Banks and other financial institutions regard IT businesses as high-risk ventures, which complicates the procedure of opening an account for company owners. It may sound surprising that an IT company is treated on a par with a Forex, gambling, or brokerage undertaking. Still, this fact should definitely be taken into account when you select a bank and a country where you want to receive financial services. The choice of a proper destination is just as important as banks and countries set different limitations as to the jurisdiction where the business is registered and the residence of its founders or shareholders.
Business Accounts for IT Companies
IT business owners rarely expect to be turned down when they apply for a bank account to carry out perfectly lawful operations. This niche is extremely popular in the present-day world, and it is commonly believed that banking institutions should welcome such customers.
Why do refusals occur so often, then? Well, we cannot exclude standard errors made by applicants, such as typos, mistakes, provision of false information, and so on). Second, the bank can make a negative decision due to some specific considerations related to high-risk businesses. If we take IT companies, the circumstances below may result in refusals:
- Banks want their potential customers to confirm the source of their income and the sphere of their activity. This is no whim as they simply care for their reputation and implement compliance control norms to adhere to financial fraud and anti-money laundering standards.
- IT companies do not engage in a high-risk area per se, but they may have connections with risky businesses. For instance, its employees will develop software for some dubious operations to be carried out by a third party or provide hosting services to fraudsters.
- Banks must verify the origin of funds, and they may require IT business owners to provide a contract and company documentation containing the addresses and names of partners and assets. This is not a mere formality but a necessary step to ensure compliance with financial fraud and anti-money laundering standards. However, it can be challenging for an IT company that develops various mobile apps to provide agreements with potential customers in all cases.
- An IT company must have a website that the bank will check in the majority of cases. And even if the information provided there is clear and understandable, who can say for sure it is true to life? The purpose of the software cannot be tracked in 100% of cases, and neither can the subject of transactions be verified in every instance, which may result in fraud.
All of the above does not mean that an IT company cannot set up an account: some banks establish special conditions for high-risk companies. These may include higher service rates, requirements for the business to be physically present in the country where the bank is located, or more stringent transaction checking.
Destinations Where IT Companies Can Open Accounts
If you know where to go and what to do, you can open an account for your IT company in virtually any country. Let’s consider all the alternatives:
- Banks and payment systems in Europe and the UK. Some of them provide services to high-risk businesses on certain conditions: you may need to confirm all of your operations and undergo stringent due diligence that covers your company and partners. In the majority of cases, they agree to provide banking services to companies registered in EU and EU-friendly countries.
- Banks and payment systems in certain CIS countries. For example, banks in Kazakhstan open accounts for non-resident IT companies, but you should expect higher service rates.
- Banks in Asia and on other continents. This is an excellent option for IT companies that carry out operations in many countries. Mauritius, some African countries, and Singapore are the jurisdictions we would recommend to IT businesses.
- Global payment systems and offshore banks. This is a promising option for high-risk businesses that want to apply minimum efforts.
The prerequisite for a successful account opening is the assistance of a qualified expert who knows all the ins and outs. You can find one on this trusted portal or address a specialist you know.
Opening a Merchant Account for IT Businesses
IT is an industry that is not directly related to any physical objects, assets, or territories, like warehouse premises or a production site. Its geography spans everywhere, making it possible to work with customers from anywhere in the world.
The first step is to create the company’s website. However, if you work with different currencies, countries, laws, and continents, you will need to consider how to accept payments. The obvious option is to use cards and transfers via your website.
Most business owners open merchant accounts at the same time as corporate accounts. If you have a merchant account, you will be able to accept payments from customer cards (in this case, the data is entered on the website) or use a POS terminal. You will set up the same process as in any Internet store: input, transfer, and confirmation.
Not all financial institutions are prepared to open merchant accounts for high-risk businesses, including the IT sphere. To simplify the formalities, we recommend opening a corporate and a merchant (also known as acquiring) account in one institution. Make a careful study of the conditions or products offered by a particular financial institution or payment system and choose wisely.
Keep in mind that the payment system you select should be linked to a bank or allow you to open IBANs outside its system so that you can open a corporate and merchant account in the same institution. It rarely happens in practice, though, so you usually have to use two financial institutions to cater to all your business needs.
Ensured Account Setup for an IT Business
When it comes to financial matters, a 100% guarantee does not exist. However, you can minimize the risks of being refused by setting up an account and registering an IT company at the same time! That is, establish your IT business in a country that offers beneficial tax rates and open a bank account for it within the same time frame.
It is much easier to register a company than to obtain the bank’s approval, so it requires special attention. You can click on the above link and discuss the possibility of pre-approval with an expert (for free!): you apply to several banks and select the one that is ready to onboard you.
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