Top 7 Reasons to Go Offshore as a Forex Broker
Forex brokers are the kings of online currency trading. Millions of traders all over the world use them. The forte of a forex broker is fast processing and that’s what brokers need to have — fast processing of all the orders their clients place. The fact that they are highly liquid, they also provide effective post-execution pricing.
If you’re a forex broker and use credit card payments to get paid, you’re probably very familiar with the costs involved.
From forex payment processing fees, to chargebacks, to high interest rates that eat into your margins. The outright best solution is to use an offshore forex merchant account for such a high-risk industry. Here are our
Avoid Forex Broker Fraud
One of the biggest problems with forex brokers is that they get hacked. It’s happened in the past and it will happen again.
When a trading account is hacked, it can take months to recover all the money, if ever. And when an online broker goes bankrupt, as many do, traders might never see their money again.
The key to successfully engaging in forex trading is having a good understanding of the global market, forex trading platforms, multi-currency processing, and how it works as well as how to properly manage positions and funds.
Offshore forex merchant accounts are exposed to international regulations, therefore safer for your money.
Traders should know that there are many brokers out there on the foreign exchange market. And not all of them are equal in terms of quality and trustworthiness.
While onshore brokers may be cheaper, they also come with a lot more risks than the offshore ones. You need fraud prevention and protection, otherwise these issues could cost you dearly.
Big Reserves for Currency Fluctuations
The Forex market is the largest and most liquid financial market in the world. It runs 24 hours a day, 5 days a week, and is open to traders from all over the globe. It’s also one of the most competitive markets out there, with plenty of brokers vying for a trader’s business.
It is important to know that you, as a forex broker, are solvent and have sufficient reserves to deal with any unforeseen fluctuations in the market.
When traders are considering opening an account with a Forex broker, it is always good to know what kind of reserve pool they have. This can give them an idea of how safe their money is with you.
A reserve pool is used by brokers to cover any losses that may be incurred by traders due to unexpected fluctuations in the market.
For example, if there was an unexpected rise in the value of a currency pair during trading hours, then this would result in traders making profits from their trades.
However, if there were no reserve pool available then these profits would have been lost because there wouldn’t be enough money available for traders to withdraw their money from their accounts until after trading hours had ended and funds had been transferred from banks into their accounts.
Therefore having a reserve pool allows traders to secure their funds no matter what.
More Currencies, More Trader Options
Offshore brokers are able to offer a much wider range of currency pairs than their EU-based counterparts. For instance, a broker that’s based in the UK may be able to offer forex traders access to the major currencies such as the US dollar (USD), Euro (EUR), Japanese yen (JPY) and Australian dollar (AUD), but it may not be able to offer them access to all of the major emerging market currencies like the Brazilian real (BRL) or Russian ruble (RUB).
In addition to this, offshore brokers are also able to offer traders access to lesser known currency pairs such as those between the South African rand (ZAR) and Indian rupee (INR). These are currencies that would otherwise be unavailable due to restrictions placed on EU based brokers by their local regulators.
Multiple Payment Methods
If you’re a broker and looking to expand your forex business, consider going offshore. An offshore merchant account allows you to process payments in foreign currencies (including cryptocurrency) and preferred, alternative payment methods like debit cards, echecks, and bank account transfers.
An offshore merchant account is ideal for foreign exchange brokers who want to expand their global reach and increase profits by making it easier for customers to pay them. Forex credit card processing for networks like Visa and Mastercard is standard, but your customers want more. Here are some more reasons why an offshore forex merchant account is right for you:
Accept international payments: You’ll be able to accept local currencies from countries around the world by enabling your customers to purchase with their local currency.
Process online payments quickly: An offshore forex merchant account can help you start accepting payments quickly and securely without tying up your funds or requiring additional approvals or underwriting from your acquiring bank or credit card processing company. Faster processing, faster payouts.
Reduce fees: An offshore merchant account is usually less expensive than traditional processing solutions because there are no chargebacks or chargeback fees associated with using it as a payment gateway service provider (PSP).
Safer Customer Data
Because most offshore forex brokerages are located outside of the U.S., they’re not subject to any U.S.-based laws or regulations (such as those governing money laundering). As such, these companies tend to provide better security for their customers’ personal information than do onshore brokerages who must adhere to strict regulatory requirements set forth by various government agencies (especially those related to anti-money laundering).
This is particularly relevant in the context of European legislation such as GDPR, which imposes strict rules on how personal data must be managed by companies.
The EU has also introduced new tax laws that apply to all companies operating in Europe, regardless of where they are based. These laws have made it more expensive for foreign companies to do business in Europe and have limited their ability to compete with domestic ecommerce businesses.
Offshore brokers will typically take advantage of these opportunities by setting up their servers outside the EU and selling their services directly to clients who want access to them without having to go through local brokers or agents.
Lower Costs for Traders
Because offshore brokers don’t have to pay taxes in their home country, they can pass on these savings to their customers in the form of lower commissions and transaction fees.
In some cases, offshore brokers may also be able to offer cheaper spreads than onshore brokers who have higher overhead costs associated with operating in their home country or region.
The fees you charge to traders can vary widely depending on the type of trader they are and where they live. Offshore brokers tend to offer lower commissions or transaction costs than their onshore counterparts because they don’t have to pay local taxes and they don’t have to comply with regulatory requirements such as Know Your Customer (KYC). This can save traders money if they trade frequently or seek higher trading volumes.
More Financial Products and Services
Offshore forex brokers can offer a wider range of financial products and services to their clients than onshore brokers can provide in their home countries. Offshore brokers tend to have more freedom in their offerings because they’re based in countries with more relaxed regulations than those of their home country.
Forex brokers may be able to offer access to exotic investments such as stock options, futures contracts, and mutual funds — but not all of these products will be available for trading for U.S. citizens because some of them would violate U.S. securities laws if sold directly to U.S. citizens by the broker-dealer itself (or by another U.S.-based company). However, offshore brokers can sell these investments directly to non-U.S., non-Canadian investors without restrictions because they’re not subject to SEC regulations like onshore broker-dealers are when it comes to selling these kinds of securities through their onshore brokerages.
Offshore brokers can also offer a wider range of financial products and services than traditional onshore firms due to their larger size and more diverse customer base. For example, offshore firms can provide more complex derivatives such as spread betting, contracts for difference (CFDs), forward contracts and other instruments that aren’t available through smaller domestic firms operating within limited jurisdictions.
Ready to Open Your Offshore Forex Merchant Account?
There are a number of reasons that a broker might consider opening an offshore forex merchant account. There’s no hard and fast rule that dictates this route, though; every broker is different. And while every broker will likely have their own set of reasons to go offshore, there are some that are pretty standard.
No matter the reason, the forex industry is considered high risk. You need high risk merchant account services to connect with the appropriate payment processor for your business.
Open your high risk merchant account with us today and start reaping the benefits.