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Offshore Merchant Account Questions and Answers

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offshore merchant account


Offshore Merchant Account
Questions and Answers

by Brian B. Carter, MS, LAc

Brian is the founder of Pulse Media International (,
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Brian Carter, acupuncturist, herbalist, and author

The offshore merchant account is a little known small business tool that is perfect for those who make money online, but it'll work for just about anyone who processes credit card transactions, and it will make it possible for you to globablize your business, and reduce your taxes legally.

Who should find out more about offshore merchant accounts?

Anyone who:

  • Makes income online
  • Wants to reduce their current tax liability
  • Wants to move assets "offshore" without throwing up a "red flag"
  • Is setting up a new business and needs to accept credit orders

What is an offshore merchant account?

A merchant account allows you to accept credit card orders from your customers. What's different about an offshore merchant account? It has its pros and cons. You may have to accept a higher charge rate on transactions, but usually there is little or no start up deposit required, and you'll save on taxes.

You can crunch the numbers, but the initial advantage of an offshore merchant account is you can get your cash flow started with little or no expenditure... and on the back end, you keep more of the money you make.

Why wouldn't I just use a domestic merchant account?

One major problem with domestic merchant accounts is of course the application requirements, and the possible deposit requirements.

  • New biz? Some banks or credit card processors will not even accept your application unless your business has been operating for two years or more.
  • Cash poor? Others want a security deposit of $5,000 or more. Some others even want to hold back your monthly card payments as an additional security deposit for possible charge backs.
  • Respect yourself? They act as if they are doing you a favor to take your business.
  • Plan to make lots of money? Some clients that have had their merchant account pulled because their business started to grow. Every US bank is now paranoid about money laundering and suspicious transactions, so sudden changes in business volume are bad. You get punished if you do too well.

Thinking Globally leads you to consider an offshore merchant account

  • You need a bank or credit card processor that understands your business, your needs, your problems
  • It's a small world after all
  • You are not locked into doing business with local banks. You can shop the world for the best rates, products, and services
  • Service can be better from a bank half way around the world. Why? They want your business, and they'll prove it to you
  • If you intend to be virtual, the best place to begin is by becoming virtual in fact. An offshore merchant account places you in a virtual or offshore jurisdiction with favorable tax rules

Why should you use an offshore merchant account?

Some offshore merchant accounts and banks are just as good as the ones you find here... but they offer other advantages.

Protect Your Income

  • Asset protection and legal tax reduction via other countries
    • low or no tax jurisdiction - legal and secure if arranged properly
    • equivalent level of technology and banking infrastructure
    • more tax friendly and privacy friendly
  • Selling via an offshore merchant account and receiving the payments through an offshore corporation into an offshore bank account can legally cut down on your tax burden and put more money in your pockets.

New Businesses - Get Started

  • Getting domestic merchant account can be difficult. factors include:
    • credit history
    • type of business you're running
    • your business plan
    • funding
    • and more
    • Furthermore, a domestic merchant account provider can require a large up-front security deposit if you are a new business.
  • Many offshore merchant account providers are:
    • more entrepreneur friendly
    • much more likely to accept a new business
    • some legitimate offshore merchant account providers will set up account without large deposit
    • rate will invariably be higher but still better for new business where cash flow is important from the start

Expand Your Business Globally

An offshore merchant account will allow you to accept credit cards commonly used outside the U.S. such as:

  • JCB
  • Switch
  • Maestr
  • and many European debit cards

You can also accept funds in multiple currencies...

    • Customers presented with prices in their local currency and pay in their local currency
    • It's more convenient for them
    • So it's more profitable for you.

Things to Think About

  • Rates tend to be higher for offshore merchant accounts - upwards of 6% as opposed to 2-3% domestically
  • Hold back amount may be higher
  • Ask plenty of questions and make certain to get recommendations from current customers
  • Always consult your lawyer or financial advisor before taking any action
  • There are plenty of legitimate providers of offshore merchant accounts

The problem with some offshore banks or credit card processors are:

  • the higher processing fees, when compared to current US rates. The fierce competition that has been seen in the US, has not reached some parts of the world, at least not yet.
  • such things as "Internet Banking" and offshore merchant accounts are new services that many offshore banks are just starting to take a look at.

Real Benefits of offshore merchant accounts and offshore banks

Better service, little hassle opening an account, and lower or no deposit requirements are only the tip of the iceberg. The real benefits to you as a business owner are:

  • Tax reduction opportunities
  • Legitimate and convenient way to get your business profits offshore
  • Money processed by offshore merchant or bank is already offshore

Read a discussion thread about an offshore merchant account

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Copyright 1999-2074, Pulse Media International, Brian Carter, MSci, LAc, Editor