Thursday, May 19, 2011

Offshore Processing for Internet Marketers

When I speak to a lot of internet marketers and bring up the option of processing business offshore, I am told (in a lot of cases) that they are not interested in offshore and they only want a domestic solution.

I am actually not 100% sure of the reason but one thing is for sure, offshore processing has much worse reputation in the Internet Marketing industry then it should. A lot of the time setting up offshore is exactly what a merchant needs to do, at least for the time being. One of the major benefits to processing offshore is that it provides you with much-needed flexibility and can really help if you are having any chargeback issues. I would be happy to speak in much greater detail with anyone that is interested. Contact me anytime.

The fact of the matter is, the offshore banks that I have worked with are all established, have a very good understanding of ecommerce, and are very easy to deal with it. If the image that you have of working with an offshore bank is that of a shady organization, operating out of a small office, in the middle of some backwards country, then you are wrong. I have seen some of the operations, and they are impressive to say the least. They are banks, they are regulated by the associations they belong to, and a lot of them understand ecommerce better than domestic banks.

What I sometimes suggest to my merchants (especially those in the online marketing space) is that they should have both domestic and offshore processing and once they setup, it’s easy to understand why. Yes, you will pay slightly more for offshore processing, but would rather pay a slightly higher premium to ensure that you are always up and running, even if you encounter some slight chargeback issues.

And lets be honest here, even if you run a 100% complaint operation, if you are running any type of trial offer you will have customers that forget to cancel, will complain and you will get Chargeback - and the difference between offshore and domestic chargeback thresholds is significant. This is a HUGE advantage of going offshore and I think it’s a better option than the IPSP model.

One concern that a company may have with going offshore is the requirements to incorporate in that jurisdiction. That is understandable if its something that you have never done before, but it’s really not a complicated process and it’s a process that any processor with experience can walk you through. There may be some slight additional costs, but the benefit of ensuring your processing is up always definitely outweighs that. Contact me if you have any questions about setting up an offshore account.

I think that getting comfortable with Offshore is something that comes with experience. I do have quite a few merchants/offers processing offshore, and I think that these days anyone with substantial volume that offers a trial is starting to see this requirement. Adult merchants have been processing offshore forever, and they definitely see the value in it BUT its important to note that you need to work with someone that has experience because you don’t want to get burned, have the bank blow up and hold your funds.

Some quick benefits

- Usually allow for more volume/no cap
- Higher chargeback threshold
- Potential for multiple currencies
- Higher chance for approval.

If you have questions about Offshore Processing, or would like to talk to me about setting up an account then get in touch.

JR

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