Offshore Payment Processing: What You Should Know


February 13, 2018

What is an Offshore Payment Processor?

An offshore payment processor, or offshore merchant, is an online account that is able to process debit and credit card transactions overseas. This type of processor is used mostly for business in the U.S. that are considered high-risk vendors. These vendors have a harder time being approved for more traditional payment processors, due to chargebacks, fraud or the industry they are associated with.
By using an offshore payment merchant account, these companies are able to process their company’s transactions, are afforded certain tax incentives, and still have security measures in place that help prevent chargebacks, as well as fraudulent transactions.

Benefits of an Offshore Payment Processor

There are multiple benefits to processing payments overseas. As previously mentioned, there are certain tax benefits to processing your payments offshore. Moreover, merchants are able to process payments in multiple currencies, as well as different credit card providers. This allows businesses to expand their customer base to other countries, and in doing so increase their overall productivity. Another benefit is having an encrypted and secure credit card processor. Just because the transaction is being processed overseas, doesn’t mean vendors will be losing out on certain security measures. These offshore merchant accounts still have security measures in place to help prevent fraud and chargebacks.

Possible Risks

For many high-risk merchants, an offshore payment processor may seem like the perfect solution to their payment processing problem. However, using an overseas merchant account to process payments does come with it’s own drawbacks. The most common concern for many U.S. vendors who use an offshore processor is the lack of oversight there is with overseas processors. United States law does not govern banks based outside the country. That’s why if vendors are going to use an offshore payment processor, it is best to go with a company who is reputable and who has higher standards of customer service and security.