Incorporating an offshore merchant account into your online business is a process anyone who makes income online should consider. Currently little is known about this niche financial tool within the USA. The fact is though, not only can offshore merchant accounts be found that are completely up to par with their domestic counterparts, but they can also offer a number of benefits that can make their use even more appealing.
Next, we’ll explore a few of the advantages of offshore merchant accounts in the hopes that the information may prove profitable to our fellow internet marketers.
1. Protecting Your Income
When talking about “going offshore”, asset protection and legal tax reduction are the first things that usually come to mind. Acquiring a merchant account in an a low or no tax jurisdiction outside of your own borders can help you accomplish both of these things legally and securely if arranged properly.
Plenty of countries outside of the U.S.A. have an equivalent level of technology and banking infrastructure. Furthermore though, there are a number of these countries that are also much more tax friendly and privacy friendly than current laws allow for American banks to be.
Selling your products, services or subscriptions via an international 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.
2. New Businesses
For the new online business, procuring a domestic merchant account can often be difficult. Your chances of being accepted for a domestic merchant account are at the mercy of many factors, including your credit history, the type of business you are 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.
On the other hand, many offshore merchant account providers are considerably more entrepreneur friendly and are much more likely to accept a new business for a merchant account. On top of this, there are legitimate offshore providers who will set up your account without requiring a large deposit. Although the discount rate will invariably be higher, this can still be a better option for the new business where cash flow is important from the start.
3. Expanding Your Business Globally
Whether you are a new or established online business, expanding your customer base globally is an excellent way to increase your bottom line. Utilizing an offshore merchant account can help you achieve this in a couple of ways.
For one, there are plenty of international providers who will allow you to accept not only Visa and Mastercard, but also credit cards commonly used outside the U.S. such as JCB, Switch, Maestro and many of the debit cards common in Europe.
Furthermore, since your offshore merchant account can be integrated with an offshore banking account, you can accept funds in multiple currencies. Your customers can be presented with prices in their local currency and pay in their local currency, making it more convenient for them and therefore, more profitable for you.
4. “Sin” Businesses
Let’s face it, despite the ideal of pure capitalism that America claims to be all about, the truth is another matter. Just try getting a domestic merchant account if you are operating an adult website! Banks will claim that high levels of chargebacks and fraud are the real reason they won’t grant merchant accounts as easily for these types of businesses. Considering their profit potential and the fact the higher risk accounts can be balanced off with lower risk accounts, that defense doesn’t quite hold up.
Fortunately, for those who have seen where the big money lies in online business – online gambling and online pharmacies for example, there are plenty of countries that aren’t run by a “moral majority” that will be more than happy to consider almost any type of business for a merchant account.
5. Other Considerations
As you can see, there are many reasons to look into setting up an offshore merchant account. You can find an offshore merchant account to suit almost any situation, be it integrating it into your online shopping cart, accepting payments for recurring subscriptions or making sales of downloadable products. Many offer easy online access and administration too.
Keep in mind though, discount rates tend to be higher for offshore merchant accounts – upwards of 6% as opposed to 2-3% domestically. Also, depending on the type of business and other factors, the hold back amount may be higher. Both of these factors are small prices to pay considering the benefits though.
When comparing offshore merchant account providers, be sure to take these points into consideration. Ask plenty of questions and make certain to get recommendations from current customers. Do your due dilligence and always consult your lawyer or financial advisor before taking any action.
Contrary to what you might have come to believe (much to the benefit of domestic banks), there are plenty of legitimate providers of offshore merchant accounts. Coupled with the multitude of profitable and protective benefits that many offer, all internet marketers and online business people would be well advised to explore this financial tool further.
James B. Allen is a niche market consultant who provides keyword research for a small, exclusive client list of internet marketers, website designers and SEO professionals. Visit him at http://www.NichesExposed.com
