Credit Card Merchant Services 101: The Differences Between Domestic and International

Credit Card Merchant Services 101: The Differences Between Domestic and International

When it comes to credit card merchant services, we prefer to respond to inquiries by phone, and we’re going to be forthright about our payment processing solutions. For us, any other way is a waste of time. We periodically find ourselves conducting somewhat of a merchant services 101 class when we receive an inquiry from a startup merchant or someone’s first venture into high risk online payment processing. There are often misunderstandings:

  • A merchant may not understand why s/he is classified as high risk.
  • Merchants don’t understand the time table (approvals can be anywhere from days to weeks, dependent on many variables).
  • A merchant isn’t sure whether to process through a domestic bank or international/offshore bank, preferring a domestic bank.

Sometimes a domestic acquiring bank won’t approve what an international or offshore bank will, that being the prospective merchant’s only option. It’s one of several significant differences in finding domestic and international merchant services. The merchant might seek a second opinion, but will circle back with us, appreciative of our candidness about the process. That’s how we’ve establish credibility in the industry.

International and domestic: Two routes with benefits

While the onboarding process with an offshore or international acquiring bank takes more time and energy, that’s not to say partnering with an overseas bank doesn’t have its benefits:

Applying for credit card merchant services

The application process with a domestic acquiring bank is easier. While every domestic acquirer has different processes, there are traditionally fewer forms to complete and fewer KYC (know your customer) documents required than with an international bank. Additionally, approvals from domestic banks are faster on average, usually anywhere between 5-10 business days. International and offshore banks take a little longer.

Some regions and countries mandate that a merchant register their business in the country of its acquiring bank. For example, when a US merchant wishes to open their doors within the European Union, there are certain things they must do:

  • Establish a physical presence in the EU, with an office and staff and telephone.
  • Open a bank account with an EU bank

Higher fees with international/offshore banks

One of the tradeoffs of offshore and international banks’ tolerance and approval of high risk businesses is the number of additional fees merchants incur. There are some industries US acquirers simply won’t board, because of chargebacks, industry type or instances of fraud. Such merchants have no other choice but to go offshore, thus incurring more fees.

I’m approved…what’s the delay?

While the application and underwriting processes commonly take longer with offshore banks than domestic, so can the process of linking your website to the acquiring bank’s payment gateway. Because of certain variables regarding offshore and international banks (which we’ll touch upon), technical issues seem to be more frequent opposed to domestic banks.

International banks = weekly payouts

While domestic acquiring banks perform daily payouts to their merchants, international and offshore banks prefer weekly payouts. While US banks typically deposit payouts without fees, their international/offshore counterparts commonly tack on a fee, which considering it is over one week, doesn’t amount to much.

Other tradeoffs to expect with international and offshore banks

  • Time differences: Using the west coast and the EU as an example, some EU countries are anywhere between 8-11 hours ahead of the west coast, making it difficult to communicate and accomplish steps in a timely manner. It’s often difficult for us here at Instabill, which is located on the east coast.
  • International banks more strict: When partnering with an international or offshore bank for credit card merchant services, it’s all about establishing trust, familiarity and credibility. For example, we’ve found European banks to be very direct, simplistic and logic-centric with little tolerance for mistakes and miscues.
  • Language barriers: Communication with certain offshore and international bankers can be difficult due to the language barrier. Not every international acquirer speaks English, with some using a third party as a translator. Language barriers can delay processes, from onboarding to day-to-day issues.

Credit card merchant services with Instabill

Considering the differences between international and domestic merchant services, merchants seeking offshore merchant services should consider Instabill as a bridge to acquiring banks worldwide. Since opening our doors in 2001 in London, and relocating to the US in 2006, Instabill knows the high risk credit card merchant services landscape like no other global payment processor.

We still communicate with our merchant and banking partners the old way: by speaking direct, one-on-one. Our merchant account managers are available Monday-Friday (8 a.m.-6 p.m. US eastern time) at 1-800-530-2444.

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