About payment gateway options for non-US citizens and registering a business.

[Tolis]

Hello all,

I am based in Athens, Greece and I am building for the last months an ecommerce website in Shopify and I am trying to add a payment gateway provider for accepting credit cards. Unfortunately I got rejected from Authorize.net after they sent me some questions to answer about my business model and if it includes dropshipping, what do I sell, where is my bank based, my website URL and the currencies I want to transact with. The reason for getting rejected was, as they told me, that they don't support my business model (I told them that I was dropshipping) and after I sent them another mail they told me that they don't support European Merchants. Then I applied and got rejected by Worldpay because they said they don't support my region, although they are both on Shopify's list for Payment Providers supported in Greece. As I read on forums, you may get rejected if your business model is based on dropshipping because it is considered to be a high risk business? Also, for the moment I haven't formed a company but I am having this website as an individual and I also read that it is best, if not necessary, to have a company. So I would like to ask the following questions because I really need to be accepted by a payment gateway and move on with my project.

1. Do I need to have a business registered before I apply for Authorize.net or any other payment gateway or I can do this as an individual with my home address, bank account and phone number?

2. If I need a business, does the business have to be registered where I live or I can create a company in another European country with a related bank account or even an LLC (You can create an LLC online but the problem is that I have to go to the U.S to create a bank account)? Shopify doesn’t accept Payoneer accounts where you can have a virtual U.S account, so in order to have a real U.S account you must go to U.S and open one. Is it going to be a reason for getting disapproved if my legit company is based in a different place from the one I live in?

3. Is dropshipping a reason for getting disapproved? As I've been reading in forums, payment providers don't really like dropshipping and what should I do in this case?

4. Can you please suggest the best option for someone that is a non-U.S citizen? I see that a lot of people that don’t live in the U.S have this problem and don’t know what to do.

Thank you very much, any answers will be appreciated.

[Nick]

Hi Tolis, 

Nick here from Shopify. 

Really good questions which are essential to have figured out to get your business up and running. 

The first thing I will address is the payment gateway. Shopify is partnered with multiple payment gateways based out of Greece which you can see here which you mention above. I will mention it to the team about the Gateway that said they did not support your region even though they are on the list. That does seem very strange. One thing to note is that it really is up to the gateways and out of Shopify's control on whether or not they decide to work with you. Let's look at the questions you asked and address them below:

1. This is something which would be best talking to Authorize.net directly about if your home address and bank account are enough.  Personally, I would recommend having a registered business regardless for legal and tax reasons. 
2. Again you would need to double check with Authorize.net or the gateway you are planning to use to be sure if this is something which works with their respective gateway. My own advice would be to set the business up in your own country again for legal and tax reasons but also for simplicity. Having a company registered in the USA could be more complicated than it's worth, but if you find a way for it to work, that is also great. 
3. This is a tough one as there are many different types of dropshipping. A third party gateway would have their own terms of service and policies that are not familiar with to Shopify. Dropshipping is a common aspect of e-commerce so this is something I would not expect. Your best next step here is to investigate a gateway you would like to use to see if this method of selling is allowed. 
4. My advice to you would be to register your company as a business and set up a business bank account and then investigate the payment gateway you would like to use. It is how I did it with my own store and I am also based outside of the USA. I believe it made the entire process easier and I felt more organized from the outset. You will need to set up a registered business at some stage to declare your taxes and doing it from the beginning that will also help you with another aspect of the setup process makes the most sense. 

I hope this helps and answers your questions. Please don't hesitate to reply and ask if you have any other questions or need anything clarified further. 

All the best, Nick

[Tolis]

Hi Nick and thanks a lot for your reply. I understand that payment gateways have their own rules and terms of doing things but I believe there should be a kind of protection or at least a warning from Shopify that it is not that easy for non-U.S merchants to be accepted from some payment gateways. I have spent 10 months building a website and now i am having difficulty to find a payment provider and I see that there are a lot of people outside the U.S having the same issues with me. And if we assume that creating a company is not that difficult and in the end it can be done, being rejected because you dropship is a real joke. Thousands of people use dropshipping and I really doubt all of them have a company registered. Maybe they use only Paypal? Maybe, but they lose a significant percentage of their potential sales.

In any case, thank you very much for your response and I have some more questions to ask you.

1. When you say that there are many different types of dropshipping what do you mean? Can you please explain a bit more?

2. I am really scared to contact a payment provider and mention that I am dropshipping because I have the feeling that I will be immediately rejected. If you check for example Stripe's terms and you go to prohibited business section you'll see they have dropshipping as high risk business. And I think that many major providers have placed dropshipping into this category of high risk business.

3. On the other hand I don't want to lie about my business. I want to create something legit and move on with this. Do you think maybe a combination of wholesale and dropshipping could work or do you have any other suggestions?

4. LLC creation seems also very complicated to me and I think you are right about this. I also have a problem with the bank account, since I have to be physically present to open one. My next choice would be to open a company in another European country like Bulgaria or Cyprus. I wish I could open  a company in Greece but it would eat all of my profit. 30% taxes + 50% prepay the taxes for next year + 5% of something I don't remember + insurance. In other words I could end up paying 70% - 80% of my income. If you add the cost of the products, advertising, monthly subscriptions and gateway fees then you can understand that I will be working for the goverment, not me!! In Bulgaria taxes are 10% flat and Cyprus 12%.

5. So, do you think the best is to communicate with a gateway provider and ask them if it is acceptable to open a legit company in Bulgaria for example and what can I do about the dropshipping part?

Thank you

[Nick]

Hi Tolis, 

No problem at all and thank you for your feedback, I completely understand that it is difficult and will deliver your feedback to the relevant team to make them aware of it for future consideration. Let's take a look at your new questions below:

1. First of all, great question. There is what I believe is the most common type of drop shipping which is connecting with a service who works alongside a large product provider such as Ali Express where you display their products on your website and when a customer orders it comes directly from the Ali Express warehouse for example. The other. Another type of drop shipping is print on demand (POD). This is when you connect with a print on demand service and provide your own designs but when a customer makes an order for a product, the drop shipping POD service makes it upon the order and ships it directly to the customer. And the last style that I'm familiar with is similar to print on demand but is working with a supplier and having your own product made but the supplier can also ship the products for you if the orders come in. 
2. I understand where you are coming from with this, I think by having a registered business with the government and a business bank account, it can help prove your case that you are a legitimate business and are serious about your store which can make it more likely for a payment gateway to deem your situation to be as high risk as others.
3. I agree with you here and don't think you should lie in any situation to do with your business as it could always come back to you at some stage. Honesty is definitely the best policy.  As well as proving you have a registered business and bank account, a combination of wholesale as well as dropshipping will no doubt help your situation. 
4. Registering a business in other countries is something I am not very familiar with. If you believe it is better and it can work by registering in another country, then go for it. I would always recommend doing it in your home country for simplicity reasons. I would suggest talking to your local tax office or a professional accountant about this to know all of your options. 
5. Yes, I honestly believe your best move forward is to register your business and set up a bank account for this business and use this to help and prove to a payment gateway you would like to use so they will accept your business to accept money for your store. A business plan might also be good to do as extra proof of legitimacy to show the payment gateways how serious you are with your business. 

Any other questions, just let me know. 

All the best, Nick

[Tolis]

Thanks for your support Nick, I'll register a business then and apply again for a payment provider.

All the best to you too

Tolis

[Nikitas]

Αποστόλη καλησπέρα , πως μπορώ να επικοινωνήσω μαζί σου; με ενδιαφέρει πολύ το shopify και εχω καποιες απορίες σχετικά με την Ελλαδα και με το παίζει εδώ. 

Το email μου είναι tehnick@hotmail.gr

[Spectrumcollect]

DId you end up being approved by anyone in the us?