When you re considering a high-risk merchant account, it helps to combine it with an offshore bank account to receive settlements in a confidential tax-free setting.
Offshore merchant accounts give you the benefit of higher sales volumes because you are allowing your customers the ability to pay by credit card.
As a general rule, when setting up a merchant account through under an offshore company there are a few facts you should be aware of: Anonymous merchant accounts are not permitted. It doesn t matter if you are using an anonymous Bearer Share Corporation when setting up an account, the Merchant Account Corporation may or may not ask you to provide relevant company documents such as financial statements or some form of identity information. With a merchant account you will need to find out what the duration of time will be between the sale and receiving the funds, as well as how often you will be paid. For example, with some offshore banking companies, they pay out once per week. Some companies have a delay of 3 weeks which is not uncommon. The merchant account provider may require you to have at least $20,000 each month in accumulated billing for the previous three months. This means you shouldn t fill out an application for an account unless you are able to prove to them that you can make them a profit with billings you expect to collect in the area of $20,000. This makes it difficult for some companies to actually obtain a merchant account therefore, many are turned away. If you are a company that experiences a high chargeback rate, beyond the 1% to 2% range, there is a good chance that the merchant account can be closed. However, some merchant account providers will work with you to reduce your chargeback rate before moving to the final step of closing your account, particularly if your chargeback rate is less or equal to 3%. This is more of a general rule, rather than a requirement of any merchant account provider but at the same time, a company that looks to help you reduce your chargebacks may be worth looking in to. Some countries have a high rate of chargebacks, which is really a fraud problem, so some merchant providers will block those countries from even applying.
There are also fraudulent offshore merchant providers which you need to be aware of. Fraudulent processors will let you process several months worth of sales that are kept in a chargeback holdback fund. They make excuses as to why they are not releasing these amounts and keep delaying for 2 to 3 more months and then close your account. For example, let s say you were billing $30,000 per month and they have a $10,000 rolling 10% holdback fund, but remember, they ve not paid you for 3 months, therefore they are sitting on $100,000 worth of your money. You will never see that money after they ve closed your account, regardless of what is stated in their contract advising of a return of your money after a period of 6 months.
Richard Price is the publisher of http://www.confidentialbanking.com, a resource and service for those seeking offshore banking services, and http://www.confidentialbanking.co.uk, offshore banking services for UK citizens.
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