Accepting payments from foreign buyers is a breeze with offshore high-risk merchant accounts. They help company owners to reduce their risk and exposure by letting them execute transactions in many currencies. An offshore merchant account acquiring bank or offshore payment processor is situated somewhere other than the company’s main headquarters. When a US business, for example, creates a payment processing account in Europe, the European account is deemed as offshore by the US corporation.
Did you know that there are 7.9 million online retailers globally right now, including 2.1 million in the United States? The globe is becoming a unified marketplace, allowing online retailers to extend across national borders, boosting sales and profits. Businesses using offshore merchant accounts with acquiring banks in target areas save money on processing, boost shopper orders, and reduce operational expenses.
5 Things You should know about offshore merchant accounts
1. Chargebacks are the Threat
Chargebacks are one of the most serious problems that modern businesses face. Friendly fraud is undetected because it is disguised as a legitimate transaction. The cardholder may argue that the goods were not as advertised, that they never got the item, or any number of other possible triggers, and demand a chargeback long after the transaction has been completed. Merchants are subsequently subjected to extra chargeback administration costs and may lose their ability to handle credit card payments. Merchants bear the brunt of the loss, as they lose money from sales, product, and shipping costs.
Also, it is important to note the fact that 86 percent of all chargebacks are likely fraud, with retailers losing $2.40 for every dollar of chargeback fraud. The typical merchant loses 1.47 percent of their overall income due to fraud.
2. About rates
Offshore account rates differ based on the area where the acquiring bank is situated. Most foreign banks have attractive rates, especially for high-volume, high-risk businesses. The amount of time it takes to settle an offshore credit card transaction is determined by the number of transactions. Smaller merchant accounts may settle monthly or a few times each week, whereas high volume merchants are able to qualify for daily settlements.
The exchange rate differs from nation to nation. European exchange rates, for example, are less expensive than those in the United States. When your clients are in the same region as the acquiring bank, offshore merchant accounts save you money on processing. If your offshore merchant processing accounts are situated in Europe, for example, your European transactions will be cheaper than if they were handled through a US bank.
3. You Need to Be Upfront with your Merchant Service Provider
When you’ve reduced your alternatives and decided on a high-risk merchant account, tell the merchant service provider the truth. You should inform them about your industry and the nature of your company right away. They won’t be able to assist you if you aren’t forthright, and being less than forthcoming may result in incorrect pricing quotations. Provide the appropriate information to the merchant service provider as requested. Your credit history, bank documents, and merchant account history are all examples of information you may be requested to provide.
4. What Can be Done if your Merchant Account is shut?
If your merchant account has a high number of forced transactions, it may be closed. In the event that the data on the card is invalid, merchants manually enter transactions into the system. Such transactions frequently fail to record certain electronic information on the card, resulting in fraudulent purchases. Without having access to the physical card, con artists may simply steal credit card information.
- Know why it happened:- Merchants should not presume that they understand why their account was canceled. It’s critical to know the whole truth. Additionally, businesses must submit a written statement from their prior acquirer when registering for a new merchant account.
- See the Match List:- The MATCH List (Member Alert to Control High-Risk Merchants) is a database that contains information on businesses and their owners that have had their merchant accounts terminated. All canceled merchant accounts must be reported to the MATCH List, according to the networks. Ensure that the company has been MATCHED. For firms that have not been placed on the MATCH List, the application process for a new merchant account is different.
- Should Save the statement:- At the very least, merchants should have the previous six months’ worth of processing statements. Merchants should double-check that they have all the appropriate documents before losing access to the acquirer’s online reporting system.
5. What Should You Do for Account Approval?
Check to see whether your company’s bank statements indicate a healthy cash flow. Check that the bank accounts you’re utilizing have enough funds to handle the level of processing you’ve requested. Processing statements are used to determine chargebacks. If chargebacks are low, it’s ideal. You Should include a short note of why chargebacks are rising and what steps are being taken to curb them. To open the account successfully, make a note of the points given below:-
- Websites for e-commerce merchants must be completely functioning. Test all links before applying to ensure that sites load quickly and that material appears correctly and without errors.
- Websites should have refund and privacy policies. If products are being supplied, including shipping information. Make the process simple for customers to reach you by clearly showing your contact emails, customer care information, and service hours.
- Search for the best Security:- When it comes to selecting the finest high-risk merchant account provider, security is critical. Before you choose an online credit card processor, make sure you do your homework to make a note of companies past security concerns.
Wrapping Up
If you’re an international business, having a local bank in the market where your customers are situated, an offshore account might be helpful for you. This will allow you to take payments without worrying about currency fluctuations, which might reduce your revenues while lowering your tax burden and the danger of credit card theft. Because various parts of the globe have varying cultural norms for what items are suitable for sale, diversifying your merchant accounts can help you avoid being too reliant on a single country’s culture or beliefs.
Offshore merchant accounts are ideal for processing payments for merchants who, owing to the nature of their business, are unable to get a domestic merchant account. When it comes to selecting the finest high-risk merchant account provider, security is critical.
