Multinational businesses often set up international merchant accounts to simplify their business transactions. These merchant accounts make it easy to sell their products and services by enabling the merchant to accept payments in multiple currencies and convert the revenue to a particular currency as per requirement.
The international merchant accounts allow businesses to expand across international boundaries and earn more potential customers from all corners of the world. But, sometimes, the question may arise whether the International merchant accounts are really worth it? This article will try to find an answer to that question.
What are International Merchant Accounts?
Before we dive into exploring the true worth and necessity of an international merchant account, we would want to be fully aware of what an International merchant account is. An international merchant account is a payment processing agency that enables businesses to build an e-commerce platform and collect from customers from different parts of the world.
A business that caters to a worldwide customer base needs to have room to allow its customers to pay for their orders using diverse payment methods. They should also be able to accept payment in different currencies. All these are made possible by offshore merchant accounts.
But, often the international businesses are considered “high-risk” by the banks. Acquiring a standard merchant account can be quite challenging. Merchants who deal with “high-risk” commodities like pharmaceuticals, online gambling, online gaming, advanced travel and accommodation booking, etc., prefer to establish international or offshore merchant accounts to ease the challenges of transactions associated with their business.
Why Do You Need an International Merchant Account for Your Business?
1. Ability to Accept Payments in Different Currencies
International businesses that earn revenue from consumers from different countries have to accept payments in different currencies. A domestic bank account does not have the provision to accept a wide range of currencies. Whereas an international merchant account is made precisely for this reason.
Offshore merchant accounts allow businesses to accept diverse payment modes. They enable you to accept all kinds of credit cards and other newer payment methods like cryptocurrencies, etc.
2. Needless to Establish Local Bank Accounts
If you are aspiring to widen your business to reach different countries, all the while maintaining a headquarter in your parent country, an international merchant account can make things simpler for you. There will be no need to open local bank accounts for every country your business enters.
An international merchant account streamlines your transactions by accepting payments from all over the world. It prevents you from the nuisance of maintaining multiple bank accounts and reduces the complexity. Their global banking network helps save your time and money handling complex foreign accounts.
3. Ability to Gain Competitive Advantage
Acquiring an international merchant account opens up a wide range of opportunities for a business. You will have a greater advantage over your competitors. With the ability to cross boundaries, the business will be able to create broader and stronger brand awareness. In addition, you will be able to collaborate with industries from all over the globe. With the globalization of the business, you can up your sales and earn more revenue.
4. Reduced Losses due to Credit Card Frauds
International businesses that operate on an e-commerce platform often fall prey to credit card fraud. To compensate for the fraudulent transactions, the businesses have to incur huge losses. As a result, the cost of services and products offered by the merchant may increase too. It will also damage the credit score of the merchant and put them in jeopardy.
An offshore merchant account offers merchants provisions to withstand the disputes caused by credit card frauds and bounce back without tainting their image. They also help protect the integrity of the business accounts from hackers by installing multi-layer firewalls.
5. Ability to Withstand Chargebacks
When most business transactions happen online, they may face a lot of chargebacks. The customers of these businesses tend to cancel or return their orders and ask for a refund. The merchant has to send the money back to the customer’s bank accounts. This might incur a lot of losses. An international business account provides the merchant’s room to withstand chargeback issues and overcome disputes.
6. Generous Volume Cap
A standard merchant account does not allow businesses to exceed a restricted target volume cap. As a result, the merchant may have to pay extra fees. On the other hand, an international merchant account offers the businesses a generous volume cap and allows your customers to transact with you without any limit.
7. Hidden Processing Charges are Eliminated
Cross-border transactions often incur some extra processing fees, either due to the nature of the bank or the payment mode used by the consumer. These charges are mostly upfront, but sometimes they are hidden. Thus, the merchants that deal with large numbers of international transactions may have to pay high processing fees.
Hence, the merchants would have to pay more than the net revenue they generate. An international merchant account eliminates the need to pay hidden processing fees and helps earn more revenue. All the fees incurred by them are disclosed in advance.
Are They Really Worth It?
With so many advantages, international merchant accounts have become necessary for businesses that cater to a global customer base. But, you would have to meet some requirements. You will also have to provide the payment processing agency with some documents before establishing an international merchant account, such as;
- Certificate of incorporation
- Certificate of incumbency
- Documents regarding the business director and owners
- Bank statements and rental agreements associated with the business.
But, according to experts, you might also move toward the globalization of your business without having to establish an offshore merchant account. You can use an intermediary or payment aggregator to simplify your transactions. Instant authorization and encryption of the financial information can also help you avoid setting up an international business account.
However, these might complicate the operations of your business. According to us, establishing an offshore merchant account is much simpler and can help manage the finances of your business with ease.
The Bottom Line:
An international business account is intended for merchants who are thinking about expanding their business internationally. It enables one to accept different credit cards, cryptocurrencies, and other unconventional payment methods. We hope this article has helped you understand why an offshore merchant account is important.