The Offshore Merchant Account Advantage
After listing by US banks, payment processing lifelines are offered via offshore merchant accounts in jurisdictions such as Malta, Cyprus, or Mauritius. These accounts are subject to different regulatory frameworks, allowing for greater chargeback limits (as high as 3%) and accommodating industries such as gaming, forex, and adult entertainment. Established providers such as CCBill and Segpay have alliances with European and Asian acquirers less susceptible to US pressure. Offshore solutions usually provide multi-currency settlement facilities, enabling merchants to keep funds in EUR or GBP as opposed to unstable local currencies. Although the fees are higher (5-8% vs. 2.9% domestically), the acceptance of payments has more advantages than costs for restricted businesses.
Implementing Offshore Processing Safely
Successful offshore processing is much more than a matter of provider screening or simply confirming licensing with local financial authorities such as the Malta Financial Services Authority, forming a local LLC for customer service and operations, and routing payments offshore. It requires things like subtle billing descriptors that wouldn’t set off a card network’s scrutiny but which allow customers to identify them, payouts coming from the multiple jurisdictions so as to eliminate single-point failures-there, some merchants divide processing between European and Asian offshore accounts, and, always, 6 months of operational capital outside payment processor accounts because offshore reserves up to 10% can take 180 days. Keep in mind that the hold periods can be 180 days outside payment processor accounts. Reference cryptocurrency as an alternative settlement mechanism through gateways like BitPay to enhance liquidity.
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