clients’ Sellers and Buyers to transact across borders, regardless of local currency, without impacting the bottom line or creating unnecessary delays in payments.
“Banking Circle Marketplaces allows Financial Tech businesses to open local IBAN accounts in the name of their Marketplace clients. And by handling the funds entirely separately from the Marketplace, this means the FinTech is keeping its Marketplace clients exempt from the new regulations. If the flow of funds went through the Marketplace the PSD2 regulations would apply, requiring a great deal of expense as well as significant changes to a Marketplace’s business infrastructure.
“This unique solution also allows Financial Tech firms to provide Marketplace Sellers with the ability to transact across borders as if they held local accounts in each country in which they wish to sell. But, of course, without the multiple international bank accounts and the paperwork and high cost which goes along with that traditional solution, which can make it problematic for many Sellers.”
Banking Circle provides the Financial Tech business with a set of master accounts, to ensure end-to-end transparency. The Financial Tech businesses is able to accept payments from Marketplace Buyers into a virtual IBAN account in the name of the Marketplace Seller or the Financial Tech business and settle the funds back to the Seller’s house account in the currency of their choice. The Financial Tech business can also offer Marketplace Sellers the ability to open multi-currency accounts in more than 25 currencies.
Anders la Cour continued: “International transfers have previously been prohibitively expensive and slow for many companies, and the new regulations for Marketplaces effectively removed a route which allowed these companies to trade internationally without incurring the high costs of the correspondent banking model. We believe that payments should not hold a company back from reaching its potential and trading with customers in any country it wishes, no matter the currency. As such, we are continually developing new solutions to meet the needs of the rapidly changing market and help businesses with new regulation as it comes into force.”
In 2013 Saxo Bank formed a new entity, Saxo Payments A/S, with the purpose of using Saxo Bank’s core capabilities within the non-cash payments market. Saxo Payments A/S is a specialist in forex and payments.
Registered as a payment institution in the European Union, Saxo Payments specialises in providing global payment account transactions and foreign exchange services to payment providers, including acquirers, payment service providers, FX brokers, money transfer businesses, e-wallets, and alternative payment providers.