Offshore Merchant Accounts

Looking for alternative locations for your merchant account? Here we look at the advantages and disadvantages of offshore accounts

What is an offshore merchant account?

An offshore merchant account it is a payment processing option available to businesses considered high risk by UK banks.

Businesses unable to secure a merchant account in the UK are often able to acquire an offshore merchant account where required. Relevant services include offshore payment processing, offshore merchant gateway or account and even offshore credit card services. This gives high-risk companies flexibility when it comes to financial transactions.

Offshore merchant services can be an effective alternative for businesses and offshore payment processing is becoming increasingly popular amongst high-risk merchants. It allows businesses with high rates of chargebacks, fraud or bad credit to take advantage a less rigorous application process – with higher rates of acceptance.

Selecting from the range of offshore merchant account providers can be a complex process, and although it has its benefits it doesn’t come without its downfalls.

Below we’ll list the pros and cons of offshore merchant accounts for different high-risk companies.

Advantages of offshore merchant processing
  • Every country has different regulations and legalities, and when it comes to offshore high-risk merchant providers these need serious consideration. In the UK the main advantage of using an offshore payment company lies in the increased likelihood of approval for high-risk merchants that have failed to secure a merchant provider in the UK.
  • Offshore merchant services provide possible tax breaks so there’s often little or no tax on revenue received from offshore payments.
  • Largely, offshore payment companies have a more liberal approach to high-risk businesses and applications.
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Disadvantages of offshore merchant processing
  • Higher rates are to be expected, especially with offshore payment processing compared to a standard merchant accounts.
  • Some offshore merchant service providers require a representative from the company to travel to their jurisdiction to open a merchant account.
  • Settling legal disputes can be difficult.
  • Damage to your company reputation as offshore merchant accounts can have negative connotations in the UK and you may find that business activity, including offshore merchant account credit card processing is monitored more closely by associated banks and authorities within the UK.
Applying for an offshore merchant account

It’s important to look into the relevant UK bank policies on receiving transactions from offshore merchant accounts before considering this as an option.

At Merchant Advice Service we are on hand to provide guidance and expert advice on this process, helping you to avoid any potential issues and make the right decision for your business.

To find out more, fill in our contact form and somebody will respond ASAP or, alternatively, give us a call on 0800 304 7875.

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Speak to us directly and get any questions you have answered. Submit your details and we’ll be in touch shortly.