We understand the trepidation a prospective merchant might feel when we propose s/he pursue an offshore merchant account for their high risk business. Merchants, particularly those in the U.S., like to keep their dealings and affairs close to home, like having a local or regional banking partner supporting their business. Sometimes, however, having an offshore or international acquiring bank is, without question, the best way to process payments, especially if your business has any or all of the below characteristics.
6 no-brainer signs you need an offshore merchant account
If your high risk business has any or all of these characteristics, an offshore merchant account for payment processing is your best option.
- Online transactions: Accepting payments online is a wonderful feature, albeit with risks. Now that most U.S. retailers are accepting EMV credit cards, fraudsters are finding it more difficult to ply their trade. As an unfortunate result, they are focusing on online businesses, which are easier to infiltrate.
- Risk of fraud: Continuing on from above, online transactions and e-commerce businesses are more prone to instances of fraud such as bogus chargebacks (friendly fraud) and account takeover. Hence, an online business is almost always considered high risk, thus an offshore account to accept payments is an e-commerce merchant’s best bet.
- High chargeback rates: Regarding our mention of bogus chargebacks: Friendly fraud is much easier to execute with an online business than it is with a physical store. More and more, online businesses are soliciting help from third-party chargeback mitigation firms to remain under Visa’s 1 percent/100 per month standard.
- High volume: This is part of the beauty of banking offshore: Generous or no volume caps. While high volume businesses (CBD, pharmaceuticals or multi-level marketing) make domestic banks a little nervous, Instabill has offshore banking partners that welcome high volume merchants.
- Poor, little or no credit history: Arguably the biggest factor in finding an acquiring bank to take on your business, domestic banks will likely refuse a merchant with flawed credit history and may pass on a startup business if it doesn’t like the model or business plan. Offshore banks are more open to such merchants for reasons we’ll touch upon later.
- Your industry type: The highest of the high risk industries, particularly those which border on legal issues, health concerns and reputational concerns – online gambling, kratom, CBD or tech support – tend to make domestic banks really nervous. In fact, we’ve seen acquirers abruptly halt processing for certain industries, with little or no warning. An offshore merchant account is the best course of action with these industry types.
2 reasons high risk offshore merchant accounts are a good thing
There are two major differences between a domestic and an international/offshore account: industry leniency and tax breaks. Offshore or international banks are far more liberal when it comes to offering payment processing for high risk industries, such as those we named prior. We believe it is a cultural difference with domestic banks. Additionally, banking offshore tends to have fewer tax restrictions for merchants of all risk types, enabling them to operate more freely, without concern about being shut down abruptly.
This is where Instabill comes in
While having an international or offshore acquiring banking partner may not have been part of your original business plan, Instabill merchant account managers are here to guide you through the process. Your personal account manager serves as your consultant – your conduit with your new offshore acquiring bank – for the life of your merchant account with us. Our expert high risk offshore merchant account managers are on hand for live support Monday through Friday in our U.S. office in Portsmouth, N.H., 8 a.m. to 6 p.m. at 1-800-530-2444.