High Risk Merchant Accounts and Offshore Card Processing

Chapter 9

A high risk merchant account is often an offshore merchant account. That is, one uses an international bank account to process credit cards and receive the proceeds. That way, you can generate income into your offshore business account. Additionally, credit card merchant account providers can label almost anybody and almost any organization as a “high risk” business. Thus, the processing companies require you to establish a high risk credit card merchant account.

Credit card processing companies do this at the application stage for a number of reasons. For example, they can categorize a business that has a high refund rate as high risk. In addition, we have seen them turn down applications because the applicant or business type does not meet strict underwriting criteria. If this is the case for you, it could make a high risk credit card processing company the answer.

Credit Card Processing and Offshore Banking

When working with a credit card processing provider that specializes in high risk merchant accounts, they will most likely approve your application. Typically, this involves offshore banking and an offshore merchant account.

Offshore Bank Merchant Account Rates

Often, high risk merchants will pay high risk rates. However, we have found that we save 98% of vendors on processing fees over what they are currently experiencing. This is the case whether they have low, medium or high risk needs. Be cautious because there are many providers who will automatically approve applicants with predatory contracts and outrageous rates. So, always check your contract and see if there are standards for minimizing the transaction rates. For instance, larger reserves, rolling reserve agreements and other types of risk minimization can help an applicant obtain the best rates possible.

Do I Need of an Offshore Bank Account?

Merchant providers can label a business as high risk due to its industry. An owner can have bad credit. Furthermore, a foreign business entity with transactions inside the U.S may own the business. Alternatively, the product or service could be illegal according to some local, state or federal laws. Even questionable marketing or sales tactics can result in a turn down. Thus, to many businesses, an offshore merchant account is the only option to process credit cards online. In order to have one, most merchants require you to have a bank account offshore. That means setting up both an offshore company and an offshore bank account.

Businesses That Need an Offshore Merchant Account

Most people believe that high risk merchant accounts are only for online casinos or pharmacies. However, with today’s lending guidelines and financial account requirements, a lot of trusted brands and online businesses are “high risk.” Therefore, they require a specialized credit card processor. Here are the business types that often need high risk merchant accounts.

1-800 type chat sites
Airlines
Airplane charters
Amazon, Yahoo or Google Stores
Annual contracts
Antiques
Auctions
Automotive brokers
Bankruptcy attorneys
Brokering
“Business opportunities”
Calling cards
Casino, gambling or gaming
Check cashing services
Cigarette or electronic-cigarette sales or nicotine products
Coins, collectible currency or autographed collectibles
Collection agencies
Coupons or rewards-points program
Credit or debt repair & credit counseling
Credit protection
Debt collection
Direct selling
Discount health and medical care programs
Debt consolidation
Drug paraphernalia
eBay Store
E-Books (copywritten material)
Electronics
Event ticket brokers (unlicensed and non registered (i.e. Stub Hub type merchants))
Exporting services (non US based)
Fantasy sports websites
Federal Firearms License (FFL) dealers
Finance broker, financial consulting or loan modification services
Indirect financial consulting (i.e. How to Save Money by Lowering Your Electric Bill.)
Financial planning, strategy or advising
“Get rich quick” books, programs, etc
High average tickets
“How-To” type websites (i.e. “Learn How-To Make Money on The Internet”)
Horoscopes, astrology or psychic services (i.e. fortune tellers)
“Hype” products or services
Hypnotists or self-hypnosis
International merchants (non US based)
International shipping, cargo or import/export
Investment firms
Investment strategy & Investment books
Lawyer referral services
Life coaching
Lingerie sales
Lotteries
Magazine sales and subscriptions
Mail order
Membership organizations (over 12 months)
Merchants on the terminated merchant file (TMF list)
Modeling agencies
Multi-currencies
Multi-level marketing (MLM)
Music, movie, software downloads or uploads (ie. copy-written music, movies or software (i.e. Microsoft office))
Non US citizens
Off-shore corp. establishment services
Pawn shops
Poor credit
Prepaid debit cards
In-bound or outbound telemarketing services
Real estate
Replica handbags, watches, wallets, sunglasses etc? (knock-offs)
Self defense, pepper spray, mace, etc.
SEO services
Social networking sites ? Facebook, Twitter, MySpace etc?
Sports forecasting or odds making/betting
Talent agencies
Telecommunications
Telephone companies
Telephone order
Third-party processing, factoring merchants (i.e. payment processors, vacation rental brokers)
Time-shares or time-shares advertising
Tour operators
Travel services & Travel agencies
Travel clubs
Vacation planners
Vacation rentals (unless property is owned by merchant)
Vitamin and supplement sales ? diet pills, prescription pills, health supplements, pharmacy
VoIP services
Extended warranty companies
Weapons of any kind: guns, knives, stun guns, or ammo. Includes any parts of weapons (i.e. butts, triggers, magazines, etc.).

Tax Compliance

Naturally, if you have an offshore bank account and merchant account, you need to maintain tax compliance. For example, people in the US, UK, Canada, Australia, and many other countries tax worldwide income. So, be sure to maintain sound tax advice from a licensed tax professional.

How to Set Up a High Risk Merchant Account

After reading this, do you think a high risk offshore merchant account is right for you? If so, please utilize the phone numbers or consultation form on this page. When you do, you can speak to a professional who can give you more information.

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