IN THIS SECTION
- ISP & Hosting
and Management Systems
- Certification and
Anatomy Of A Payment
of Offshore E-commerce
of Offshore E-commerce
Professional and Financial Services
Offshore E-commerce Applications
With an offshore
location, the actual sale will traditionally
have taken place on the local server to avoid
any possibility that the transaction could occur
in the buyer's tax jurisdiction. However, initiatives
from high tax countries such as the US to counter
terrorism and money laundering have increased
the scrutiny of payment methods such as offshore
credit cards, and may therefore compromise tax
privacy for the customer.
payment method is, nevertheless, likely to be
credit/debit cards, and the software employed
to process the payments should:
- Establish contract
terms and make a contract
- Perform the
transaction in a secure environment such as
SSL or SET
- Handle the
credit card payment transaction including
- Integrate the
sales/payment process into order management
with a customer database
In order to avoid
the need to run complex payment processing systems
on its own web-site, a company can outsource
this function to a third party organisation,
of which there are a number. The customer is
transferred to the third party processor at
the moment when sensitive details need to be
entered (credit card numbers; other personal
were aware that there could be tax risks in
allowing payment to take place in a 'third party'
jurisdiction, or possibly in an unknown jurisdiction.
Perhaps partly for this reason, payment processing
was one of the activities which offshore jurisdictions
began to offer directly to users in the initial
stages of offshore e-commerce.
did not take off as initially anticipated, with
jurisdictions particularly hurt by the focus
on securing and regulating international payments,
since they were already in the public eye as
a result of the work of the FATF and the OECD.
Only the most advanced and respectable jurisdictions,
such as the Isle of Man or Bermuda, have been
able to welcome e-commerce business with any
confidence that adequate payment mechanisms
can be put into place.
lack of adequate banking support for offshore
e-commerce has been to some extent compensated
by the emergence of the aforementioned third-party
payment gateways, the best-known of which is
Pay-Pal, but even these services are now being
threatened by legislative attacks from tax authorities
and law enforcement agencies, with the United
States, as is often the case, leading the charge.
two main US threats to the workings of the international
payments system at the retail level are the
Internal Revenue Service and the Patriot Act,
which offers the US law enforcement authorities
plenty of opportunity to prevent financial institutions
from offering or participating in international
payment systems - and since US institutions
are all-pervasive in international payments,
that means a major impact for offshore jurisdictions
which are hoping to host tax-efficient retail
the Patriot Act, the Treasury Department introduced
a new set of rules in April, 2002, that extended
its provisions for banks and securities firms
to credit-card companies, mutual funds and wire-transfer
firms. The regulations required the firms to
implement comprehensive money-laundering compliance
programs. Among the provisions, companies were
required to designate a special compliance officer,
train employees to detect money laundering,
commission independent audits, and establish
policies and procedures to identify risks and
minimize opportunities for abuse.
Act requirements are tough enough for domestic
transactions, but are potentially much worse
for overseas transactions.
Autumn 2006, the US Congress created further
international shockwaves when it approved legislation
effectively banning all online gaming, by making
it illegal for banks and credit card firms to
make payments to such internet operations.
- A quick overview of the tools, solutions and
facilities needed by companies locating e-commerce
or e-business operations in an offshore jurisdiction.
- ISP and Hosting Services
- The facilities you should look for in an offshore
jurisdiction to support an Internet e-commerce
or e-business presence.
Communication and Management Systems - The
front-end systems you will need to communicate
with your customers or trading partners including
sales and exchange tools.
- Certification and
Security Services - Supporting e-commerce
and e-business services with certification and
security facilities from an offshore jurisdiction.