Is A Merchant Account Offshore Legal?

Traveling back from Europe the other, I exchanged business cards with the gentleman sitting next to me.   He saw merchant account offshore on my card and said “Isn’t a merchant account offshore illegal or something?” Then one of the other passengers chirped in “Yeah, I hear that a merchant account offshore is a scam.  A way for people to launder money or avoid paying taxes.” Both these comment about a merchant account offshore were incorrect, of course.  Yet, the reasons for the false beliefs were totally understandable.

The term offshore merchant account has long had a bad rap.  Years ago, accounts were set up with banks in small obscure island countries. Hence the term offshore merchant accounts meant the banks were literally offshore.  Exotic island locations which few average people have ever seen became suspect.  Were the rich people mysteriously squirreling away hoards of cash? Well, a lot has changed since the olden times.  And a merchant account offshore no longer refers to some island location

These days, merchant accounts offshore are set up almost everywhere in the world.  Switzerland, France, UK, Netherlands, Germany, UK, US, South America, Asia, Pacific Rim, Middle East.  You name it. The leading banks in countries around the world avidly compete to establish merchant accounts offshore for companies doing business globally. In fact, world class international banks with recognizable names are now the most common place to establish a merchant account offshore. The term simply refers to an account established in a jurisdiction other than the company’s original country of domicile.

Almost every country in the world wants to profit as much as possible from the vast electronic financial universe in which we all live.  Offering a merchant account offshore is just one of many services banks around the world use to attract business customers and their money. There’s no doubt establishing a merchant account offshore can have financial benefits for companies.  Certain countries do offer more favorable business conditions than others.  You can review those advantages with your business advisers.  But laundering money and avoiding taxes is not the reason companies establish a merchant account offshore.

There are obvious advantages for most companies doing business globally to have a merchant account offshore.  For example, savings on foreign currency exchange, reduced payment processing fees and redundancy in payment processing facilities to protect business operations are all sound business reasons to set up a merchant account offshore. In these modern days of global ecommerce, a merchant account offshore is no longer anything to hide.  In fact, establishing a offshore merchant accounts may be one of the wisest business decisions a company can make.