Essentially, an international or offshore merchant account is a bank account used by online businesses and merchants located outside that merchant’s country of residence. This type of account typically allows for a faster transaction process and the acceptance of different currencies and payment cards.
This type of account is usually needed by those working in a high-risk industry or with a high volume of sales. Local banks are less likely to accommodate these sorts of merchants because of the risk involved, which is why many merchants have to turn to international options instead. These types of merchant accounts are also helpful for businesses that have offices located in different countries.
High-risk and high-volume merchants also often run into the problem of having payments delayed or their services suspended due to suspected fraud or other account issues when partnered with the incorrect type of acquiring bank.
International and offshore merchant accounts are better equipped to handle these situations and have the appropriate fee structure in place to protect themselves, the merchant, and the customers.
When applying for an offshore merchant account, you need to ensure that it is suitable for your business needs. The most common restriction you will come across is that certain account providers will only work with US-based businesses.
Otherwise, it is very easy to find a reliable provider that can set up a merchant account for you in nearly any country. If you have a high-level of international customers from a particular region or country, you should try to base your offshore account in that country.
If your sales are international, an offshore account is useful if you are struggling to get approved for a domestic high-risk merchant account. A poor credit score or working in a very high-risk industry are common reasons for account rejections.
Offshore merchant account providers often have fewer regulations and restrictions, which makes opening an account much easier. However, keep in mind that this type of account comes with its own set of risks for your business such as increased fraudulent activity and fewer legal remedies if things go wrong.
You should also be prepared to pay much higher transaction fees and monthly or annual fees. Account providers know that your choices are limited, which drives up these costs and they also want to protect themselves from fraud and chargebacks.
Before opening an account, closely evaluate the fee structure and make sure it suits your business and profit margin.
There are some great benefits to international and offshore merchant accounts, including:
