An “offshore” merchant account might sound like something out of a Bond film, but in reality it’s a much more practical concept.

Simply put, an offshore merchant account refers to a payment processing solution that exists outside the jurisdiction of the United States.

No matter how long you’ve been in business or what industry you’re currently operating in, offshore high risk merchant account providers can help your company out in an array of ways. Let’s take a look at the four following reasons you may need to open one:

Open Your Offshore Account Today

Reason #1: You’re a “High Risk” Business

poker player with a colorful stack of chips, texas hold-em

Online casinos are one example of a high risk business.

One of the top reasons you may need an offshore account is because you’re a high-risk merchant. In other words, you’re either a younger business/startup, or pose some other sort of risk to banks (i.e. poor business credit, excessive chargebacks, etc.).

Some particular industries deemed high risk include:

If your business falls under the high risk umbrella, you’re likely having trouble finding banks who will process customer transactions.

Being backed by at least one reputable bank is a big part of long-term success, and there are plenty of them overseas from which you can pick – places with potentially more lax acceptance requirements than in the United States. That fact alone makes offshore high risk merchant account providers a useful resource for many businesses.

Reason #2: You Want to Protect Your Assets

rusty padlock, lock / security concept

While not necessarily padlocked down, offshore assets are often more secure.

Another reason you may be interested in opening an offshore merchant account is to protect your assets. America ranks in the top 5 for both lawyers and lawsuits per capita, which means that running a business carries some inherent risks. It’s unfortunate, but some consumers are simply out looking for a quick buck, and they don’t care at whose expense it comes from.

Imagine you get hit with a lawsuit: even if the subsequent court case ends in your favor, it still takes time and money to deal with it. Smaller companies simply can’t afford to squander their limited resources on legal matters.

By opening an offshore merchant account, you make litigation substantially more challenging for others – meaning your risk of frivolous lawsuits will decrease. In the event a case actually reaches the courts, having a mixed portfolio of merchant accounts that includes an offshore bank allows you to pay legal fees and keep business running as usual.

Reason #3: Diversification

a group of young people standing, only their pants and bottom torso are showing. Diversity concept

How many bank accounts do you have?

Regardless of which industry you operate in, diversifying your assets is a good business decision for a variety of reasons. As mentioned earlier, America is known for its abundance of both legitimate and frivolous lawsuits. If you are the subject of one, your finances could be consumed for months or even years on end.

Additionally, there is always the chance of encountering banking problems as a merchant. Whether they stem from excessive chargebacks or other problem areas, they could result in the freezing of your processing capabilities. An offshore merchant account can keep the lights on while you deal with your other banking problems.

Reason #4: You’d Like a Non-U.S. Banking Solution

Swiss flag in the Swiss Alps

Switzerland is great for banking, but don’t forget about other EU countries.

Although there are plenty of people who believe the American banking system can do no wrong, this is clearly not the case as demonstrated by the 2007-2009 recession. In the event of downturns in the American economy, having overseas accounts can help protect your business and its assets.

Not to mention, many of the safest banks in the world exist outside the United States. Opening an offshore merchant account gives you added insurance that your assets are safer from domestic instability, as well as being managed by world-class institutions.

How to Open an Offshore Account

Young woman teaching a young man a computer concept

Even if offshore accounts aren’t for you, it’s still helpful to understand how they work.

Now that you’ve read about certain benefits related to having an offshore merchant account, let’s look at how you open one. In order to open your account, you will need the following:

    1. Bank Letter & Voided Check (note that all routing & account numbers MUST match)
    2. Passport or Valid photo ID
    3. Articles of Incorporation
    4. 3 most recent months Company Bank Statements
    5. For new businesses – 3 months of personal bank statements
    6. 3 most recent months Processing Statements for all of your current accounts (if you have them)
    7. EIN or SS4 paperwork

You may still need other documents depending on your industry and the offshore bank you end up working with, but collecting these various items will be a good start.

Furthermore, it would be good to create notarized copies of these documents to ensure their authenticity, as well as financial references that show a satisfactory relationship with your present banks or other lenders. A “satisfactory relationship” is typically defined as an account that has remained in good standing for at least 6-12 months.

Final Thoughts

Overall, there are plenty of reasons you may wish to open an offshore merchant account. In addition to the clearer examples (being high-risk/diversifying your account portfolio), there are plenty of other benefits for opening one – such as protecting your business in the event of litigation, and being able to disburse funds to employees during turbulent legal or financial times.

While many business owners seem to have some apprehension about opening an offshore account, doing so could prove to be one of the wisest business decisions you’ve ever made. Are you ready to learn more?

About the Author

Geoff Scott is a Payments Consultant for Motile LLC, where he strives to connect users across the internet with processing solutions for their small businesses. He also loves Thai food, craft beer, and an exhilarating game of squash (when he's off the clock, of course).