If you’ve got an online business or are running any type of business, at some point, you’ll want to set up a merchant account in order to accept credit cards. To do this, you’ll need to find a merchant account provider. The question is, should you use an offshore merchant account?

There are pros and cons to using a domestic versus offshore merchant account. First of all, of course, tax liability will generally be lower with an offshore merchant account versus a domestic one. However, it should be noted that if you use a domestic merchant account, you’ll likely take advantage of increased competition, which has been good for both consumers and merchants. For example, competition has driven interest rates down from approximately 7% per transaction to about 3%.

With an offshore merchant account, of course, set up is generally easier, often with no deposit or set up fee required, and tax liability is reduced, both for what you bring in and what you keep. However, fees for offshore merchant accounts are generally higher; do your homework and make sure not to buy into hype.

Make sure as well but what you’re doing is perfectly legal, since no savings is worth any headaches you might acquire by doing something illegal, even if you do so unknowingly. Make sure that the offshore merchant account you use, if applicable, is legal and aboveboard; it should be well established and have a good reputation. You can find most of this information quite easily on the Internet, by reading up on a particular company you’re investigating.

Some places also do not actually require you to have a merchant account but in fact you can do third party processing offshore as well. Do your homework for these types of situations. Of course, make sure that the company you choose, as with any merchant account provider, is an established business that has a good reputation and will handle your money with care.

Finally, make sure that the offshore third-party provider you choose, if you do so, is also well enough recognized by customers that they will have no qualms buying through you with a third-party provider. Some of these establishments are not yet well known, but will be. Others may not be fully aboveboard.

Therefore, again, it behooves you do your homework. You should also know that many if not most merchant account providers these days provide currency exchanges so that you can service customers from around the world, whatever their currency. Again, this is a service you want to look into if you expect to be doing any selling to customers from other countries with different currencies, and if you’re in e-commerce, it’s likely that you will.