The advent of technology over the last few decades has brought about the meteoric rise of e-commerce and online business models.
Online credit card transactions have become the norm as the new way of doing business.
Many businesses hosting their trade solely on virtual platform can be exposed to various risks and regulations. Also, if the business is doing transactions with customers from all over the world, the option exists to legally position the business in a jurisdiction which treats such businesses most favourably.
For most people that will mean an incorporation jurisdiction that can offer privacy, low or no tax and low regulatory requirements. A global e-commerce business that wants to succeed online, more lucratively and with less hassle, will want to invest in an offshore merchant account package, which includes company formation and banking options.
Put simply, an offshore merchant account is an account that allows a business to accept credit card payments through a banking institution located in a jurisdiction outside the country where the business operator lives and works.
Some of the best-known global companies, such as Apple, Microsoft and Google, take full advantage of offshore financial and legal structures that help lower their tax burden in the United States – by setting up offshore subsidiaries in favourable tax jurisdictions to serve different segments of their foreign market.
Likewise, an existing e-commerce business currently located in the U.K., for example, can do exactly the same and serve their non-U.K.customers from a foreign subsidiary in a low or no tax jurisdiction.
To get full benefit from this offshore e-commerce opportunity, for tax optimization purposes, you need to set up an offshore corporation that you neither own nor control. This then can be your platform for an international business with great tax benefits.
Here are some of the benefits of setting up an offshore merchant account for your online business:
There are two main routes you may take for setting up offshore merchant credit card processing services:
For start-up operations, the best route is to begin with a clearinghouse processor. This involves hiring a third-party service that allows you to bill your customers using their merchant status (this service will still allow a unique descriptor to appear on your customers' statements so they recognize your transactions).
This route lets your business build up sales momentum before you make the jump.
Even if the company already has domestic processing history, it is usually much quicker and easier to start in this way, with the understanding that the processor will then sponsor you for your own direct merchant ID with one of the banks they work with.
This by-passes the onerous paperwork requirements that bank compliance departments otherwise hit you with before the direct merchant account can be opened. After a period of 6 months to a year, once there is sufficient sales transaction volume and history, a business may consider moving to a direct bank processing relationship with an offshore bank.
A good number of e-commerce businesses will qualify for their own bank-direct merchant account (where the billing and merchant ID will be in their name); however, as you would expect, this type of service is more costly that one in your country of residence.
This is because, if you default on your obligations, say by going out of business and leaving your customers stranded, it is impossible for the bank to come after you for any sums owed.
Though the majority of domestic merchant accounts will require a 2%-3% discount rate, which is the percentage they take of your turnover, with an offshore merchant account, the discount rate is higher. You can expect to pay anywhere from 4% to 12%depending on the average ticket size.
The higher rates would be for higher risk businesses.
For example, with a Panama-based offshore merchant account offered by Offshore-Protection.com, the average rate is about 4.5% + 23 cents (USD) per transaction, but actual rates will depend on years in business, volume and other factors. While higher than domestic rates, these rates are considerably lower (as much as half) than what you can expect to find with a standard offshore clearing house processor.
With both offshore credit processing options, they will need for you to provide a security deposit to protect themselves and the bank from any unlawful use. This deposit is typically solicited in the form of a 'rolling reserve'. This means they will commonly ask to retain 10% of your sales revenue for a period of six months. Your funds are thereafter freed up on a pro-rata basis.
Any discerning online merchant will want to seriously consider going offshore to reap the many benefits that comes with such an initiative. If you want a reliable firm to show you how to capitalize on this offshore opportunity, you'll benefit from the wealth of knowledge found at Offshore-Protection.com.
An Offshore Merchant Account is a viable solution for those non-resident internet-based companies that deal in global business transactions.To capitalize on all the opportunities afforded a company by its globalized positioning, such as tax reduction strategies, offshore banking and accounts a company should seek to due business in an financial environment that supports its growth.
A jurisdiction, therefore, should have a low-regulatory environment, yet one that protects privacy and ensures confidentiality. An International Offshore Merchant Account allows for International Credit Card Processing for corporate entities that have non-resident status.
Merchant Accounts allows a business to accept credit card payments through a non-local banking institution in a jurisdiction outside ones primary country of operation. An Offshore International Merchant Account is for an individual or corporate entity that:
Using a Merchant Account with an IBC creates a great platform for an international business that gives benefits including:
For more information about Offshore Merchant Accounts and our tailored Offshore E-Commerce Programmes Please see our link Below
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