A Panama Merchant Account (also known as Offshore Credit Card Acquiring) facilitates trouble-free e-commerce sales worldwide in US dollars. By basing your e-commerce business in Panama but selling your goods or services in the rest of the world, your business can operate in a completely tax-free environment.

Internet Merchant Accounts facilitate credit card transactions over the internet. If you operate an online business, Pamnama provides perfect solutions for you to obtain privacy, and avoid much of the bureaucracy involved in onshore merchant accounts. Since these accounts can be contracted by a simple, anonymous Panama corporation, you can manage them from anywhere in the world. Effectively, Panamanian merchant accounts are therefore available to all businesses worldwide.

We are now able to offer Online Merchant Accounts for those clients purchasing a Panama Corporation with a Panama Bank Account through our firm.

Four Simple Steps for Establishing your Panama International Merchant Account

1. Incorporate a tax free Panama corporation through Do Business in Panama. Our fee includes all government taxes & fees.
2. Establish a Panama bank account where the proceeds of your online credit card transactions can be direct deposited. We can arrange this at the same time as you form your Corporation.
3. Register your Website, offering whatever products or services you wish, in the name of the Panama corporation.
4. Establish an online internet merchant account through us. We put you in touch with an international bank or IPSP willing to accept your application.

Contact us today to get started.

Internet Merchant Consolidators (IPSPs or Internet Payment Service Providers)

There are two business models which work for Panama corporations. One is your own merchant account, and the other is an IPSP account. With this option, your corporation outsources sales to another company, which must be duly authorized to carry on this business.

Both are good options, depending on your business. Normally for a new business or for turnover under $10,000 per month it makes sense to use an IPSP. Another advantage of using an IPSP is that setup is almost instant. All the while, however, you are building up your business and the necessary processing history so you can obtain a better deal on a direct merchant account after 6 – 12 months. We can introduce you to appropriate processors in Panama, and in certain cases also in other countries.

If you already have this turnover and a good processing history, you can apply immediately for a direct merchant account.

We currently deal with several merchant acquiring banks in Panama and overseas. The one we recommend for you will depend on your particular business model and plan. Please note that most merchant providers do not accept certain types of high risk businesses, such as adult entertainment, gun sales, online gambling, or sales of prescription medicines. However, we have relationships with several merchant processors, so if one particular processor does not accept your business model, then we have others who may (although the set up and processing costs may be slightly higher for high risk credit card processing). Anyhow, asking costs nothing, so you have nothing to lose.

Services Included

Merchant account processing services are provided by a bank or a third party processor to the merchant. These services may include authorization of credit cards, settlement of funds through the bankcard companies (Mastercard & Visa), depositing of funds into checking accounts, merchant billing, and account activity reporting.

Cards and Currencies

Our Merchant Processors can process

• MasterCard

• Visa and Visa Electron

A direct merchant account with American Express usually requires a separate agreement, as very few banks are able to package this directly. Diners Club cards are now processed on the Mastercard platform. Optus-Discover cards can be processed through certain offshore merchant accounts only. JCB cards cannot currently be processed online in Panama, although we may be able to introduce you to a bank in Spain which can process JCB cards for Panama corporations. JCB is used mainly in Japan, although some are now issued in Europe.

Our recommended Merchant Acquiring Banks can settle funds to merchants’ bank accounts in US Dollars to any bank worldwide using the SWIFT payment system. Funds may also be sent in other currencies such as Euros, pounds sterling or Canadian dollars

Detailed Requirements to Set Up a Merchant Account:

Corporate Bank Account: This is where the proceeds from the merchant account transactions will be deposited. For more complex setups it may be necessary to open several different bank accounts in different banks.

Financial References: At least one bank reference letter (original, dated within 3 months) is required to open the account.

Professional References: At least 1 professional reference letter (original, dated within 3 months) is required to open the account.

Detailed Business Plan:

A letter should be provided with the following information:

1. Summary of your business activities.
2. Description of products and/or services sold online.
3. Jurisdictions where your company currently doing business.
4. Year your company was incorporated (this refers to the parent company if you are setting up a new Panama subsdiary)
5. Previous or expected business volume (annual revenues, sales, average ticket size etc.)
6. Estimated charge-back percentage – this may not exceed 1% in the case of Visa or Mastercard.
7. Website URL that will be used for selling your product or service
8. Jurisdiction where site is hosted
9. Scan of passport for all company directors, officers, and legal representatives or signatories of the account

Frequently Asked Questions about Offshore Merchant Accounts

Q: How long does the application approval process take?
A: You can start accepting credit cards immediately after the application is accepted and your merchant account is activated. If you opt for an IPSP or third party processing, you can be trading within 24 hours. The direct merchant application and approval process takes from 2 to 4 weeks, depending on whether all of the necessary documentation is complete.

Q: Can I start accepting credit cards immediately?
A: Yes, once your account is approved and activated, you may commence processing of credit card transactions immediately.

Q: How will I get paid for credit card transactions?
A: Funds are automatically transferred to your business checking account via an electronic wire transfer after a transaction has been “captured” and settled for payment. The time frames for payments range depending on the terms you have negotiated with the processor or the bank, as well as on complying with the agreed minimum and maximum processing volumes. Some pay within 24 hours, others within 2 weeks or monthly. Please note that certain “hold-backs” (generally a small percentage of the transactions, around 5 to 10%) may apply, depending on the risk level of your business. The “hold-backs” are released after a certain time period, generally within 30 to 180 days (depending on the risk evaluation performed by the merchant processor).

Q: Is there paperwork to sign?
A: Yes, applications will need to be couriered or emailed to your address, you would need to return the signed applications along with the required documentation to commence final approval. Once final approval occurs (normally around 2 weeks after we receive the original paperwork) you will then be able to begin processing.

Q: Will I need to purchase additional equipment?
A: No. All you need is a web browser and Internet access to utilize the Virtual Point Of Sale (VPOS) terminal. Use this to authorize/settle transactions, view orders, manage recurring billing and more! In Spanish this is known as PDV (punto de venta virtual) or TPV (terminal de punto de venta)

Q: Will I receive statements?
A: Yes. Our recommended merchant processors offer you Internet-based reporting, that gives you online access to review your daily sales, financial history, and other pertinent account information. In addition you will receive a paper statement at the end of each month.

Q: What type of bank account do I need?
A: A business account is required. Your bank will be credited and debited via wire transfer.

Q: If I am a new start up company without a credit history, will my company get approved?
A: There are no strict credit requirements. Any business can be approved.

Q: I need a merchant account for processing online gambling transactions for my online casino. Can I be approved?
A: Yes. We may be able to find a correspondent merchant processor that allows online gambling. However, this would not be in Panama. Panamanian banks do not process gambling transactions.

Q: I already have a retail merchant account. Why do I need another one?
A: Financial institutions and the Visa / MasterCard card Associations have different criteria for evaluating the potential risk involved in credit card transactions where the card is not physically presented to the merchant. This type of business is typically referred to as “card not present” or “MO/TO” (mail order/telephone order). For this reason, a separate merchant account is needed.

Q: What is a payment gateway?
A: A payment gateway is a service that gives merchants the ability to perform real-time credit card authorizations from a web site over the Internet. The Gateway is an encrypted channel that passes the transaction securely from your customer’s computer to the financial institutions to capture the authorization and approval. Once the transaction is complete, the information is sent back through the Gateway to complete the order and provide you with verification. The Gateway offers many administrative features such as: viewing orders, keeping sales records, account maintenance, etc.

Q: What is the difference between a Panama Merchant Account and an Onshore Account?

A:There are many advantages of having a Panama Merchant Account. Some of them are:

• Usage of the US Dollars as Currency

The currency used in Panama is the US dollar. This makes the service suitable for international business. There are no issues of currency conversion, which in turn assures those customers buying online using the Panama Merchant Account. They are totally satisfied.

• Confidentiality

For a Panama Merchant Account holder, privacy and confidentiality are taken for granted. Both, the assets of the account holder, as well as the identity of the owners are treated with thorough confidentiality. The identity of the clients is never revealed to anyone.

• The advantage of Panama for non-US businesses entering the USA market

Non-US businesses will sometimes depend heavily on US as well as other global markets for business growth. The same applies to businesses that want to access the UK or mainland Europe market, but would not like to, or are unable to set up a legal entity in that country. Setting up a legal entity in a specific jurisdiction implies having to comply with taxation and legal procedures, which a foreign business may not be able to afford in terms of cost or time.

These businesses in particular will face substantial difficulties in obtaining a domestic merchant account, as domestic banks will only cater to businesses that are within the jurisdiction of their home country’s laws. Third party providers will only provide services to businesses registered or incorporated in specific countries (usually lesser known countries or those known for a high propensity of credit card fraud).

Other International Merchant Accounts

The key advantage of an international merchant account is the ability to cater to a certain geographical market while benefiting from transaction/processing cost savings and potential tax benefits as well. In addition to USA merchant accounts, Carribean, Panama, St. Kitts, Dubai, Germany, Switzerland, Europe, Australia and South African merchant accounts are also available.

International Merchant Accounts work through a merchant account provider who has relationships or tie ups in place with banks in the region of interest. For instance, in case of a European Merchant Account, a merchant (European or non- European) will approach a merchant account provider who deals with certain banks in the EU who specialize in providing merchant services to business that may not be registered as corporate entities in the European Union. This bank will then proceed to apply for and obtain a merchant account (enabled with multiple currencies as per the need of the merchant). Once the merchant account is approved, the merchant will need to incorporate in the area of jurisdiction of the bank. We can assist with this, all with one convenient point of contact. Once that is done, the bank will complete the set up of the International Merchant Account and the merchant will be able to start processing transactions.

The Terminated Merchant File

The Match / TMF file is a ‘blacklist’ of merchants who have failed to comply with or honor the terms and conditions of the merchant credit card acceptance agreement. When this happens the merchant service provider or acquiring bank can report the information regarding the merchants business practices on the, “MATCH” file database. This database is used by acquiring banks to identify the merchants and the principals who were terminated. MasterCard and Visa hold the acquiring banks accountable for the credit card transactions that flow through your merchant processing account. Once chargeback levels increase and / or suspicious activity occurs, it is critical for business owners to resolve the matter immediately. If the issues are not resolved immediately the acquiring bank will have not choice but to terminate the merchant account and place the information on the owner and business on the “MATCH” list.

Banks use the, “MATCH” to help assess their risk in opening merchant accounts. If the risk of opening a merchant account exceeds the bank’s risk tolerance, the merchant application will likely be declined.

How to Avoid Getting on the MATCH List

Here are several ways to try to keep you business of the, “MATCH” list. Correcting the cause of consumer disputes, chargeback’s and suspicious activity is a less expensive but, will have you facing the probability of being placed on the, “MATCH” list. Termination and listing can cost you your business. Here are several ways to try to keep you business of the, “MATCH” list.

1. Correct the cause of consumer disputes, chargeback’s and suspicious activity. Relying on chargeback’s to handle this will have you facing the probability of being placed on the, “MATCH” list. Termination of your merchant account and listing the business and principals information can cost you your business. Make sure there is a customer service number that will appear on your customer’s credit card statement. Follow up with your customers; make phone calls, e-mail and newsletters always works. Stay in contact with your customers. Always provide exceptional customer service and treat your customers with the highest respect possible. Respond to your customers quickly with accurate information.
2. Do not go over your authorized maximum ticket or your monthly processing sales / allowance without asking in advance for permission from your merchant service provider.
3. Avoid depositing transactions that were generated by a different business. This is a violation of MasterCard and Visa rules and regulations. Merchant accounts are only authorized for your specific category of business and must not be used for others. Do not do your friend a “favor” by collecting his money using your merchant account; this can cost you your merchant account.
4. Chargebacks are the major industry problem and hurt all businesses. High chargebacks are anything more than 1% of the total sales volume. Increased chargeback’s indicates risk exposure of the merchant, and can cause the merchant account to be terminated and to be placed on the, “MATCH” list.
5. Do not complete a transaction if the authentication request was declined.
6. If your business has policies regarding merchandise returns, refunds or cancellation, disclose these policies for the cardholder to see on your website.
7. Settle your transactions / close your batch daily.
8. Keep customers up to date on the status of their order and shipment.
9. If merchandise is on back order, notify the customer and keep the customer up to date.
10. For Card Present Merchants, make sure transactions are only entered into the terminal once. Also, make sure incorrect receipts are voided immediately.
11. If a customer wants to cancel a recurring transaction, cancel it immediately.

CADIVI and Offshore Merchant Accounts for Venezuela: updated June 2008

Comisión de Administración de Divisas - CADIVI - is the Venezuelan government agency with the power to regulate and impose currency control restrictions, called “Providences”, for purchasing foreign currency. They also have the power to issue or deny authorizations to purchase foreign currency and verify and control the use of that foreign currency, as well as the purchase of that currency from the Central Bank of Venezuela that has authorized the transaction. CADIVI has issued a number of Providences on the requisites and procedures for the purchase of foreign currency for the different kinds of operations (imports, foreign investments, foreign debt, technology transfers, etc.)

In the last year, almost four times the money (4 Billion, versus 1 Billion) has been charged on Venezuelan international credit cards, provided to Venezuelan citizens as an attempt to inject money back into the economy and strengthen Venezuela as an independent and self-sufficient country. Unfortunately, a lot of that money never returned to the Venezuelan people for its intended use. If you’re a Venezuelan merchant or outside merchant that wants to accept these Venezuelan credit cards, this may be difficult.

The government of Venezuela and more specifically CADIVI has identified numerous ways that people, both merchants and card holders, have been defrauding their country and undermining the local economy. Some of these popular scams include traveling to other countries and making purchases through merchants that inflate the price of an item or items and give cash refunds to the card holder, charging tokens at a casino and turning them in almost immediately for cash and merchants that simply charge a percentage of the amount charged, while rendering cash to the card holder. These practices are all commonplace.

All of this has made it difficult for honest, law-abiding merchants and businesses to accept credit cards, make an honest living and help strengthen the Venezuelan economy. One great example of this are credit cards for further education abroad, in an attempt to educate or re-educate people that will return to Venezuela and strengthen their workforce.

If you are a merchant within Venezuela or want to accept Venezuelan issued international credit cards, we can help you set up suitable merchant accounts in Panama, Europe and elsewhere. Currently their are banks that are offering merchant accounts to businesses that are challenged by new government interest, regulation and red tape caused by all of the fraud that has transpired over the last couple of years. With many countries’ domestic banks imposing, sometimes unfair restrictions on banking, the honest businesses often suffer the most and in the end find it easier to do their banking offshore through Panamanian merchant service providers.

Some of the services that can help your business today are having a terminal for card swipe transactions or POS (point of sale terminal), virtual terminals for telephone orders, a processing gateway for ecommerce transactions, funding schedule next day-or to a one week hold pending due diligence and third party fraud scrubbing. All of your transactions are batched daily to keep you organized. Electronic statements are provided so that merchants can keep track of their customers’ purchases. The real goal is to fix the perception of the merchant and Venezuelan credit card holder offshore business relationship. Responsibly run international commerce, operating within the law, benefits the Venzuelan economy and its people. If you’re a Venezuelan merchant and would like to apply for a merchant account, please feel free to contact us.