An online merchant account is a must for businesses operating online. To accept payment online, it is mandatory to open a merchant account. When you are out in search of merchant account provider, you will come across that term ’Offshore Merchant Account’. Now you may want to know what actually an offshore merchant account is. It often have negative connotation and are often thought of as an account reserved for high risk merchant who are unable to get approval for merchant account within their own home country.
It is true that some offshore merchant account providers cater specific high-risk industry but it’s not the case with all other offshore merchant account providers. Let us first understand what an offshore merchant account is.
Offshore Merchant account
It is like any other account but is with a bank outside merchant’s home country. This type of account enables a merchant to accept payment online by accepting credit card. It is not restricted to any industry type, but is available for merchants across all the industrial categorization and can get this account opened to reap its benefits. This type of account is more beneficial for merchant’s expanded their business beyond geographical boundaries i.e. multinational merchants.
Multinational merchants mean that the merchant sells a product to domestic as well as international customer and deliver real-time credit card processing in a local currency of customer. For safe and secure credit card processing these merchants should work with local bank of other countries. To achieve these objectives, an offshore account is the best alternative.
How to choose an offshore merchant account?
If you are looking for an offshore merchant account provider, you will find hundreds of them but find out the one that suite your business requirement is quite a task. While looking for offshore account provider, consider the following:
It is not possible to accept payment over the internet by simply opening a merchant account. You also need a payment gateway to conduct transactions. If a merchant is dealing with overseas customers, your merchant account provider should also facilitate you by offering international payment gateway for real-time online processing.
Major Currency Acceptance
Offshore merchant account should facilitate merchant to process payments in a local currency of various countries. Where a merchant is providing services. It is important that your merchant account provider offers multi-currency processing in the countries you operate. If you are planning to expand your region, make sure that merchant account is capable of accepting currency of that country too.
To ensure secure credit card processing anti-fraud protections like AVS, CVC, and pre-authorization tools are important. This will also help in reducing chargeback ratio.
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Are offshore account high risk?
An offshore merchant account does not translate to high risk but depending upon the geographical location of business some merchants may refer to these accounts as offshore in a certain jurisdiction whereas others might consider it onshore. It is advisable to work with reliable international merchant account provider as it delivers security to every credit card processing and this will help merchant as well as provide various opportunities to grow business financially as well as geographically.
Generally, an offshore merchant account is high risk as it caters businesses at risk for fraud and bankruptcy. These businesses are:
- High sales volume
- Better refund frequency
- High chargeback ratio
- Poor credit history
- Company registration address is available in an offshore environment.
Most of the businesses need to take a risk without affecting their financial credibility in order to increase sales or for growth, this kind of flexibility provided to the merchant by High risk offshore merchant accounts. Domestic financial institutes find it risky to deal with such situation. Hence, they avoid giving approval for a merchant account to high-risk businesses.