An offshore processor’s underwriting team is similar to that of a US processor insofar as they are looking to make sure that the processor will not face any losses, either through excessive chargebacks or regulatory fines or fees. Unlike a low risk processor, an offshore processor knows that some level of chargebacks is inevitable, but excessive chargebacks are not tolerated. Like a US account, an offshore underwriter needs to make sure that their bank is going to make enough on the account to support it, however, their cost structures might be significantly different. That is to say, a US processor will happily write a business even if they’ll only make $20 per month. An offshore processor, by contrast, will often impose high monthly minimums or processing volume floors on an account to both ensure that there is enough profit to make the integration worthwhile, and to ensure that they are compensated for the risk and account oversight that they must undertake.

Because an offshore merchant account requires a bit of setup and integration and requires approval by the bank for most industries, most offshore merchant account providers require merchants to process a minimum amount each month in order to maintain the account, called a monthly minimum. Typically the monthly minimum depends on the specific offshore payment processor, and industry, and ranges from $20,000 USD to $250,000 USD per month.

The reason why most offshore merchant account providers require an application fee or an integration fee (which is only required upon approval) is that there is a fair bit of technical work required to complete the integration. Plus this requirement serves as a financial barrier to prevent businesses that are particularly poorly capitalized or run to receive approval.

If you’ve got a question about a CRM, payment gateway, chargeback tool, bad credit merchant account or anything else related to accepting payments in a business, and want some advice, email me your question directly: info@blueberrymerchant.com.

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If you’re applying for an offshore merchant account, chances are, you’ve already applied for a domestic US account before. That experience was probably pretty straightforward, you completed an application, gave them a voided check, a copy of your driver's license, and poof… approved or denied. Offshore accounts are a little more complicated. The first step is to find a reliable and reputable offshore account provider. See more below…

Every merchant account, both US and offshore, requires a sponsor bank or funding institution to underwrite merchant accounts. So an offshore merchant account means that the sponsor bank is based outside of the US. Typically, that’s because the specific bank underwriting the deal has underwriting and risk criteria that enable them to write a broader range of business types. That sponsor bank then works with an offshore processor, which is who will be processing your payments.

There are a number of merchant account providers and payment processors that offer offshore processing. Unlike with US processing, however, the quality and security differences between offshore payment processors varies widely. Therefore, the important question when searching for an offshore merchant account provider isn’t simply whether they will accept your business, but rather how stable the processor is.

Yes, at Blueberry we provide access to all-inclusive merchant services, which includes e-Check/Credit Card processing services to hundreds of high-risk and offshore merchants, ranging from startups to businesses processing hundreds of thousands of dollars a month. The process is simple, just complete our 5 minute free online application, then we’ll email you a PDF copy which lists all terms and pricing for your electronic signature. Once approved and integrated, you can begin processing. We’ll handle setting up your chargeback management tools and your payment gateway, making the process easy and simple.

A businesses’ chargeback ratio is the number of chargebacks per month divided by the total number of monthly transactions. The dollar amount of the chargeback is irrelevant, as is whether or not you win, lose, or don’t fight the chargeback. Once a chargeback has been initiated it counts as a chargeback. So, if your high risk business has 100 transactions in a month, and 5 customers have initiated a chargeback dispute in a given month, you have a 5% chargeback ratio for that month, regardless of whether you fight, lose, or win those chargeback disputes (with some exceptions depending on how the specific sponsor bank and processor count reversed chargebacks).

Your processor, including an offshore processor, faces potential Visa / MasterCard fines if your chargeback ratio exceeds 2%, and they continue to let you process payments. Those fines are in the tens of thousands of dollars, which means that getting fined for allowing you process will certainly cost them more than your account brings in. That means that once the processor begins looking at your account, and sees that the ratio exceeds their chargeback threshold, which is typically 2%, they will almost always terminate your account. Offshore merchant accounts offer some additional chargeback flexibility, but in general a 2% rule applies with an offshore merchant account. Moreover, chargebacks are a sign that your customers are dissatisfied with your product or services (or that there are fraud issues), and for both reputational and good business practice reasons, a processor and sponsor bank will not wish to support such businesses over the long term.

Businesses in high-risk industries, particularly those that seek out offshore merchant accounts due to industry type, are prone to high chargebacks for any of a few reasons,

High risk businesses often accept MoTo payments or web payments which are prone to higher levels of chargebacks and fraud just due to the nature of the payment method Many customers may forget that they ordered something, and because the business may not have great name recognition, the customer may believe the charge is fraud, Business owners, particularly startups, may not understand or employ the full suite of techniques and services that are available to keep chargeback ratios low, Many startup or small high risk business owners do not understand that a chargeback, regardless of whether won or lost, contributes to their chargeback ratio, thus they do not immediately grant refunds or otherwise aggressively take corrective action to make sure the customer is satisfied,

Before the Sale: In a lot of high-chargeback industries, particularly eCommerce, the key is to quickly identify stolen e-Check/Credit Cards, fraudulent or bad sales before they happen. And if you’re using a high-risk payment gateway a lot of those fraud prevention services can be automatically integrated. The goal is to either flag the transactions for manual review, or never have them complete in the first place.

During the Sale: This is obvious, but during the sale, the goal is to fully deliver on the promises made, both implicit and explicit to the customer. For businesses conducting MoTo / telephone sales, that might mean recording salesperson calls to ensure that everything being said is consistent with company expectations. For eCommerce businesses that might mean making sure disclaimers aren’t hidden in the fine print but are explicitly shown to the customer, and overall just striving to provide excellent service.

After the Sale: Once the sale is made, the goal is to make sure that you stay in front of the customer such that if they are at all dissatisfied, you’re the one that they contact as opposed to their issuing bank (aka the phone number listed on their e-Check/Credit Card or e-Check/Credit Card statement). That’s achieved through having a clear payment descriptor, a payment receipt that explicitly mentions what customers with billing questions should do, making sure that your billing support center is friendly, competent, and available, and that they understand that the goal is to make the customer happy first. Finally, it also may mean sending out a follow up email, letter or confirmation phone call after the sale confirming that the customer was happy, in order to completely minimize the potential for chargebacks.

After the Customer Complains: In most high risk industries you can dramatically reduce the number of chargebacks through the above methods, but you may not entirely eliminate them. Once the customer complains to their issuing bank, you can use a chargeback alert system, which will provide you, the business owner, with a three day window in which you can issue a full refund to the customer. The benefit of this is that if you do issue a rull refund, the chargeback will not initiate, and your chargeback ratio will not be affected.

Maintain high transaction counts: Your chargeback ratio is determined by the number of chargebacks divided by the number of monthly transactions, regardless of the dollar amount of those chargebacks. So, a business with an offshore merchant account which is processing only 100 transactions per month is at a much greater risk of exceeding their chargeback percentage threshold by a few random chargebacks slipping through, than a business doing 1,000 chargebacks. Obviously, it’s not as easy as simply wishing your business to be 10x larger than it currently is, but in general having a higher ratio of monthly transactions prevents your chargeback ratio from skyrocketing due to a few random surprise chargebacks. So consider, for example, that in a month in which your processor has already informed you of a chargeback, that is not a good time to shut down sales and take an extended vacation.

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Blueberry provides all-inclusive merchant services to hundreds of high risk and offshore merchants, ranging from startups to businesses processing hundreds of thousands of dollars a month. So when you’re ready, we’re ready.