Advantages of Having an Offshore Merchant Accountby Confidential Banking #1 Merchant Processing Services
When it comes to processing payments, modern online businesses have more options than ever before. One of the most reliable and cost-effective options for processing payments is having an offshore merchant account.
A merchant account is a type of bank account that enables you to accept debit and credit card payments on your business website. In the past, most businesses have partnered with financial institutions in the same country in which they conduct business. However, as technology advances, a steadily increasing number of businesses are working with banks located overseas.
This isn’t exactly new, though.
Multinational corporations such as Google, Microsoft, and Apple have been using offshore bank accounts and legal structures to help them minimize their tax liability for years now.
Historically, the use of offshore bank accounts has always been exclusive to big corps and businesses in questionable industries. However, nowadays, it is something well within reach of small and medium-sized enterprises.
Benefits of Using an Offshore Merchant Account
- Tax Benefits: Because you are processing payment in another jurisdiction, typically one with a lower corporate tax rate, an offshore merchant account can also reduce your tax liability. Of course, you certainly aren’t going to escape all tax payments, but this will help you optimize your tax situation.
- Easier for International Sales: Most jurisdictions offering offshore bank accounts often have more lax laws regulating credit card transactions. This ensures that sales from international customers can be handled more efficiently.
- Options for More Currencies: Just because your business is based in the U.S., that does not mean you can only do your online transaction in U.S. dollars. For example, if you offer your services in Japan, you may want to allow your buyers the option to make payments in Yen. Using an offshore account would make it much easier for you to work in a non-local currency.
- Will Accept High-Risk Businesses: If your business is in a high-risk industry, such as online gambling, you may want to look for a high-risk merchant account provider that offers offshore banking solutions. Financial institutions in foreign jurisdictions are much more liberal than domestic banks and would be much more likely to cooperate with you.
Considerations When Evaluating an Offshore Account
The advantages of having an offshore account are indeed very desirable to any business. Keep in mind, though, not all offshore accounts are equal. If you want to open an offshore merchant account, you first have to assess it in the same way as you would assess a domestic account.
First of all, make sure your provider is willing to work with your service. As mentioned, offshore bank accounts can be really appealing to high-risk businesses, but that does not take away from the fact that not every provider accepts every business. As with any domestic merchant account, offshore accounts may differ dramatically in terms of processing fees and payout structure. This might actually offset any of the financial benefits of going offshore. So, make sure that you do the math to confirm that the provider offers fair rates and fees.
All in all, partnering with an offshore bank for your merchant account can be a very profitable solution for your payment processing needs. It is not, however, without obstacles. Working with the right payment processor will ensure that you enjoy all the benefits of offshore banking with none of the drawbacks.
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Created on May 4th 2020 05:48. Viewed 259 times.