Offshore Merchant Account

Summary: Offshore merchant accounts are a relatively new phenomenon in the vast majority of established and well regulated offshore jurisdictions but there are financial institutions out there aware that many business owners need the flexibility that ‘offshore’ can offer them...

As most business owners already know, a merchant account is simply some form of account structure that allows one to accept credit card orders and payments from customers.

Particularly as a result of the growth in internet based business the growth in the demand for merchant accounts has been significant – so much so that many onshore and offshore merchant account providers are now competing hard to win business and reducing the fees charged to both the customer and account owner.

However onshore merchant accounts are restricted by tough anti money laundering legislation and reporting requirements, and company owners who wish to operate as tax efficiently as possible and who are considering options such as incorporating offshore might also like to consider opening the offshore merchant account alternative as it can enable them to earn income offshore, access international market share and have a far more flexible merchant account structure.

Basically the trouble with the amount of anti money laundering legislation now in place in countries such as the US and UK is that the reporting requirements banks and financial institutions have to abide by actually restricts their ability to provide a decent level of customer service.  When it comes to account activity anything ‘suspicious’ such as an unusually large transaction - or in the case of a merchant account, a large volume of business or a spike in the number of orders received and processed - can and does result in all sorts of problems for those trying to legitimately run a business that does not have a day to day flat turn over of transactions and income.

Merchant account owners often complain about the fact they have to pay high ongoing fees for such an onshore account, that they are interrogated regularly about their account activity, that they have to place funds on deposit in case of claw back and that they are basically restricted by the requirements that they have to sign up to.  An offshore merchant account could be the answer to so many of the problems business owners are facing.

Offshore merchant accounts are a relatively new phenomenon in the vast majority of established and well regulated offshore jurisdictions but there are financial institutions out there aware that many business owners need the flexibility that ‘offshore’ can offer them and these financial institutions are now leading the way in the provision of low cost, more flexible merchant account structures.

Some of the benefits that are available to many business owners from an offshore merchant account include the fact that income earned is already offshore therefore financial assets do not have to be moved offshore for taxation planning and offshore asset protection purposes making it far simpler to structure an overall taxation planning strategy for example.  Furthermore an offshore merchant account enables those with international business focus to capture a far broader market share.  Those with high volumes of transactions can also be better serviced offshore as often an offshore merchant account will have no restriction on the number or size of transactions carried out.  Overall the growth in the number of international financial service providers offering offshore merchant accounts is good news for the international business community.

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