The Foreign Merchant Account
The world is getting smaller. This is evidenced by the way we travel easily from one country to another. It is also illustrated by the way we can order, via the Internet, nearly anything we want from other countries. Ecommerce is increasingly becoming a big thing, as people do business with people from other countries without having to meet in person. Global and foreign partnerships are rising. If you can do business with people in other countries, why not set up a foreign merchant account to handle the credit card transactions of your clients, whether online or off? A merchant account is simply an account that handles your credit card transactions. This type of account is one that you entrust to a bank or other financial institution. The merchant account keeps your money in a account, as people use their credit cards to do business with you, or with your Web site. At the end of each month, a percent of the money you make is deducted as fees to pay the institution for handling your credit card processing. Merchant accounts are useful because they save you the trouble of personally processing credit cards. Many business owners figure a portion of the fees into their overhead and recover it in small markups. With today’s global economy, however, it is possible to set up a foreign merchant account to handle your transactions. The foreign merchant account can be useful because there are certain perks that you get by taking care of your money, and locating your profits, outside of the United States. Many times, however, with foreign merchant accounts, the fees are actually higher than those found in the U.S. But a merchant account is not just about the fees. In fact, there are many advantages of a foreign merchant account that offset the slightly higher fees. Lower security deposits and fewer restrictions are benefits of a foreign merchant account. While U.S. banks often require a minimum of $5,000 and can hold back additional amounts of your money for security against charge backs, a foreign account may not subject you to such onerous practices. Most foreign merchant accounts can be opened with a smaller deposit to guard against overdrawing due to charge backs. Additionally, there are usually fewer restrictions placed on foreign accounts. This is because the United States is facing increased scrutiny due to “terrorist funding” and other money laundering issues. If you have a successful ad campaign that increases your sales by a few thousand dollars a month, you may find your account closed for “suspicious activity,”