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Merchant services: Offshore merchant accounts for high-risk, fast-paced businesses

Reading time: 8 mins

Offshore merchant accounts are something quite special in the world of merchant services.

Many talks about it, everybody has a strong opinion about it, very few have actually experienced it.

Resorting to offshore accounts is actually quite far from the shady image it may have. Many perfectly legitimate businesses use their services, just for convenience, or because their usual bankers don’t like the kind of business they’re doing. Or even more simply, because these retailers want to be where their customers are.

Offshore merchant services providers are now easier than ever to find from within the UK, and many of them offer serious, secure and fast services – albeit for a higher price than traditional merchant banks.

How do offshore merchant accounts work? What are their advantages and disadvantages? Who are these offshore merchant services providers and how to choose them?

Offshore merchant account basics

These accounts have more benefits than just taxation-related ones, but they also suffer from some very real disadvantages.

What is an offshore merchant account?

An offshore merchant account is a virtual account which works like any merchant account, enabling credit card processing and the eventual transfer of funds obtained from an online transaction to the regular business bank account of the retailer.

Contrary to usual internet merchant accounts though, these accounts are not provided by typical high street banks nor by mainstream specialised merchant banks. Offshore merchant accounts, or international merchant accounts as they are also sometimes called, are underwritten by banks located in another jurisdiction than their business customers, that is, the shops using their services to process debit or credit card transactions.

And merchant accounts provided by these offshore companies are not the only service which is based overseas. Depending on the provider, payment gateways and payment processors may also be included in the package and be based offshore.

Technically, when a UK-based customer buys something on the e-commerce website of a UK-based business using a credit card, authorization is then fully processed offshore, outside the UK’s jurisdiction.


International merchant accounts, because they are managed overseas, are necessarily more flexible than others on many aspects:

-  The first reason why any business would choose an offshore merchant account is because their managers want to target customers in the same jurisdiction as the offshore account. This naturally helps lower transaction fees.

-  Another reason why these providers might be preferred is because the business conducted by the shop is considered high risk. Offshore merchant processing accounts do not abide by UK laws and regulation, and may either have more flexible screening process, accounting rules, or security measures. International accounts therefore may be a last resort for companies with poor credit history rejected by more traditional merchant banks.

-  Quite simply, for many different reasons, what kind of transactions or what kind of business is considered risky in one country will not necessarily be considered risky in another country. For example, gambling or pharmaceutical industries are among the types of business which are often considered risky by many banks, in various countries. These accounts sometimes represent the only chance for some businesses to start an e-commerce.

-  Another reason is that these accounts are often necessary for an e-commerce in order to build a tax optimisation scheme, aimed at lowering taxes on revenue collected from sales operated through the account.

-  As the providers of these accounts are used to working with international businesses, multiple global currencies and payment gateways are almost always supported out of the box.

-  Also because these account providers are used to working with overseas businesses, farther doesn’t necessarily means slower. Even if the e-commerce is considered an offshore merchant, instant transactions are still possible. They may even be quicker than with national merchant account providers.


However, disadvantages of offshore merchant accounts can also be significant, and must not be overlooked:

-  Some providers will require official representatives of the business to physically travel to their jurisdiction to open the account,

-  It will sometimes be required to actually incorporate a company within the jurisdiction of the provider, which banks or their partners can arrange, at a heavy fee,

Transaction rates will usually be higher than those of domestic merchant banks,

-  Some providers may require their business customers to keep a rolling reserve or a certain amount credited on the merchant account at all times,

-  The reputation of businesses using these accounts may suffer,

-  The regular bank holding the “normal” business account of the retailer may not accept funds to be transferred from these banks,

-  More importantly, security is not only an excuse for UK banks to levy more fees on their merchant accounts; it’s also an essential service that’s part of what businesses buy. When a UK bank refuses to open a merchant account based on security reasons, and an offshore one accepts, their customers can’t have it both ways, and should therefore be super careful in reviewing transaction logs and personal data policies,

-  Finally, when offshore means offshore, and when businesses look for a hard to reach partner, that’s exactly what they get. In case a dispute arises between the business and a foreign bank, and even more so if the bank is located in a tax haven, it will be much harder to find a settlement, or sometimes even to file a legal case.

 Offshore merchant accounts

How to choose and open an offshore merchant account

From within the UK, offshore accounts are easier to open than they used to be, but still quite harder than domestic ones. Beyond the usual trip overseas which might be required to open the account, it’s essential that interested businesses do their homework first and spend time reviewing key aspects of the merchant account provider.

Doing the homework first

As with any other merchant bank, the business customer first has to prepare his application carefully. It’s not because the bank is offshore that this step shouldn’t be taken seriously.

Applicants should therefore assemble data or forecasts, as precise as possible, concerning:

Types of goods or services sold online,

Annual sales volume,

-  Annual processing volume,

Average transaction amount,

-  History of merchant transactions,

Annual accounts of the company.

Evaluating the provider

Even more so than traditional merchant services providers, offshore merchant banks should be evaluated in-depth, notably regarding:

-  The reputation of the provider, which involves finding as many testimonials as possible,

-  The contract, which involves being extra careful on all the fine print,

-  The payment gateway, which means checking where the gateway is located, who actually operates it, or if the merchant account can work with another gateway selected by the retailer,

-  More generally, the package contents, including payment gateway, virtual terminal, payment processors, transaction logs, anti-fraud features and currency conversion services,

-  The reaction of the usual business bank which will receive the funds from the overseas merchant account. Some banks will simply not accept the transfers, so it’s better to be totally transparent on the plan and for the retailer to tell the banker that he or she is going to use the services of a given offshore merchant bank and to openly mention the name of this offshore financial services provider,

Customer services. Sometimes overseas mean really far away when a quick answer or essential help is needed after something seems to be going wrong, such as a data breach or funds not arriving on the business account. It’s crucial to check the responsiveness of the offshore bank’s customer services.

Selecting the right offshore merchant account services provider

The good news is that there are now many offshore merchant banks providing this service to UK businesses.

An introduction to major offshore merchant services providers

There’s an ever-growing list of offshore merchant services providers which can be accessed by businesses based within the UK. Many of these providers are based in the US.

However, some actually have set up offices in the UK and liaise with overseas banks to provide offshore services.

Some offer more services than others, and some enjoy a fine specialisation of different high-risk business types. Some might even offer POS hardware such as PDQ terminals.

Selecting the right company is more often than with other B2B services made difficult by the fact that many of these providers do not publish their rates. It’s therefore even smarter to use online services like Companeo to get  as many quotes as possible in merchant services effortlessly.

A comparative table of offshore merchant services providers



Known fees

Services included




Various global locations


From 4.95% + $.65 transaction fee,

$45 chargback fee,

$40 monthly fee

All inclusive

All inclusive,

Business sector expertise,

Real-time transaction reporting,

Fast transfers

Setup fee required,  amount not public although company claims “no hidden fees”


US & Malta


Virtual terminal,

fraud protection,

online shopping carts

No setup fee,

Serious fraud protection policies

Early termination fee,

Possible unilateral contract termination

Tiered pricing


US, Colorado + various global locations


Virtual terminal, gateway, may provide physical card terminals

Proprietary gateway, PDQ machines available,

Dedicated account manager

Fees not public

EasyPay Direct

US, Texas + various global locations

$99 setup fee,

1.59%-4.00% +$.29-$.60

$25 monthly fee

Virtual terminal, gateway, recurring billing, online shopping carts

Possible load balancing between accounts,

No termination fee

Setup fee,

3 year contracts

SMB Global

US, Utah


Uses and NMI gateways, business loans


Possible load balancing,

Low fees,

Reputed customer service

No POS equipment

Host Merchant Services

US, Delaware + various global locations

$15 monthly fee,

Tiered transaction fees,

$24 annual fee,

Variable gateway fee

Proprietary gateway + other gateways,

POS hardware,

cloud-based POS,

merchant cash advance

Full service approach,

Good customer service,

possible very low interchange-Plus rates for low-risk businesses


Equipment sold not leased,

Gateway fees,

Stringent on application acceptation,

Possible termination fees


More information on Merchant services

How do I know payments taken with a card machine are secure?What types of card payment terminals are available?If my business expands, can I add more terminals to accept card payments?