An offshore merchant account, also known as an international merchant account or “off shore” merchant account (two words), is a payment processing option available to merchants with high risk business types, a history of chargebacks or fraud, or bad credit.
Offshore credit card processing allows merchants who generally don’t qualify for traditional processing to take advantage of less stringent approval standards overseas. While offshore merchant services can be a solution for businesses without any other viable options, they also carry a fair amount of risk.
Here are some of the benefits of setting up an offshore merchant account for your online business:
- Lower tax burden than with a domestic merchant account
- Allow profits to grow offshore – tax-free!
- Accounts can be set up in almost any currency of your choice
- All major credit cards can be accepted
- Processing of transactions is confidential
- Accounts with high transaction volumes are permitted
- Payment gateways can be easily integrated with your existing e-commerce website
- Account can be managed online without down time
- Geographic location of actual business is irrelevant
- Higher risk businesses are permitted
- No up front deposits are required except on extremely high risk businesses
There are two main routes you may take for setting up offshore merchant credit card processing services:
- Set up a merchant account through an offshore payment processing clearing house
- Set up your own direct offshore merchant account
Most of these businesses are geared toward high risk e-commerce businesses, and merchants should therefore expect to see higher rates than they would pay with traditional credit card processing. As always, the best way to ensure that you get a good deal is to contact multiple companies on this list to compare rates and products.
A business is generally classified as high risk when both its chargeback potential and the likelihood that it will shut its doors and disappear over-night are considered high based on the history of that type of business.
If you are setting up an internet business offshore, you will need a corporation (Ideally an Offshore Company), a bank account, and a way to process credit card transactions in to that bank account…this is the offshore merchant account.