and assuming they can’t, when did this suddenly happen?
Though opening a high risk merchant account today, sure looks like a mission impossible, in no way did this suddenly happen.
Hardening the banking industry in general and the credit card processing industry in specific is an on-going process which started with the MSB witch hunt, causing hundreds of Money Services Businesses to seek none US banking solutions, continued with illegalizing online gaming to its current pick, caused by the Subprime Crisis from which America is yet to recover.
As online gaming (happily processed out of the US) had to find none US alternatives, it opened the door for new offshore merchant account initiatives and offerings. Once hit by the Subprime Crisis, reducing bank capital and eliminating large part of America’s credit availability, banks had to carefully pick, or occasionally stop extending, lines of credit.
As providing acquiring services is another mean of credit line, acquirers were forced to adjust to new industry standards and started implementing same hardening restrictions, getting US high risk processing to where it is today.
Offshore merchant account providers were only waiting for this opportunity, to gain control over an additional portion of US businesses processed out of the US.
As merchants are left with no other choice, they apply for offshore credit card processing, and get their processing needs elsewhere. It is perfectly legal and practically, for some high risk merchants, the only way to sustain their online business.
The US ends up losing higher processing fees paid by local merchants to offshore merchant account providers.
Gidi Argov, Founder and CEO
www.CreditCardProcessing-r-us.com
Tags: High risk US merchants processing out of the US, offshore merchant accounts
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Dear Gidi,
You actually describe a risk management drill.
I know that avoiding risk comes with a price. In our case, surprise, surprise, we the merchants are paying it.
Can you please give us a snapshot of the difference in processing prices between the US and the offshore solutions?
Philip, hard to comparer des pommes avec des oranges …
Online gaming is no longer legal in the US – Can’t be compared to any US solution
Many other credit card processing solutions are also per case basis.
I have my doubts with regards to the practicability of the requested comparison.
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This post is so accurate, it hurts!
We were running an MSB business in the US up until we were informed by our bank we have three months to close our accounts. Our credit history was superb! Our clients had only compliments to share! Our AML policy was the strictest… Nothing helped!
We opened an offshore entity, offshore accounts and moved our business elsewhere!
The answer is no. High risk merchants cannot process cards in the US. The real problem is that definition of “high risk” keeps expanding…
Surely if you sell/provide: jewelry, electronics, tickets, rental, herbal supplements, telemarketing, dating services, online auctions, debt collection, credit repair, coins collections, stamp collections, multi level marketing, detective services, fortune telling, weight loss centers, and many other you are ‘high risk’.
Regardless of the field you’re at, if you’re starting a new business you are considered high risk. If you have an established business and reached high volumes – you are high risk. If you are into flying you are a very high risk. If you are into online gaming you are not only high risk, you are also illegal.
No. Many merchants can’t process cards in the US and the number of merchants facing difficulties keeps growing!
Everything is correct but the title – should definitely be changed to: “Can MERCHANTS process cards in the US”…! When did good established travel agencies enter the “high risk” zone???
YES – US merchants can process credit cards!
It is very easy to open a bank account and a merchant account in a foreign country outside to our domicile country of residence and accept credit cards via such an offshore merchant account. Almost every US merchant can do it!
Exactly… opening an offshore merchant account is now easier than processing cards in the US