Offshore payments and offshores for their acceptance

Offshore payments and offshores for their acceptance

Theoretical part

Classic credit card processing is the interaction between the payment cards regulator (VISA, MasterCard, etc.), bank of cardholder (bank issuer), the Processing Company (processor), a bank in which the Merchant (online business) has opened merchant account (bank acquirer) and the payee himself.

Providers of payment cards decide on carrying out which payments (for which services) from which countries to which countries to allow and what kind of commission to take for it from processing companies. Regulators prohibit certain payments risky from their point of view.

Processors can be “white” and “gray”. The white ones usually work only with the existing legal business, require compliance with a number of site standards, often require a security deposit, the disclosure of the names of real business owners and other specific list of documentation for each type of business.

The possibilities of using offshores

One of the most interesting features offered by the registration of the company in an offshore jurisdiction is to hide the names of the true owners of businesses and to avoid taxation. This possibility can be, for obvious reasons, quite interesting for the citizens of onshore states. Unfortunately, these schemes are not welcomed by most financial institutions and, in particular, by the Internet companies, if done incorrectly, you may have trouble with the acceptance of online payments.

The fact is that obtaining data from the business owner is required by VISA and MASTERCARD in accordance with the banks for opening “Merchant” accounts, which, in turn, need to accept payments from credit cards. The second requirement, now the bank’s requirement in relation to the companies, is that they need to have an annual financial statement to the state. Both of these requirements are incompatible with the ability to hide the true owner of the operating company (the person carrying out the activity). In these cases you need to use the structure of offshore legal entities.

An example of a simple holding

An example of such a structure can be popular among entrepreneurs of the “real world” bunch of British Virgin Islands – Cyprus, in which the Cypriot operating company is in “open” possession of the parent company in the BVI. But the owner of the company on the BVI is hidden. However, Cyprus is not a classic offshore – it is a low-tax jurisdiction with corporate tax of 10%, which is a part of the European Union, with all its requirements and limitations, as well as having a narrow Internet channel “on the continent”, that is bad for server placement. In addition for opening of a merchant account, even if only for the bank, but the actual name of the business owner will still need to be uncovered. As a result, a bunch of BVI – Cyprus is a good choice for the withdrawal operations of money to offshore accounts with the subsequent liquidation of the structure, but to maintain long-term Internet businesses such scheme is not always the case. However, there are several tens of offshores in the world and depending on the business model there can be built variety of schemes and combinations thereof. The main thing is that it has to be done taking into account the specifics of online business.

Also, you need to understand that hiding under the beneficiaries in each offshore means very different things. In one jurisdiction, the registry can be opened simply by request of the court of any state, in other only by a decision, and only a court and only on the criminal case. This is a completely different level of protection. And the higher the protection, the more difficult it is to agree with the payment system. In each case, it is either the balance between safety and capacity, or structure of offshore companies or security deposit to the account of the payment system. But usually the combination of these methods takes place.

To choose the optimal strategy for the security of the beneficiaries, be sure to seek the advice of our experts.