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Applying for an Offshore Merchant Account
Important Note: This offshore merchant account information is for educational purposes only. Advantage Processors has no trouble getting merchant accounts setup for high risk and offshore credit card processing solutions for your business. We generally have a solution for everyone and the easiest way to get started is to click here and fill out our simple merchant application form to get started.
Understanding Offshore Credit Card Processing
With the advent of the internet and e-commerce, you are no longer
limited in you choice of who to do business with, including
what businesses will handle your financial transactions. You have
a wider choice of national banks as well as international. In
fact, offshore merchant accounts are often the
only option to consider for some high-risk merchants. A business
is considered high-risk when examining its chargeback history and the
likelihood of its closing its doors and 'dissapearing' overnight,
leaving the financial institution liable for the charges. Offshore
financial institutions are not bound by U.S. Visa and Mastercard
regulations and so have less strict thresholds governing processing
volumes and chargebacks and this works to offset some of the
liability risks associated with high rates of chargebacks, credit card
fraud, and other disputes. In addition you are not subject to the
same restrictions in business transactions as institutions under
onshore law.
Often there is a lot of red tape and costly
administrative tasks associated with conducting certain types of
business within the U.S., and money and time can be saved by using an
offshore account. Unfortunately, U.S. financial institutions are
often not willing to deal with the complications and risks associated
with such businesses as gambling sites, adult entertainment, horoscope
and psychic readings, pharmacies, travel sites, arranged marriage
sites, and so on. Also, U.S. banks often only accept limited
types of credit cards such as to accept credit cards for only Visa and Mastercard, and they don't
accept non-U.S. money denominations. This can be limiting to any
business whether they are high-risk or not. Having the capability of accepting foreign forms of credit and denominations is extremely advantageous to you when you are trying to grow your international
presence.
One major difference when using onshore merchant accounts is the
application requirements of U.S. banks. Often they require a large
application fee or application deposit. Some banks will not even
look at your application unless your business has been operating for
two years or more. U.S. banks sometimes act as if they are doing
you a favor by doing business with you, when it used to be the other
way around. Because banks are worried about fraud and money
laundering schemes, some U.S. banks will freeze or close your accounts
if you suddenly experience a shift in your volume of sales. With
most offshore merchant account banks there is no transaction minimums or maximums. They are not bound by the same laws and regulations governing onshore financial transactions, but they are still legal.
You are often rewarded with better customer service because the
offshore banks know they are competing with more familiar onshore banks
and they have to use every form of quality service they know of to
ensure you like their company better than the one you may already be
familiar with. You are assured maximum privacy while still
keeping within the confines of the law. You can benefit from more
favorable business legislation in other countries, especially if you
are incorporated in another country rather than the U.S. An
offshore account is also helpful when you want to separate your
high-risk card transactions from lower rate risk transactions that may occur
within the same company.
When selecting an offshore banking institution you should consider the
state of the government of that country and what the laws are regarding
financial institutions in that country. Often a government will
not step in to bail out a bank in the event of a crisis and the bank
may not be insured like banks are FDIC insured in the U.S. Obtaining
quality insurance is one of the main reasons U.S. businesses may be
hesitant to take their business offshore. You should make sure
the laws of that country prohibit the exposure of customer information
and have ethical privacy standards. Some reporting measures may
be required by the U.S. government- it is best you check with an
accountant or lawyer before setting up an offshore account to make sure
you are operating within the confines of the law. You should
never go offshore to avoid your creditors, liability, or to evade
paying taxes.
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