Many of our clients are interested in ways to reduce their current tax liability with the current business they have. Some are concerned about ways to move some of their assets "offshore" without throwing up a "red flag". Others are interested in setting up a new business, perhaps via the Internet, and need a way to accept credit orders. Regardless of the need or concern, an "Offshore Merchant Account" may be the ideal answer for you...
A merchant account is basically an account or facility that allows you to accept credit card orders from your customers. It's that simple. If you accept credit card orders already with your existing business, then you are already familiar with this. But what is the difference or perhaps advantage of using an "offshore" card processing service vs. a local or domestic one?
Well, one thing that is certainly true about the US credit card business, is that it has become very competitive. This has been both a good thing for both consumers and business owners alike. As a consumer, you know that interest rates charged on credit card balances have come down. For business owners, it has meant that where as you were charged up to 7% in the past to process your customer's credit card purchases, those rates have come down to about 3% on average. All positive news. But, there are still problems for the US small businessman wanting to set up his or her own merchant account.
One major problem is of course the application requirements, and the possible deposit requirements. Some banks or credit card processors will not even accept your application unless your business has been operating for two years or more. Others want a security deposit of $ 5,000 or more. Some others even want to "hold back" your monthly card payments as an additional "security deposit" for possible "charge backs". In addition, especially in the case of US banks, they act as if they are doing you a favor to take your business. Aside from all this, we know of some clients that have had their merchant account "pulled away" simply because their business started to grow. What am I talking about?
Well, because every US bank is now paranoid about such things as "money laundering" and "suspicious transactions", any sudden change in your business volume sparks a reaction. We know of one client that was given a "we are closing your account" letter by his US bank, because his monthly volume went from $ 10,000 per month up to $ 18,000 per month in a fairly short time.
The bank said it was "suspicious". The client said it's called "advertising". Well, you know what they say, people that fail in business end up in banking....
This is one reason why you may want to look for a bank or credit card processor that understands your business, your needs, your problems - and is willing to help. Where can you find someone like that? Well, it all starts with being able to look beyond your own backyard.
Most people would agree that technology and modern telecommunications has provided at least some benefit. We now have fax machines, e-mail, and of course the Internet. What many people do not think about however, is the fact that the world has become a much smaller place.
What this means for the business owner is, you no longer are "locked in" to doing business with just the bank or company in your town or state. You can literally "shop the world" for the best rates, the best products, the best service, or what ever. You now can do business with a bank or credit card processor in Germany, Singapore, Holland, or any place else just as easily as "the bank down the road". In fact, nine times out of ten, you will find the level of service to be much better with a bank half way around the world, then you will with your neighborhood bank.
Why? They want your business, and they are willing to prove it. The other benefits are obvious. If you intend to be virtual, the best place to begin is by becoming virtual in fact. An offshore merchant account places you in a virtual / offshore jurisdiction with favorable tax consequences.
The problem of course with some offshore banks or credit card processors are the higher processing fees, when compared to current US rates. The fierce competition that has been seen in the US, has not reached some parts of the world, at least not yet. However that is slowly changing. In addition, such things as "Internet Banking" and offshore merchant accounts are new services that many offshore banks are just starting to take a look at. Even in a banking location such as Panama (with over 130 banks), these services are not even available with a handful of banks.
However, we did find a very reliable credit card merchant account service provider that wants to change all that. They are based in Europe, they have been in business for over 30 years, and their fees are extremely competitive (with both US bank rates, and especially their "offshore" competition). In addition, they will gladly accept a new business without any costly deposit requirements. This is the type of company to work with, because they want to work with you.
I know what you are probably thinking, "This all sounds very interesting, but what is the real benefit for me to do business with an offshore merchant account provider". Well, being able to get better service, little or no hassles getting your account opened, and lower or perhaps no deposit requirements are only the "tip of the iceberg".
The real benefits to you as a business owner are the tax reduction opportunities that become available through the use of a separate offshore-incorporated company (your company) to handle your credit card business for you. In addition, you also have a very legitimate and convenient way to get your business profits offshore. The fact of the matter is, if you have an offshore bank or merchant company process your credit card transactions for you, your money already is "offshore".
This being the case, you now have the means to really make the most of your business income and keep more of what you earn.
For additional information about obtaining an inexpensive offshore merchant account, or forming an offshore company for tax-advantaged strategies for your current business, please contact our office.