If you’re looking for payment processing for an offshore company, you probably already know that you’ve stumbled into a grey market filled with shady service providers and questionable business tactics.
That said, whether you’re looking for merchant accounts or basic financial services for foreign and offshore companies, there are legitimate options that exist.
Of course, where your business is structured, the products or services you’re selling, and where your customers are based, will all influence the banks and payment processing options available to you.
KEY TAKEAWAYS
- Payment processors only accept companies registered in certain countries
- Some offshore companies cannot unluck certain offshore payment processing services due to their business being too high-risk
- There are offshore payment processing companies that cater to high-risk businesses
- It’s important to look for an offshore merchant account that caters to similar business structures
Some readers might be wondering why it’s so difficult to set up merchant or payment processor accounts when opening financial accounts for companies abroad is relatively straightforward.
Well, for international companies (particularly those from offshore jurisdictions) and high-risk businesses, finding and setting up a payment processor can be very challenging due (in part) to limited options.
Likewise, fees can be extortionate. Chargebacks over a certain threshold are a concern, and account closures are common. Not to mention, just getting your foot in the door can be difficult.
Of course, offshore entities from reputable jurisdictions will have an easier time establishing merchant accounts. Similarly, they will have more options when opening bank accounts offshore.
If you’d like to get a head start on opening accounts for your offshore company then download our FREE Business Banking Starter Guide right now!
Feel free to use the table of contents to jump ahead to the sections most relevant to you.
Table of Contents
- Why Payment Processing for an Offshore Company Is Challenging
- How to Setup Payment Processing for an Offshore Business
- What Does This Mean For Your Offshore Company?
Why Payment Processing for an Offshore Company Is Challenging
Let’s start by first explaining why most international companies struggle to open payment processing accounts.
Payment processors only accept companies registered in certain countries. If your company isn’t registered in the “right” country, the payment processor can’t serve you and you’re out of luck. That’s often the case for an offshore company. Or, if you are incorporated in an offshore jurisdiction that payment processors consider “high-risk” or happen to be on a grey or blacklist, you may also have problems.
In addition, businesses in high-risk industries requiring processing will almost certainly find themselves shunned by payment processors and turned away from offshore merchant accounts. Think gambling, crypto, physical products, pharmaceuticals, cannabis, adult entertainment, or businesses that traditionally have a high percentage of chargebacks.
So, if you are incorporated in the wrong country or have a high-risk business and find yourself being shunned by payment processors, what can you do?
How to Setup Payment Processing for an Offshore Business
Having the wrong structure from the get-go can be devastating for your business. It can result in a ban from the world’s best, most cost-effective payment processing accounts.
If this is the situation you’re in, you have a few options available to you:
- Find a payment processor that caters to offshore companies
- Find a payment processor that caters to high-risk businesses
- Set up a payment processing subsidiary in a favorable jurisdiction
- Scrap your current structure and set up a new company altogether
Payment Processing or Offshore Merchant Accounts That Cater to Offshore Companies
If you’re hell-bent on keeping your current company structure and you have no interest in forming a new company for payment processing purposes, then it’s time to start looking for offshore merchant accounts that will work for you.
Currently, GlobalBanks analysts monitor 115 payment processor accounts globally. All of these offer solutions generally based on three criteria: industry, country of registration, type of business, transaction volume, and beneficial owner.
While we don’t currently provide access to our payment processor database, that will be changing. And for now, our analysts are happy to help members find payment processor accounts that work best for them.
If you’re not yet a member of GlobalBanks IQ and would like to take a stab at finding a payment processor yourself, you should start your search with 2CheckOut, Bluesnap, Square, and Stripe.
Checkout in particular is an interesting solution, it caters to high-risk merchants, small businesses, and offshore companies. While most comparable payment processors and offshore merchant accounts often charge extortionate fees, 2Checkout is comparable to PayPal and also allows you to accept PayPal for payments without opening a PayPal account. As for whether or not your country of registration is on the list, at the time of writing 2Checkout accepts companies from 196 countries, so you should be covered.
In an upcoming premium report for GlobalBanks IQ members, we’ll discuss the best payment processing options out there, new trends and restrictions, and actionable processing hacks for different company structures, industries, and jurisdictions.
Payment Processors for an Offshore Company & High-Risk Industries
What if you have a high-risk business? Step one is to look for offshore payment processors and offshore merchant accounts that already cater to similar businesses. You can also look for high-risk merchant accounts that have a history of servicing high-risk businesses in general. This will give you an initial sense of how many options are available to you. And you’ll know how expensive they will be, and how difficult they will be to open.
For example, if you’re operating an Amazon FBA or e-commerce business with a company registered in Panama or Mauritius, what payment processors are your competitors (or similar companies) already using?
Sometimes you might even find that there are in-country options that are familiar with your business model. This means they’ll know how to properly assess your risk profile. In other words, if your Panama company is selling products online you might find that a Panama payment processor is the best choice – yes, they exist.
In other instances, you will face more challenges accessing payment processing accounts. For instance, if you are opening a Singapore offshore company bank account and you do not have clients in Singapore, it’s unlikely you will be able to access local payment processors.
Similarly, if you have an adult entertainment, cannabis, or gambling site, you should start by trying to determine which payment processors accept businesses from this category – though, in our experience, these businesses tend to be tight-lipped when it comes to their banking stack so to not jeopardize their existing business banking and payment processing relationships.
And before jumping to the conclusion that these issues only impact small businesses, keep in mind that Pornhub, the largest adult entertainment site in the world, was abruptly cut off from PayPal in 2019. As a result, Pornhub said they’ll be adding more payment processing options. And those options will be “sex worker-friendly”. They also said they would be considering cryptocurrency options.
The bottom line, regardless of your industry, by looking at the offshore payment processors and offshore merchant accounts that other high-risk businesses use you’ll be able to find suitable options with a higher tolerance for high-risk businesses.
Set up a Merchant Account or Payment Processing Subsidiary in a Favorable Offshore Jurisdiction
What if you don’t want to explore an alternative payment processor or merchant account but don’t want to change your company structure? Then, it might be time to consider a payment processing subsidiary.
In a nutshell, this means setting up a new company in an offshore jurisdiction. And it’s key to set up that company in an offshore country with the payment processing options you need.
This can be a direct subsidiary of your current company. Or it can be a new company that simply re-sells your company’s current products and services.
Examples of offshore countries and structures that would provide access to good payment processing options include a UK LLP, a US LLC, a Canadian LLP, or similar pass-through entities.
As always, before setting up an offshore company, opening a bank account, and establishing a payment processing relationship, you need to do your homework and speak with your own tax advisors to assess how this new structure could impact your personal situation.
Many entrepreneurs with companies in foreign countries have started opting for this strategy. The reason is, that it allows them to retain profits in a tax-efficient jurisdiction. But it also gives them access to first-world payment processing.
In short, form a new company to solve your payment processing problems instead of restructuring your entire business.
Obviously, the specific corporate structures you choose will depend on your business, personal preferences, and tax situation. We’ll discuss this more in our upcoming GlobalBanks IQ report.
Scrap Your Current Structure and Set up a New Offshore Company Altogether
If you’re not happy with any of the above options, there are other options. You can always scrap your current structure and completely start over. This will obviously depend on your objectives and products. And it will also depend on the related tax implications for you and your company. That said, this could be a good option… though in most instances it’s not necessary.
Before scrapping your current structure, no matter how desperate the situation might appear, hit the chat button below and speak with one of our team members, they’d be happy to help you quickly determine if there are any viable options available before you go through the expensive process of closing and setting up a new corporate structure.
What Does This Mean For Your Offshore Company?
If so, you can access GlobalBanks Insider and start the process of applying for an offshore account in a few clicks.
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And “yes!” GlobalBanks Insider is designed to help foreign and non-resident individuals and companies open bank accounts.
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