About Offshore Merchant Accounts

by: higherrisk.com

Many businesses, whether domestic or international ultimately reach a point in their growth where they need to process credit cards. It is in the nature of the modern business world that credit card acceptance is not only a helpful payment acceptance ability, but a necessary tool for the success of the business. According to The Wall Street Journal, in the year 2004, electronic transactions passed paper transactions in the percentage of the most used payment method. This figure ultimately concludes that the ability to accept payments electronically is necessary, to cater to the fifty one plus percent of potential customers.

Unfortunately, many businesses don't qualify for a domestic merchant account, either because their business type is considered too high of risk or they are a non-American business. Either of these two factors will prevent any business from being able to set up merchant services with an American based processor, by no fault of the business itself. The benefit of being able to setup merchant services with an American processor are significantly lower costs for processing transactions. Common high risk business types are adult product or services sales, pharmacies, and even travel agencies.

It is obvious that a business cannot survive without the ability to accept credit cards, so a business must seek other options to accept payments electronically. The options available to businesses are using merchant services with a foreign banking systems, using a third party processing system, or using an offshore merchant service provider. It is hard to maintain a reputable position in the business environment if you use a third party processing system such as Paypal™ or Ikobo, so this option is not recommended or outlined here. Many would immediately inquire about using a foreign banking system, but this solution proves to be no easier and certainly no cheaper than an offshore merchant service provider. After weighing the options most businesses find that an offshore merchant service provider is the easiest and most cost effective way for their business to accept credit cards.

An offshore merchant service provider is a company that has a relationship with an international bank, or multiple banks that allow the provider to resell merchant services at a reduced price compared to the bank itself. Many offshore providers have relationships with several banks because each bank offers slightly different rates to different business types. An offshore service provider provides a service very similar to domestic merchant account service provider, except the banks that underwrite the credit card processing aren't under the same FTC(Federal Trade Commission), ETA(Electronic Transaction Association) and FCC(Federal Communications Commission) restrictions as American banks. For this reason, banks that serve offshore providers are much less restrictive in the business types that they allow to process credit cards. These banks take on much more risk than their American counterparts. The risk that is involved is also what makes the cost of an offshore provider much higher than a domestic provider.

The benefit of an Offshore Merchant Account is that most have no volume restrictions or ticket size restrictions. Also, most any business types are accepted. This means that as long as the merchant avoids chargeback's fairly well, there will be nothing that the processor does to restrict business growth. It is very common for companies that process through American providers to see restrictions or even being shut down by strong business growth. Most offshore merchant accounts also include a virtual terminal type setup, that allows the merchant to process their transaction easily over the internet. In addition to a virtual terminal, almost all offshore merchant accounts have the ability to tie directly into a website shopping cart system.

So, do I need an Offshore Merchant Account?
If your business has been unable to process through an American merchant service provider, and you want to stay in business, than YES. You will need the ability to process credit cards. There is a very good chance that an offshore merchant account will be the most cost effective method for your business to accept credit cards. We encourage you to look into all of your options before making a final decision.

I'm interested, but I'm still not sure if I want to sign up for an offshore merchant account:
Give us a call or an email or fill our a request form. There is no obligation for contacting us and we will be happy to discus the details with you about using our company as your offshore merchant service provider. We have many business types processing with us, and we have relationships with several offshore banks. Chances are we have a business like your processing with us already.

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