In the regular sense, white-label is among the most popular forms of partnership in which one company manufactures goods, and other companies sell them under its name. When it comes to Forex white-label, it is an affiliate program where an infrastructure company shares its expertise with the new brokerage, in exchange for a commission or fee. This infrastructure provider is also known as the white-label provider. In simple terms, the function of the white-label provider is to allow the new broker to join the forex market. The firm will not only offer trading platforms to new brokers, but will also support customers in a variety of issues.
On the other hand the white-label broker is the one who is paid a fee to the white label provider to use their infrastructure and other facilities. When there are technical issues, the white-label broker is able to contact the white-label company. Many traders do not realize that they deal with white-label brokers for forex. Why would brokers select such a service? One of the primary reasons brokers choose this option is to help to kickstart their businesses without incurring high costs. Starting a company from scratch isn’t easy. The founders will need to spend a significant amount on technological infrastructure. They can start their business easily by working with a white-label service provider to cut down on these costly expenses.
A partnership like this has an additional benefit: new brokers are able to use modern technology to meet the demands of the clients. Rather than wasting time developing innovative software, they could make use of the widely available options available. In this way they can select from the wide array of software and solutions from the white-label supplier or can ask them to deliver a customized solution that meets their specific needs. Many brokers think that using a white label service would mean they cannot create their own brand, however, this isn’t the case. Brokers can market and grow their businesses without mentioning the white-label provider.
However, just as the coin has two sides, the same goes with white-label Forex. First of all, even if you utilize this service you still need to pay a commission to the white-label company, regardless of whether you’ve made money from your business. The white-label provider is a major broker service. Therefore, they cannot offer anything unique to your business. As a broker, you must create something that distinguishes your company from other companies. Thirdly, you don’t have complete control and you must rely on the company for what they provide. Thus, you might be in a tense situation in the event that the white-label company charges you too much, fails to provide the latest technology or decides to shut down their doors one day.
To sum up the matter, white-label Forex can be a viable option for new brokers to get into the Forex market, however they must be cautious when they do so. They must choose a reliable white-label service provider that can aid them in expanding their business, while ensuring full openness in their business.