Firstly, an offshore merchant account, as the name specifies, is essentially a type of account underwritten by a bank allowing e-merchants to process transactions in a non-resident country. The term is also interchangeably used with International Merchant Account. If you have an online business and want to accept payments on a global level, this is a good place to start.
However, having an international merchant account has its advantages as well as disadvantages. So, let us look at these:
- You have a broader selection of banks, and the application process is hassle-free.
- You can accept payments in multiple currencies.
- You will have real-time updates of your transactions, plus your information remains absolutely confidential.
- You can efficiently market your business globally and expand the customer base.
- As compared to onshore accounting, taxes on offshore merchant accounts have comparatively lower rates.
- Offshore merchant accounts are particularly helpful for online e-commerce businesses creating a more favorable business climate to operate in.
- High-risk merchants operating in such businesses as online casinos, pharmacies, and forex have higher chances of approval.
- There is no cap on the monthly dollar value and the number of monthly transactions, which helps expand company profits and achieve maximum potential.
- All major credit cards are accepted to process payments in various currencies.
- Offshore Merchant Accounts are more flexible and approved even for businesses with bad or no credit history.
- The time difference may be one pitfall of having an international merchant account.
- Transaction rates are usually higher as compared to domestic banks.
- Sometimes, a representative has to travel to the offshore jurisdiction to open the account.
- As accounts are offshore any disputes that can arise may make it harder to legally resolve.
Of course, the advantages outweigh the pitfalls of having an offshore merchant account. However, you must carefully weigh the pros and cons before opening an offshore merchant account to avoid any negative consequences at a later stage. The offshore banking sector can be a bit overwhelming and confusing, however, if you find a reliable provider to cater to your business needs offshore merchant processing can have huge benefits to your business.