Home » Getting Offshore Merchant Account and Payment Processing

As a US business owner, you naturally assume that your merchant account will be with a US bank. This is not always the case and luckily, the global economy has changed things quite a bit. 

Occasionally, you may want to opt-in for offshore payment processing, especially if your business is considered high-risk and you have a hard time getting approved in the US. In this case, an offshore merchant account might be your only option to accept credit card and debit card payments.

Let’s see what it means to have an offshore merchant account, how it works, what are its pros and cons, and how you can set up an offshore merchant account. 

What is an offshore merchant account?

An offshore merchant account is a type of bank account established in a country different from where your business is headquartered. An example would be a US business that has a payment processing account somewhere in Europe. This setup allows businesses, particularly those labeled as high-risk, to process payments using foreign banks.

Offshore merchant accounts function similarly to traditional ones — but are hosted by a bank outside of your home country. 

When a customer makes a payment, funds are processed through this foreign bank and then transferred to your account. This process might involve currency conversion, depending on your account setup and the currencies you choose to operate in.

Why do high-risk merchants choose offshore payment processing?

First, it’s important to mention that offshore accounts aren’t just for high-risk merchants. They are also suitable for business with international operations and companies seeking financial flexibility. Here are some examples:

1. E-commerce platforms: Online retailers with a global customer base may choose offshore accounts to handle multiple currencies more efficiently and to reduce exchange rate losses.
2. Consultancy and freelancing services: Professionals who serve clients from various countries often use offshore accounts for easier and more flexible money management.
3. Export/Import companies: These businesses deal with cross-border transactions regularly and benefit from the simplified currency conversion processes offered by offshore banks.
4. Startups in emerging markets: New businesses in areas with underdeveloped banking infrastructure might find better stability and services with offshore merchant accounts.
5. Companies with high sales volumes: Offshore accounts sometimes offer more favorable processing fees for businesses with exceptionally high transaction volumes, making them a more cost-effective solution.

That being said, the most common users of offshore merchant processing are high-risk businesses. Here are five main reasons why:

1. Easier approval process: Some offshore banks have more relaxed criteria and are willing to work with industries that domestic banks avoid. This makes the approval process faster and less stringent.
2. Higher transaction approval rates: Offshore merchant accounts often offer higher transaction approval rates compared to domestic accounts. This is particularly important for high-risk merchants who expect a high volume of transactions.
3. Access to global markets: Offshore accounts enable merchants to transact in multiple currencies and across international borders more fluidly. This accessibility is vital for high-risk businesses that operate online and target a global customer base.
4. Favorable regulatory environments: Some countries offer more favorable regulatory environments for high-risk industries, such as lower taxes and less stringent legal restrictions. 
5. Enhanced privacy and asset protection: Offshore banks tend to provide greater privacy and confidentiality than domestic banks, which might be crucial for sensitive industries like adult entertainment or gambling. In some cases, using an offshore account can also help shield a company’s assets from domestic legal actions, providing a layer of security for the business owners.

Overall, offshore merchant accounts present a compelling package of benefits for high-risk merchants, combining easier access to banking services with strategic advantages in privacy, regulatory relief, and international commerce.

How does offshore credit card processing work?

Offshore credit card processing for your business operates in exactly the same way whether your merchant account is in the US or with an acquiring bank in some other country.

The only difference is that, when a customer makes a payment, funds are processed through this foreign bank instead of a domestic bank, before being transferred to your account. 

Now, your offshore bank will still have its own rules and terms related to fees and chargebacks — just the same as a local US bank would.

This is why here at SecureGlobalPay, we also provide you with a secure payment gateway that we configure to suit the offshore credit card processing requirements of your acquiring bank, whether at home or abroad.

If you need an offshore merchant account, click on the image below and let’s set you up with one.

Are there any drawbacks to offshore merchant processing?

Doing business through an offshore merchant account bank naturally is a little more complicated than using the bank next door. However, thousands of US merchants have grown their business successfully while having their card payment processing in different countries.

Still, here are some potential drawbacks you should be aware of:

• You might need to provide more information and documentation to get approved.
• Applications may take a few days longer to process.
• If you are operating in a high-risk industry, the transaction fee will still be high compared to a low-risk merchant.
• It takes a bit more time to receive funds from abroad.
• Some acquiring banks may ask you to incorporate in their country (establish an EU corporation and place of business) as well as in the US.

If you apply for offshore payment processing with SecureGlobalPay, our customer support team will fill you in on any complexities around our partner banks.

How to get a high-risk offshore merchant account?

There are three steps for setting up a high-risk offshore merchant account:

1. Choosing a payment processor: Select a payment processor that specializes in high-risk accounts and has robust experience handling the regulatory requirements of your target offshore locations. Research potential processors thoroughly to check their credibility, fee structures, and the range of services they offer.
2. Set up an international bank account: This bank should be in a jurisdiction that is favorable to your business type and offers economic stability, favorable tax laws, and privacy protections. Evaluate their international services, associated fees, and compatibility with your business operations.
3. Integrate your payment system: This step involves setting up the technical aspects of your payment processing. It includes integrating your website and other sales platforms with the sponsor bank and your payment processor to handle transactions smoothly. 

The actual merchant account approval process is essentially the same as when applying for a US merchant account. Card processing payment underwriters look for the same type of information.

While the exact documentation can vary from country to country, usually, you will need:

• Govt issued ID like a driver’s license or EIN from the IRS (or both)
• Voided check from your regular business bank account
• Financial statements covering, at minimum, the last 3 months
• Memorandum and Articles of Association (if looking to open a merchant account in the UK)
• Proof of available funds

After you provide the required documentation, an offshore payment processor will review everything, go through your merchant processing statement, estimate your potential chargeback ratio, and similar.

There might be some back and forth. You might be asked to provide additional information or show how you plan to keep chargebacks under control.

The whole approval process for a high-risk merchant takes 3 to 7 business days on average, if underwriters don’t find any major issues.   

If you decide to use SecureGlobalPay as your payment service provider, we will advise you of what a specific underwriter may require once we have matched you with a suitable offshore partner bank.

Open an offshore merchant account with SecureGlobalPay

While we can work with almost any industry, SecureGlobalPay specializes in helping high-risk merchants accept and process high-risk credit card transactions quickly and effectively. 

For those that need an offshore merchant account and payment processing, we offer the following:

• You will get a dedicated account manager with 20+ years of industry experience that will guide you throughout the whole setup and approval process.
• We can help you find a suitable offshore sponsoring bank through our industry connections.
• Access to our secure online payment gateway which we can preconfigure to work with the chosen offshore payment processor and accept different currencies.
• Advanced chargeback dispute resolution and prevention programs.
• Fair and flexible processing fees that don’t ruin your bottom line.

Learn more by sending a question to partners@secureglobalpay.net or simply fill out our online application form:

Offshore payment processing FAQ

Who is an offshore merchant?

An offshore merchant is typically a business owner who has opted to register and use a merchant account in a foreign country. Many of these businesses are considered high-risk due to their industry type, customer base, or revenue models. Examples include online gaming, pharmaceuticals, or adult entertainment industries. 

These merchants turn to offshore accounts to bypass stricter regulations and gain more favorable banking conditions, which might not be available domestically.

How can my business be rejected by a US bank but accepted by a foreign bank?

It’s possible because banking rules and underwriters’ guidelines regarding risk differ. More importantly, the major card networks also apply different rules in different countries.

For example, the Visa operating rules manual consists of 765 pages covering what partner acquiring banks can and can’t do as regards payment processing. Visa has split the world into 5 regions and rules vary in each region. That means that a line of business that Visa will not handle in the US could well be acceptable in, say, Europe. MasterCard operates along similar lines.

Who are offshore payment processors?

Offshore payment processors are like international banks. It just means that your merchant account is with a bank in another country.  For example, when a US business operates an offshore merchant account in Switzerland, the Swiss account is regarded as an offshore account for the American business.