Much of what will be covered here was covered in a previous post about why banks say no to you but yes to me. I’d highly recommend reading that post first.
So you want to accept PayPal as an offshore company. Maybe you can’t even find your IBC jurisdiction of choice in the dropdown of countries; maybe they rejected your application.
Will PayPal accept your offshore company? No, most likely not. Neither will a lot of other payment service providers.
Let’s start by talking about risk and why you look dodgy.
You Pose a Risk
Risk of fraud. Risk of money laundering. Risk of abuse. Regulatory risk. You name it. Chances are your company is incorporated in a jurisdiction with a poor reputation, but if you incorporated in for example Hong Kong, Malta, or maybe Isle of Man, you are in luck. Or, more likely, you made an informed decision where cost of incorporation was not a key deciding factor.
The problem is secrecy and lack of accountability. The fact that your IBC or other secretive company cannot be verified against a public record of companies coupled with the fact that your company is under loose accounting regulations are a big part of why companies like PayPal are hesitant to take you on.
Stop Posing a Risk
Something as simple as forming a payment processing subsidiary in a reputable jurisdiction can open new doors. UK is the foremost choice for this. A UK company can cost as little as under a hundred GBP to form; a few hundred if you want nominees in order to keep your name out of public records (nominees come with their own host of challenges, though).
UK banks very likely will not accept you (unless you are resident in the UK), but banks like Wirecard Bank and Deutsche Handelsbank are generally happy to take on European shell companies. While quite dreadful banks, they are tolerable enough for a pass-through account. With a bit of effort, you can find other European banks willing to take you on.
However, having a payment processing subsidiary is not all roses. There can be tax implications that you need to consider. In most cases, the tax issue ends up being a non-issue with the help of a good tax adviser and lawyer but it’s nonetheless a hurdle you must face.
Another thing to consider is that if you are an ecommerce operator, you probably need to inform your clients that the payment is processed by XYZ Billing LLP (UK) on behalf of XYZ Software Limited (Anguilla). It’s often enough to put this in the terms and conditions but you will want to make clear that customers will see XYZ Billing and not XYZ Software on their credit card statement to prevent chargebacks.
Find a Risk-Friendly PSP
Sometimes, forming a payment processing subsidiary is not an option. That’s where risk-friendly PSPs come in. There are a lot of players in this field.
The most respectable ones are companies like WorldPay and Braintree. They can act as middlemen and for example let you offer PayPal to your customer, albeit at a a much higher cost than you would directly.
Then there are e-wallet solutions such as Skrill, Neteller, Click2Pay, and so on. These require the user to have an e-wallet account and odds are quite high that customers will take their business elsewhere instead of bothering with that.
PSPs like 2CheckOut, Square, Stripe, and Bluesnap are also known to take on offshore companies from time to time.
It is rare to be given your own merchant account with these operators, but they support it and once you have built up history it might be worth inquiring about.
High-Risk Card Processing
The world of high-risk card processing is a dark and shady one. The finest operators are not known outside of tightly knit circles, processing billions in high-risk volumes.
There are some who offer their services in the open, though. Many of them are focused on adult entertainment but will take on regular ecommerce for other high-risk merchants, such as offshore companies. These include CCBill, Instabill, Verotel, Commercegate, and Zombaio.
They will charge an arm and a leg and it often works out more cost efficient to form a subsidiary if you aren’t actually selling high-risk goods. However, the convenience factor is hard to argue against.
Just make sure that you read and understand the fine-prints. These types of processors often ask for monthly fees, rolling reserves, and other types of costs that aren’t obvious per-transaction costs.