Offshore and High Risk Merchant Services | Our Blog

3 Simple Steps to Offshore Company Formation with a Merchant Account

High Risk Merchant

When it comes to obtaining a bank account for an offshore company, the process is simple. There’s no obstacle course of tasks to complete. Things aren’t so simple for obtaining a merchant account, though. Offshore company formation with a merchant account requires you to incorporate your business in the country or region where your merchant account exists.

For example, if you want to obtain a merchant account in Seychelles, you must incorporate there as well. The process isn’t particularly arduous, but it can be tedious work because company registration is required for each country—with one exception. The European Economic Area (EEA). Register in one country and your offshore merchant account works across every other in the EEA.

Covering the Basics of Company Formation and Merchant Accounts

Before considering the three steps to incorporating a company with a merchant account, you need to understand what each term means. Being well informed before the application process will help you better prepare and understand a contract’s fine print.

What is offshore company formation?

Simply put, an offshore company is one that is registered in a different country than that of the stakeholders. There are several potential benefits (usually involving taxation, asset protection, and privacy) for offshore company registration and transaction processing. Therefore, offshore company formation is the process of incorporation for a company in another jurisdiction than the one in which it resides (i.e., an offshore jurisdiction).

Why register an offshore company?

There’s a level of privacy and tax-efficiency to offshore company registration. Typically, a company is registered offshore with the intention of operating internationally as opposed to locally. Otherwise, you could open a regular business in that new country. This is the difference between an offshore and onshore company. For example, a gambling business might want to be registered in Malta but operate throughout the EU or Asia because regulation and taxation are more lenient.

A lot of high-risk businesses are attracted to offshore processing because of the leniency that surrounds business acceptance. This is just one reason registering a company offshore might be a good option.

Does my business need a merchant account?

Yes, your business needs a merchant account to process the transfer of funds from the customer to your business bank. A lot of popular merchant accounts are somewhat masked to attract more customers. For example, many individual sellers or small businesses probably wouldn’t gravitate toward obtaining a merchant account because the phrase sounds too business-y. But all businesses require a merchant account to function in the world of e-commerce.

Is a merchant account the same as a business account?

Not at all. A business account, or a business bank account, is where a business holds its money. Just like any other bank account but used for business purposes only. A merchant account is what allows for credit card processing from popular networks like Visa and Mastercard. so payments and purchases can be transferred into a business bank account. You won’t be able to process debit card or credit card payments without a merchant account. There are several benefits to having an offshore merchant account, like processing various currencies or avoiding fees from international transactions.

Where is the best place to set up an offshore company?

This is a common question with no real answer. The best place to set up an offshore company is entirely dependent on the industry you’re in and what you hope to get out of offshore company formation. The United Kingdom, Spain, Nevis, Mauritius, Singapore, Panama, Seychelles, Cyprus, Belize, Hong Kong—there are so many places you can set up an offshore business. Each differ from the next, so it’s important to understand the country regulations that apply to your business.

Are offshore companies legal?

A resounding yes is the answer. Contrary to common belief, offshore companies are subject to local law and taxation. They aren’t specifically meant for criminal activity or tax avoidance, though that does happen just like with regular onshore companies. Offshore businesses still need to file taxes, comply with regulations of the jurisdiction in which it resides, and maintain proper licensing. Many offshore jurisdictions are referred to as tax havens, which should only imply incredible tax benefits (like low tax or tax-free), not evasion.

Steps to Offshore Company Formation

Now that you know the basic terms and concepts, we’re ready to go through the steps to offshore company formation. These are condensed and one step may be more involved when enacted than outlined below, but these should give you a general idea of what to do and expect.

Step 1: Choose an Offshore Location

Each country has different benefits and drawbacks regarding incorporation and payment processing. The right location is entirely dependent on your international business needs.

In general, a European payment processor usually imposes lower fees, including application, transaction, and fixed, in comparison to other areas. Therefore, obtaining an offshore merchant account in the EEA is likely more attractive to most companies. They’re easier for European merchants to work with, and with such a large economic area covered, it’s good for your own business as well. Registration requirements vary depending on each country, though there is an overarching set of requirements within Europe. So choosing to register in that more lenient country gives you equal access to all others in the EEA as if you registered somewhere else.

Do some research and choose a location that fits your business needs. Our team of offshore merchant service experts will help you decide, as well.

Step 2: Register Your Company

Before you can apply for an offshore merchant account, you need to register your company in that jurisdiction. We do recommend using an offshore service provider, but you should still have some understanding of company formation and merchant accounts to successfully obtain one.

Once your jurisdiction is selected, your next step is to choose a company name for your business. There are many words that cannot be used in your company’s name depending on where you’re registering. Words might include University, Bank, Municipal, Trust, and others along those lines. It’s a good idea to have a few options for your name just in case it includes a prohibited word or the name is already taken. You’ll also need to tack onto the end of your name a suffix that signifies liability (e.g., LLC, LTD, Inc., Corporation).

Next, you need to provide due diligence/KYC (Know Your Client), identity documents, and other pieces of information related to your business. Each region requires something different, but you can expect to submit a copy of your passport, proof of residential address, and details of your company’s activities. Our team will assist you with prepping the correct documentation. The other documents required depend on what type of company you’re registering as (e.g., holding company).

Finally, an order form can be submitted that answers other questions regarding shareholders, directors, local representation, and others. We’ll submit the form and your company will finally be registered.

Step 3: Open a Bank Account and Merchant Account

You can’t have a merchant account without a bank account, and you can’t have an offshore bank account without registering your company. So, once you’ve successfully registered your business, we can connect you with acquiring international banks and negotiate merchant account terms.

We are connected with a wide variety of EEA banks that work with offshore merchants. Once we understand your business requirements and goals, we can match you with the right acquiring bank and get you set up with an attractive merchant account.

KYC is also required here when applying for a bank account. Luckily, you’ve already gathered all the proper documents in the previous step, so copy and paste that process here and you’re set. This should be pretty straight forward and painless—you’ve already done the hard work.

As your offshore service provider, obtaining a merchant account and offshore banking account is done roughly at the same time. The bank account comes first, so we set you up with that. And then we can speak with payment processors to get a payment gateway on your site. Fees and rates for European offshore accounts are generally pretty attractive, so we’ll help you compare each available credit card processing company to find the right one for your business.

And now you’re set! The company is registered, the bank account is open, and you have a merchant account to process payments. You’re ready to do businesses.

Get Complete Offshore Company Formation with Merchant Services

Our excellent customer support team is here to get your business offshore and ready to earn. If you need local representation, a registered office (physical or virtual office), phone number,  acquiring bank, and merchant account (i.e., you need them all), then we’re the right company for you. We’ll help you through every stage of the company registration and incorporation process, position your business to attract banks and processors, and provide you with a myriad of additional services to protect your business.

Get in touch with our team today and get started on your most lucrative business expansion yet.