Your EU company is known as a “dealer”. The merchant account is opened directly on behalf of this company, while the funds are deposited into an associated company account. The process is as follows: When the acquirer issues the customer a Merchant Identification Number (MID), he also provides details of the technical setup. Later, the merchant will be set up in the payment gateway and his access data will be configured. You will then be provided with API integration instructions and the acquirer’s technical team will likely be able to assist you with this.
This scenario, which should be clarified with your acquirer in advance, involves an additional company, e.g. B. a Hong Kong company that has an agreement with your EU dealer where the dealer acts as the processing agent for the main Hong Kong company. The Hong Kong partner can ease the EU company’s tax base to some extent. Any such agreement between the two partners requires a clear and detailed legal contract. According to the contract between the two parties, the EU dealer handles the entire sales process, invoicing and collecting payments from customers.
With ever growing KYC and AML requirements and new VISA and VAT regulations for distance selling, our customers are looking for ways to start an online business in a jurisdiction that is both a) acceptable to banks and has compliance requirements for processing as well also b) tax efficient and easy to manage. The wish list could also include confidentiality protection, fast corporate bank account services, and many other benefits that are actually quite difficult to combine into one simple structure – but let’s try it!
KYC / AML transparency for acquirers
Ultimately, buyers must meet their KYC / AML obligations, which essentially means having their entire corporate structure vis-à-vis their UBOs and individual controlling individual directors, etc. Opaque corporate structure is just a letter from the regulator away from complete transparency.
It’s always best to keep things as simple as possible, both to make banking setup easier and to pass the considerably more difficult due diligence of the buyer.
Please note here: There are new visa rules for the location of traders, which will come into effect on October 15th. In short, Visa is trying to crack down on merchants who are not based in Europe and access their European card acquirer network by creating a European company. The new rules state that it is not enough for the trader to have a European company; the “merchant outlet location” must also be in Europe. What does that mean?
In general, it’s where the business is run from: where the offices are, where decisions are made, etc. It also relates to where the customers are. If the trader is not in Europe, a significant part of its processing traffic is expected to come from Europe.
There are a number of other requirements and conditions, but the basic idea is that merchants who want to use acquiring services in Europe should have a good European operation and / or European customers.