Offshore Merchant Account- What is that?

E-commerce and online business concepts have exploded in popularity as technology has advanced over the last few decades. As a new way of doing business, online credit card transactions have become the norm.

The acquiring bank or offshore payment processor for an offshore merchant account is located outside of the company’s primary headquarters location. For example, When a US company opens a payment processing account in Europe, the European account is deemed offshore for the US business.

What is an Offshore Merchant Account?

International merchant accounts are comparable to offshore merchant accounts. The primary difference is that the US acquiring banks often classify merchants seeking offshore merchant accounts as high risk. On the other hand, international merchant accounts are utilized by both regular and high-risk merchants that wish to take advantage of the worldwide e-commerce boom. There are no volume limits on offshore merchant accounts. Banks require a minimum monthly processing history of $50,000 to open an account (or equivalent in other currencies).

Applying for Your Offshore Merchant Account

An offshore merchant account application is always free and without obligation. You fill out an application and attach any necessary documentation. To be considered for an account, you must process at least $50,000 every month. Most international acquiring banks favor high-volume offshore merchant accounts.

You will deal with a dedicated account representative who will work with you throughout the application process. The goal is for you to get approved as quickly as possible with the best rates and terms.

When the complete application file is received, account approval will take 7-14 business days. Supporting documents include:

• A color copy of the signer’s driver’s license or passport.
• A voided check from the bank where the processing funds will be paid.
• Three months’ worth of business bank statements.
• Six months’ worth of payment processing statements.
• Business formation documents such as Articles of Incorporation.

Most countries require businesses to form a corporation and open a bank account in the exact location as the acquiring bank. Some acquiring banks will allow you to do this step after the offshore merchant account has been approved.

Rates & Terms for Offshore Merchant Accounts

Offshore merchant account rates differ depending on the location where the acquiring bank is located. Most foreign banks have competitive rates, especially for high-volume, high-risk businesses.

The volume of transactions determines the time it takes to settle an offshore credit card transaction. Smaller offshore merchant accounts may pay monthly or a few times each week, while high-volume merchants qualify for daily settlements. The rate of exchange varies from country to country. For example, European interchange rates are cheaper than those in the United States, and they are competitive with those in the United States.

When your consumers are in the same region as the acquiring bank, offshore merchant accounts save you money on processing. For example, if your offshore merchant processing accounts are located in Europe, your European transactions will be less expensive than if you processed them through a US bank. For offshore processing, more card declines are a factor to consider. US cards may be regarded as cross-border transactions by some banks, resulting in higher decline rates. Card approval rates will remain high. However, it will not be as costly as processing a US card through the US acquiring bank. The jurisdiction in which the acquiring bank is located determines a lot.

The Benefits of Offshore Credit Card Processing for High-Risk Merchants

• Industry type, processing volumes, tax considerations, diversification, and targeted markets are all reasons why high-risk businesses use offshore merchant accounts.
• Because of the products or services, specific high-risk merchants are not eligible for US merchant accounts. Forex trading platforms, online gambling/sportsbook, adult entertainment, and nutraceuticals are just a few examples of businesses that employ offshore merchant accounts. In many companies, high-risk merchants discover that offshore merchant accounts have more lenient underwriting and friendlier authorities than the United States.
• In comparison to US banks, international banks allow much higher processing volumes. Offshore merchant accounts, once approved, provide high-volume processing capabilities. Volumes are rarely capped, which is especially beneficial for fast-growing, high-risk merchants.
• Some businesses open merchant accounts in other countries to save money on taxes or take advantage of business advantages. Others set up credit card processing centers in other countries to take advantage of various regulatory regimes. Consult your business consultants to see if using offshore payment gateways is a good idea for you.
• Another reason corporations process payments overseas are the diversification of acquiring banks. Different countries of the world, for example, have political or cultural standards that accept certain items or services more readily than others. Offshore merchant account diversification reduces processing risk while safeguarding corporate operations.
• Another reason for offshoring credit card processing is targeted markets. Card acceptance rates are substantially higher when processed through an acquiring bank in the buyer’s location.

Multi-Currency Payment Processing

Multi-currency processing is available on DMerchant accounts located overseas. The pricing displayed at checkout on your site is the same as what appears on the buyer’s credit card bill. Multi-Currency payments in e-commerce encourage clients to complete the transaction rather than abandon the shopping cart. Buyers become confused when prices are not shown in local currency, putting a damper on sales.

To increase sales, offshore merchant accounts can feature preferred “in-country” alternative payment options. In many nations, for example, local bank transfers are preferred over card payments.

Tips for Getting Offshore Credit Card Merchant Accounts Approved Quickly

Check to see if your company’s bank statements reflect a positive cash flow. Confirm that the bank accounts you’re using have enough funds to handle the processing volume you’ve requested. Chargebacks are determined by looking at processing statements. It’s excellent if chargebacks are low. Include a brief explanation of why chargebacks are increasing and what efforts are being made to reduce chargebacks.

Websites for eCommerce merchants must be completely functional. Test all links before applying to ensure that pages load quickly and content shows correctly and without problems. Refund and privacy policies should be posted on websites. Include shipping details if products are being shipped. Make it simple for customers to contact you by clearly showing your contact emails, customer service information, and service hours.

Setting up merchant accounts abroad provides safe havens for high-risk merchants to process payments. And it gives you the best access to credit origination anywhere in the globe, which protects your company’s liquidity.