Does your business have anything to do with adult gaming, telemarketing, travel, online pharmacy, subscription/membership services, tickets, multilevel marketing or telecom? Then it may lie in the high-risk classification of the banks. Moreover, if your business involves online credit card payments then it is almost vital to have a merchant account. A merchant account will allow you to carry out credit card transactions. However, if for any reason you do not want to conduct your banking or credit card processing or want to get some taxation benefits, then an offshore merchant account can be the best option for you. It also proves beneficial if you are starting with a new business.

An offshore merchant account can prove to be a financial lifesaver if the US banks and processors find you unsuitable. An offshore merchant account works in a similar fashion as a merchant account would in the US. It has the same method of processing credit card transactions as done by your domestic bank. The only difference is of certain internal bank policies.

Offshore accounts normally have higher processing costs or longer hold back periods but this is in lieu of a deposit requirement. This higher than normal processing charge is a by-product of the fact that the offshore bank assumes higher risk with your offshore merchant account.

Under the usual circumstances you would not have problems getting an offshore merchant account unless you deviate from having ethical sales or business practices. The offshore banks do not really care about your type of business or products. This is unlike the US banks that may at times go much farther than simple due diligence or looking at potential client banks.

Having an offshore merchant account can prove quite beneficial if you have a small business and the cash flow is low, since the account would not require a large up front security deposit. However, you must take into account the fact that the bank may hold back some of the proceeds as a reserve against possible charge backs.