People very often come to us with a request. Indeed, this question is relevant because, recently, banks have not particularly welcomed non-resident companies and often refuse to open an account. This pattern is visible in low-tax jurisdictions and many prestigious jurisdictions.
Today, opening an account with international banks is associated with many difficulties and can take 3 to 12 months. The list of documents and proof of actual economic activity can be impressive, and as one of our clients says, “I only have to take tests.”
Also, the current trend is that banks are willing to open to companies closely linked to the country where the bank is located. What constitutes such a connection? Some require contracts with local counterparties (e.g., Poland), and some require an office and an employee (e.g., Estonia). From our recent cases, when opening an account with Latvian banks, they ask for Estonian office/employee(s)/contracts with Latvian counterparties. In other words, banks now want to confirm that your business exists in the country of registration.
Although opening accounts with banks can be challenging, it is still one of the proven and reliable ways to get funds into your account, and it has its advantages.
Advantages of a bank:
- Guarantee of funds in accounts by state authorities (the so-called Deposit Guarantee Fund, in the EU, the coverage is 100,000 euros)
- direct work with cash (it is possible, but most banks dislike to work with cash nowadays)
- possibility to transfer money to deposits
- wide range of services
- opportunity to meet a bank representative physically and see where your funds are kept
- If, all the same, you want to turn to more modern digital opportunities, then it makes sense to think and choose an account in…
Why choose electronic payment systems?
Today, there is a powerful alternative to a bank—an electronic payment system account that allows you to conveniently, quickly, and securely make non-cash payments worldwide. You can open an account in the payment system from anywhere in the world.
A payment system is a financial and technological internet platform that does not work with cash, and all payments are made through the internet. Digitalization With payment systems, a company can accept payments from customers globally, receiving the exact unique details as in a traditional bank. The company can also use its account to pay invoices and transfer funds to subcontractor (employee) accounts. Often such services have very convenient interfaces to online accounts, which do not differ from online banking.
How to open an account with a payment system?
Before opening an account, we always recommend checking whether the payment system has a license and finding out from references that already worked. Many payment systems worked 3-4 years ago, and their sites already have a “404” error message. A natural person and a legal entity may open an account in the payment system.
Any company may become a client of the payment system.
The process itself of opening an account in a payment system is very similar to opening an account in the technology of the bank:
- you submit an application
- You provide a package of necessary documents (registration documents + the charter)
- Fill in the KYC form, where you answer the questions on your business activities
- video identification (by request)
- you open an account
There are enough cases when clients are refused to open accounts and payment systems in our practice. That’s why it is necessary to be careful with the information provided when opening an account.
Some payment systems can open an account by identifying only the manager. Other payment systems can ask for information from all beneficiaries (those with 25% or more company shares).
Advantages and disadvantages of payment systems
- Easy identification process by video connection and photocopies of the documents without sending any paper documents
- Payment systems are more flexible and are focused on modern technologies of payments, confirmation of payments, and other financial transactions
- Lower tariffs in comparison with banks
- “Soft” requirements to the availability of the actual office and employees of the company
- Account opening for offshore companies
- Some banks close the accounts when the company is sold. It is enough to re-identify in the payment system
- Payment cards can be linked to PayPal and other systems
- Have the user-friendliest mobile applications
- Very many young systems
- Risk of illegal activities
- limited range of services
- The impossibility to use the account as a deposit
- Some systems offer only SEPA transfer (only EUR) or SWIFT (only USD) and do not work with transfers in other currencies
- Only work with an internet connection
Who is suitable for a payment system account?
- Using a payment system will make your business activities much more manageable if you work with services or goods you supply worldwide. Also, payment systems are the obvious choice of freelance professionals
working on platforms such as UpWork, Freelancehunt, etc. - Professionals of this profile prefer to open multi-currency accounts in Stripe, Payoneer, Paysera, PayPal, and other systems
For medium and large businesses, an account in a payment system will help quickly start working in a new country. In contrast, the classic bank account is being opened and may be an additional channel of risk diversification.
Recommendation from Finevolution: If your customers are the whole world, open up to the world and register a payment system account!
Our team is ready to provide consultation on these issues. Our business hours: Monday to Friday, 9:00 AM — 7:00 PM. Contact us via WhatsApp, Telegram, or Viber, or submit an inquiry through our online form.
