White-label in its most basic sense, is a type of partnership in which one firm produces goods and other companies sell under its brand. White label, as employed in Forex, is an affiliate program in which an infrastructure provider shares his expertise with the brokerage in exchange for an amount of money or a commission. This infrastructure provider is also known as a white-label supplier. The white-label provider’s task is to allow a new broker to trade on the foreign exchange market. The firm does not only offer trading platforms to new brokers but will also support customers in a variety of matters.
A white label brokerage however, is the one that is responsible for paying a fee to the white label provider to use their infrastructure as well as other services. The white-label broker can contact the provider in case of any technical problems. It’s quite a shock, but most traders aren’t aware they’re dealing with white-label brokers for forex. What is the reason brokers choose to use this service? One of the primary reasons brokers use this option is to help start their business without having to incur high costs. It’s difficult to establish an enterprise starting from scratch. The founders need to invest lots of money on technological infrastructure. They can launch their company easily by working with a white-label service provider to avoid these huge costs.
Another advantage of such an arrangement is that new brokers are able to utilize the latest technologies to meet the client’s demands. Instead of wasting time developing innovative software, they could just use the existing solutions in the market. So they can select from the wide array of solutions and tools available with the white-label provider or can ask them to create a custom solution to meet their needs. Brokers frequently believe that the white-label service can’t hinder them from establishing their own brand. They can establish and promote their business as their own without mentioning any white-label service provider.
But, just like coins have two sides, so too for white-label Forex. In the first place, regardless of whether you make use of this service, you will still have to pay a fee to the white-label provider, whether or not you have made money from your business. The white-label service is a major broker service. Therefore, they cannot offer any unique services to your company. In this scenario you (as a broker) need to come up with something to differentiate your company from others. Additionally, you aren’t able to have the full range of options, and you must rely on the company for whatever they offer you. This means that you may find yourself in a difficult situation if the white-label provider charges you too much, fails to offer updated technical equipment, or decides to close their business one day.
To summarize it, white-label Forex is a good way for new brokers to get into the forex business, but they need to be careful when doing so. They should select a reliable white label company that will help them grow their business, while ensuring full transparency in their operations.