Last updated on March 23rd, 2025 at 10:45 am
Offshore Merchant Accounts: Insider’s Guide
Every day, hundreds of high-risk merchants face rejections from domestic credit card processing companies. The reasons for these rejections include poor credit scores, large ticket sizes, and high monthly sales volume expectations. These challenges should not permanently restrict merchants from accepting credit card payments. Offshore merchant accounts can be a lifesaver for most businesses rejected by domestic merchant service providers.
An offshore merchant account is a specialized bank account established in a foreign country to process credit card payments. Offshore card processing accounts are generally used by high-risk businesses. These accounts are offered by acquiring banks in jurisdictions that have high-risk, merchant-friendly laws.
Unfortunately, finding the right offshore merchant account is not an easy task. Many of these providers have their websites in foreign languages. This makes it harder for domestic merchants to find offshore payment service providers.
QuadarPay has been providing highly stable and affordable offshore merchant accounts since 2016. We have created this cheat sheet for you. It offers insights into offshore credit card processing. We have covered various aspects of offshore merchant accounts, such as key benefits, application process, KYC requirements, and related questions. By the end of this cheat sheet, you’ll have a solid understanding of offshore merchant accounts. Let’s begin.
Industries That Need Offshore Merchant Accounts
Offshore merchant accounts are extremely important for high-risk merchants, as most domestic banks and payment service providers say no to them. Let us explore a few industries that mostly need offshore credit card processing accounts.
Online Gaming
These merchants are classified as high risk due to strict government regulations, high chargeback risk, and cross-border transactions. Domestic banks generally do not prefer to work with gaming merchants. Offshore accounts are excellent for these businesses. This is mostly because offshore processors operate from jurisdictions that have relaxed gaming laws.
Adult Toys
Most banks avoid working with merchants from the adult toy industry due to reputational concerns. Such merchants need alternative payment channels. Merchants from sectors like adult video streaming, adult dating, adult toy stores, and cam sites can benefit from offshore processing. As a matter of fact, there are specialized offshore adult payment processing options available.
Trading and Forex
Trading merchants like forex brokers and prop trading firms face uncertainties due to changing regulations and fraud risks. Offshore banks and payment processors understand these complexities well, making them an excellent choice for such businesses.
CBD-Related Products
Merchants that sell CBD, hemp, nicotine pouches, kava, kratom, vape, bongs, and hookahs generally struggle to gain approval from domestic payment processors. Inconsistent regulations and social stigma make domestic processing difficult for these businesses. Many offshore banks operate in jurisdictions that welcome merchants from such industries. Offshore processors aren’t guaranteed to approve these businesses, but they’re often worth exploring.
Tech Support/Remote Support
Tech support companies face high chargebacks and returns. The industry is infamous for its high fraud ratio. All these factors make domestic providers extremely cautious about working with tech support merchants. This is why offshore merchant providers are best suited for these companies. Such processors can handle high-volume transactions and can also offer recurring billing facilities to remote PC support merchants. However, offshore payment gateways for tech support may be costly and could have delayed payouts.
Travel & Airlines
The travel and airline booking industry is considered high risk because customers make payments for services that they are not going to receive immediately. Delayed delivery can attract chargebacks, and thus domestic processors avoid certain travel merchants. Another reason is high-ticket transactions, which create the possibility of chargebacks. Offshore merchant accounts offer high processing limits, making them a strong option for travel and airline businesses.
Supplements & Herbal
Nutraceuticals, supplements, herbal products, and vitamin businesses generally have a high refund rate. Along with that, such businesses operate in legal gray areas because of product claims. Domestic banks generally do not prefer to work with such businesses. Fortunately, offshore payment processors are flexible when it comes to working with merchants from these industries.
Offshore Merchant Accounts: Key Features
Offshore credit card processing offers various features. It is important to be aware of these features so that merchants can efficiently use the account. Let’s explore a few of these in detail.
Access to International Markets: Sometimes domestic acquiring banks limit a merchant’s ability to accept international credit card transactions. Many local processors only allow the acceptance of payments in the merchant’s home currency. Such an arrangement is a risk mitigation step, which can be beneficial for the bank. However, it may result in financial losses for the merchant. Offshore credit card processors allow merchants to accept payments in various currencies and offer settlements in the merchants’ home currency.
Higher Processing Limits: Domestic payment service providers set low monthly volume limits for merchants. They generally put a monthly volume cap of USD 25,000. However, any e-commerce merchant that invests well in marketing can easily exceed this volume in just a few days. In such a scenario, business owners require alternative options to continue processing payments. Offshore processing companies offer much higher transaction volume limits and sometimes even provide no-limit accounts. Merchants that conduct high-ticket sales or have very high monthly sales volumes should explore such solutions.
Bad Credit Scores: Domestic providers require excellent credit scores for approval. It is a fact that every business faces challenges, and many are unable to maintain perfect credit scores throughout their operations. Such businesses with poor credit scores face rejections from local banks. Offshore processors have relaxed credit score requirements.
Offshore Merchant Services Application Process
The application process is simple. It begins with researching and selecting the right provider. The merchant should identify three to four processors specializing in their industry. Merchants should compare their features and rates and then choose the most suitable option.
The next step is the application process, in which the merchant submits the application and KYC documents to the underwriters for evaluation. It is important to submit all the KYC documents without any manipulation. This will potentially increase the chances of approval.
The third step is the review process. The underwriters at the sponsor bank check the merchant’s risk profile, financial stability, and compliance. In this step, the underwriters may require additional documents. Whenever requested, the merchant should provide these documents promptly.
The last step is account approval. The provider sends an offer to the merchant. The merchant reviews the contract and then signs it. The approval timeline for an offshore merchant account is between 1 to 2 weeks. The provider sends the gateway login details and integration information once the contracting signed by both parties.
KYC Checklist for Offshore Merchant Accounts
The KYC process is mandatory for every payment processor, irrespective of where they are located. The payment processor verifies the legitimacy of the applicant company by evaluating the KYC documents. Let us explore a few of these items in detail.
Business Registration Proof: The merchant must provide a copy of business registration. This can be a certificate of incorporation or any similar document. The documents should confirm that the merchant is registered and is eligible to perform business activities.
Financial Documents: Merchants must provide 3–6 months of business bank statements. For some merchants, the processor may also ask for recent credit card processing history.
Identity Proof: For this, merchants can provide government-issued photo IDs, such as a passport or driver’s license. Keep in mind that the ID proof must be valid and should be in English.
Address Proof: For proof of the company and the directors’ addresses, the merchant can submit recent utility bills. This can be an electricity, phone, internet, or municipal bill.
Website Compliance: For e-commerce merchant account approval through an offshore bank, the merchant must ensure that the website has a shopping cart. The site should have pages for terms, refund policy, shipping policy, and privacy policy. The website must have detailed product information with pricing.
The payment processor may ask for specific licenses relevant to the merchant’s industry. For instance, the processor might request lab certificates from merchants selling CBD or nutraceutical products. A tobacconist license may be required for any business selling cigars or tobacco products. For telemedicine practitioners, the underwriters may request a medical license. A supplier agreement is necessary for dropshipping and e-commerce businesses.
Offshore Payment Gateway Integration
After the approval the payment processor will send you the gateway access with API integration guide. The API document will have detailed information about various webhooks available on the payment gateway. Along with that the guide will also include some sample codes that the merchant may use for integration. The payment processor may also provide ready-to-use plugins for shopping carts like WooCommerce, Magento and Opencart.
Once the integration is complete, the merchant can perform some test transactions. After a few successful test transactions, the processor will switch the gateway to live mode, and then the merchant can start accepting real transactions.
The Future of Offshore Merchant Processing
Offshore merchant processors will continue to play a key role in the global e-commerce industry. While domestic processing companies are becoming very choosy about the industries they wish to support, offshore payment gateway companies are still open to merchants from various high-risk industries. The stricter domestic processors become, the more demand for offshore credit card processors will increase. However, it is important to remember that offshore credit card processors may not always be as flexible as they are today.
FAQ: Offshore Merchant Processing
Is It Necessary to Register a Company in a Different Jurisdiction to Get an Offshore Merchant Account?
In some countries, the credit card processor may ask the merchant to register a local company. In many other countries, such registration is not mandatory. For example, an offshore payment service provider located in Sofia, Bulgaria, might not ask a Romanian company to register a business entity there.
Why Is Belize a Preferred Jurisdiction for Offshore Merchant Accounts?
Belize used to be a favorable destination for opening offshore merchant accounts, but not anymore. Now there are many other jurisdictions that can offer better solutions. However, it is important to note that the jurisdiction offers a business-friendly environment with low corporate taxes. It can help businesses reduce operational expenses.
Which Countries Are Best for Offshore Merchant Accounts?
The ideal country for an offshore merchant account varies based on the merchant’s needs and preferences. Mauritius is well known for tax benefits, making it a preferred choice for merchants in high-risk industries. On the other hand, Seychelles is well known for its ease of company formation and lenient regulations. Exporters, AI companies, and SaaS providers prefer Hong Kong. Offshore merchant processors in Cyprus are more comfortable onboarding merchants from fantasy sports, social gaming, and skill competition industries.
Are Instant Approvals Available?
Some providers claim to offer instant approvals, but we do not recommend you try them. This is because of the potential risks associated with imperfect risk evaluation. We recommend you work with an offshore processor that approves an account only after thorough risk evaluation, and this can not happen instantly.
