An offshore merchant account is one of the smartest ways to increase your sales.
DirectPayNet often receives requests from ecommerce sellers that want to apply for an offshore merchant account. Yet, most don’t have a clue about what’s involved. And if you’re a high-risk merchant, this is even more complex. Whether you’re marketing and selling diet pills and supplements, adult entertainment or other online offers, going worldwide can only help your earnings grow and diversify your risk. Applying for an offshore merchant account (much less a business) requires a lot of expertise and patience (which DirectPayNet can help you whiz through that painlessly). Why you ask? Keep reading and we’ll tell you, as well as offer advice to help you reach your business expansion goals.
#1: Diversify your processing by getting an offshore merchant account
An offshore merchant account is a common way to accept sales from customers in foreign countries. It diversifies payments so all orders aren’t stuck in one business and merchant account. Perhaps you have a local payment processor for your weight loss tea, fitness workout videos or adult retail store, for example. You might notice that 30% of your transactions are coming from the UK, Italy and Germany. You may also notice that many of those same international customers abandon your shopping cart because you don’t accept their payment modes. Unfortunately, your domestic processor might also have rejected your sales, which spells lost revenue for your business.
Blocked transactions from foreign customers happen for several reasons. This includes a bank flagging a cross-border sale as a fraudulent transaction. It could also be that the person is using a foreign Visa or MasterCard debit and your domestic processor is refusing those card types. Not only are these obstacles a big blow to your brand reputation, but also your dissatisfied customers leave your checkout page with no product. Whatever the reason, finding an offshore payment processor can help overcome some of these challenges.
#2: Increase your consumer market share
There are several benefits to getting an offshore high-risk merchant account. The first is that you will increase your online consumer market share. By setting up credit card processing to support buyers in other countries, you can significantly increase the number of cross-border payments depending on the location of your secondary market.
Secondly, you can process orders in more than one currency. For instance, let’s say you can buy cheap traffic in some EU markets. Add the right relationship with a bank that offers multiple currencies like Euros, British Pound, Norwegian or Danish Krone, or Swiss franc and see your conversions skyrocket!
With that in mind, remember to think globally! Translating your website to one or more languages is a great conversion tactic. Also, don’t forget to ensure you can affordably ship to customers in those secondary international locations. Determine your minimum order needed for free shipping, or the net profit margin after shipping and other expenses are deducted. Moreover, you should extend customer service hours in anticipation of more callers needing info and potential refunds.
#3: Register a business and a bank account in your target jurisdiction
To secure payment processing in another country, you must have a registered company in your jurisdiction of choice. If you are a European business owner and want to expand to the US, you must have a registered company in any of the 50 US states. Additionally, you’ll need to ensure one of the officers of the business is American. But that’s not all! It’s necessary to have a bank account specifically for that registered business.
US (and Canadian) ecommerce merchants are subject to the same rules when applying for an offshore high-risk merchant account in Europe, the Caribbean and elsewhere in the world. However, regulatory policies in Europe, allow for a business to get payment processing with slightly more flexibility. For example, a merchant with a registered business in the United Kingdom doesn’t necessarily need to be a British citizen. Interestingly, you can apply for a merchant account in a different European nation, not just the UK, which allows you several options.
#4: Set a realistic time frame to launch overseas
The time it takes to get a merchant account overseas really depends on your response to your payment processor’s requests for processing history, financials and personal documents. Generally, the process can take a few weeks. As with a domestic merchant account, supporting documents are required when applying to a foreign payment processor. Unfortunately, there’s no way to avoid this; it’s part of the screening process. All acquirers must perform due diligence to avoid potential liabilities and reduce risk. Therefore, if you want a faster offshore expansion, get as much paperwork ready in advance.
What type of paperwork is needed? The following are just a list of items an acquiring bank might request:
- Current processing history (if available)
- Government ID (e.g. copy of passport)
- Void check or a bank reference letter for your business’s bank account (Otherwise, how else will you get paid?)
- Utility bill for an officer of your business
The acquiring bank may ask for a few more supporting documents. But, working with the right provider can help streamline this process and minimize the paperwork. One thing to also keep in mind about this type of know-your-customer (KYC) policy is that it often should work both ways.
#5: Be careful
Many merchants opt for PayPal or Square thinking those platforms will solve their international purchase problems. Those types of payment options can be great for startup merchants building their processing history or low risk online merchants seeking processing in multiple currencies. However, these platforms are not always the best for everyone. Many advertisers learn that their business models or desire to offer subscriptions aren’t supported by those providers until it’s too late. Don’t let this be you! Otherwise, your business can be put on hold while you get another payment solution!
Unsure of whether or not you’re high-risk?
Check out 5 Reasons Why You’re Considered A High-Risk Merchant!
#6: Get the right kind of help for your offshore merchant account
Applying for an offshore merchant account can be time consuming and a real pain. That’s why most merchants seek the support of merchant service providers like DirectPayNet, who can help you swim through the process quickly and easily. We even help you incorporate your company and assist in obtaining a bank account for your business. It’s important to get to know the people who will be helping you. Ask the right questions!
Many advertisers ask common questions about pricing and length of the application process. Not all questions can get a response until you have a pre-approval from an acquiring bank. But, it’s important to investigate and test the knowledge of your partners. After all, you’re trusting them with your payments. Try asking questions like:
- “What’s your background and how long have you been in business?”
- “Do you provide other services besides merchant boarding?”
- “Who can I contact if I need support for my merchant account?”
- “What happens if my merchant account gets terminated?”
There are a lot of providers out there, but few provide substantial value and knowledge when it comes to merchant services.
DirectPayNet offers offshore merchant accounts AND support
Now that you know more about the requirements for an offshore merchant account, it’s time to get started! DirectPayNet can help you launch your cross-border payments, and increase sales by 30% from international customers within the first six months of processing! Give us a call or fill out this quick and easy contact form! We respond within 24 business hours!