Offshore and High Risk Merchant Services | Our Blog

Are offshore merchant accounts right for your business? Here are the pros and cons.

Merchant Account

Offshore merchant accounts can be the golden ticket to taking your business to new heights. Offshore accounts are a completely legal method for managing money in a more profitable sense. But that doesn’t mean offshore merchant processing is right for every business. Weigh our pros and cons before sailing off to new lands, because a tax haven for some might mean less business for others.

Offshore Merchant Accounts – The Sum Up

Before weighing in the benefits and disadvantages of offshore payment processing, let’s quickly define what an offshore account is and possible reasons why someone might use one.

What is an offshore merchant account?

An offshore merchant account is one in which the acquiring bank or credit card processor is located outside a business’ area of operation. For example, having an offshore account in Malta but selling in the UK.

Why use an offshore account for credit card processing?

There are several pros and cons to operating through an offshore account, and there are various reasons why a business might want to open one. Some online business owners might be required to use an offshore credit card processing company because they can’t find one in their own country if the business type falls into a high-risk category. Other businesses use offshore accounts because the country in which they open an account has a larger customer base for their products. And other times, accounts are opened for taxation purposes or because they often handle higher sales volumes.

The Pros of Using an Offshore Account

Whether you want to diversify holdings, take advantage of another country’s taxation, or something else entirely, offshore banking is a great solution.

Reduced Taxes

Many offshore accounts are in countries commonly referred to as tax havens. A lot of people equate that to tax avoidance which isn’t inherently true. Tax havens are places where taxes are levied at low rates, sometimes as low as 4% in the end. Who wouldn’t want that? You still have to pay, but it’s a fraction of what you might be charged in other countries like the US or Canada.

More Currencies

Conversion rates for international customers are often abysmal. If you have a large customer base in Japan but use a UK merchant account, then you’re losing out on profit due to the conversion fee, international transaction fee, and other fees imposed by the acquiring bank. With an offshore account, you can accept currencies outside of your main area of operation.

International Sales

Aside from foreign and local currency, international payments are easier to handle with an offshore merchant account. Offshore services are similar to international merchant accounts in this regard. Laws surrounding offshore business accounts are usually more lenient in reference to transaction regulation. 

Higher Sales Volume

High volume is associated with higher risk of fraud, so many regular merchant accounts impose a monthly volume cap. With offshore banks, the cap is either much much higher or doesn’t exist. This allows for possibly unlimited processing under one account, saving you from either stifling sales or swapping between merchant accounts to keep up.


The diversification of your merchant accounts helps alleviate the reliance on one account for all transactions in a single country. A low-risk merchant account or domestic high-risk merchant account is great for domestic sales, but that same account might not be so helpful when going abroad. That could be due to volume caps or fees, as listed previously, but could also refer to better processing rates in general.

High-Risk Business Acceptance

E-commerce businesses in industries such as gambling, nutraceuticals, and adult entertainment (among many others) require a high-risk merchant account provider because of their association with chargebacks and fraud. Many domestic banks don’t want to offer service to businesses in these industries due to the level of risk associated with them. Offshore banks and processors are more accepting of high-risk businesses.

More Ways to Pay

Offshore accounts give e-commerce merchants access to other ways for customers to make purchase besides credit card payments. They typically come with ACH processing and e-check support on virtual terminals.

The Cons of Offshore Credit Card Processing

Weigh in the disadvantages of using one of these accounts before submitting an application. At the very least, you want to be aware of any pitfalls so if you do decide an offshore merchant account is right for you, then you’ll be better prepared.

Higher Decline Rates

When using an offshore account for payment solutions, transactions may be subject to a higher decline rate. This doesn’t happen in every situation but should be noted so you can warn customers beforehand. Since the offshore payment processor is in a foreign country, processing transactions are considered cross-border. Because of this, domestic banks might flag the purchase as fraud and decline the card. Declines come with a fee for you, so racking up too many and spell out a loss.

Less Protection from Fraud

Offshore merchant account service providers need the same information to approve service as domestic merchant accounts. That usually means handing off sensitive business and personal information like processing history, credit card info, bank account info, and personal addresses. And that info may not be well protected. As you should anyway, monitoring the information you shared will help you stay on top of any potential fraud or identity theft.

Potentially High Fees and Rates

This isn’t always the case, and often enough rates are even cheaper than going domestic. But it depends on why you’re looking for an offshore account. Some providers can feed off your desperation if you’ve been unsuccessful at acquiring one domestically (i.e., for businesses operating in high-risk industries). You could be contracted with higher rates simply because the provider knows you’ll sign the dotted line. Shop around and don’t act out of desperation. You’ll get a merchant account that fits your needs with attractive rates.

Less Client Conversion

New leads may not convert as frequently to regular clientele if you only process local debit card and credit card transactions with an offshore payment processor. An offshore account might be a good temporary move until you can get approved for one domestically.

Not All Offshore Merchant Accounts Are the Same

Shop around, just like you would with a domestic account. The pros and cons listed above don’t apply to every account provider, acquiring bank, or offshore payment processor. Finding the right one for your business will take a little effort to hunt down, but the effort will pay off. We will help you in the search, of course, and connect you with acquiring banks that will accept your business.

The location of an offshore account is important, too. Tax laws and payment regulations differ for every country. You might find the best solution in a country you’ve never considered. Evaluating your needs will help us both narrow down the search.

And some accounts found in tax havens have such high processing rates and fees that the tax benefit is completely negated. Pay attention to all aspects of the account and don’t make any assumptions. We’ll help you understand the fees, rates, and pricing for the merchant accounts you’re interested in and use our connections and negotiating skills to make the offer as attractive as possible.

Just because it’s an offshore account doesn’t necessarily mean it accepts every currency (or at least the currencies you’re most interested in). Many offshore accounts do process several different currencies. But, again, don’t make assumptions. Make sure the account does what you need it to do, otherwise it’s money out the window.

Don’t Forget to Register Your Business

Many times, you’ll still need to register your company in the same region as the acquiring bank. EU banks will more than likely require this step. To do so, you’ll need a local physical address for the business, a country representative, and a bank account. These steps will also help your business once you get quick approval for an offshore merchant account, so don’t fret. Each country has different requirements. We’ll help you with the incorporation process to make sure your application goes smoothly and your business is ready for offshore processing solutions.

Convince an offshore merchant account is right for you? Then let’s have a chat!

We’re ready to get this going as soon as you are. If you’re still convinced that an offshore account is the best solution for you, then contact us. We’ll answer any questions you have, help you understand the process, and get you set up for offshore payment processing.

Contact our specialists now and scale your business internationally today. We’ll set you up with a payment gateway to hand all local and international online payments as you see fit through the world’s most popular credit card companies like Visa and Mastercard.