Over the last several months, a noticeable trend has emerged: several of our U.S.-based merchants have decided to “pick up shop” and relocate to European countries. On the surface, this sounds idyllic. I imagine some of my favorite clients sipping coffee or wine at sidewalk cafés, embracing a slower pace of life. But what’s driving this Great Digital Exit? This month, we look at the reasons behind this trend, as well as the benefits and challenges that come with such a move.
Why Are U.S. Merchants Leaving?
Moving your business abroad is not a magic fix. You’ll still be navigating global KYC protocols, maintaining full card brand compliance and reporting to the IRS.
There are several key factors prompting adult merchants to relocate their operations overseas. One of the main issues is the disjointed array of U.S. age verification (AV) laws. Regulations vary significantly state by state, and some state laws even impose criminal penalties for noncompliance. Unsurprisingly, this patchwork of requirements is causing confusion and concern. While many other countries are also implementing AV regulations, the EU seems to be taking a more collaborative approach that considers user privacy and accepts input from the adult industry.
Another issue is the unstable U.S. banking environment. Currently, only two large U.S. acquirers — Esquire and Merrick Bank — are willing to set up accounts for adult businesses. A few smaller banks still operate in the space, but they are highly selective, focusing on high-volume merchants. U.S. acquirers face the same uncertainty as merchants do, as they strive to navigate AV laws and ensure full compliance with the Visa Integrity Risk Program and the new Visa Acquirer Monitoring Program.
Thinking of Making the Move?
If you’re considering relocating your business outside of the U.S., there’s a fair bit of footwork required. Here are some key requirements for laying the groundwork.
- Choosing your jurisdiction: Look for countries that are tech-savvy, tax-friendly and adult-industry friendly. Popular options include Cyprus, the Netherlands and the Czech Republic. If you’re physically moving, you might also want to think about what kind of lifestyle you personally hope to lead.
- Setting up an in-country corporation: You will need to register your business locally. Your EU acquirer will require a full corporate Know Your Customer (KYC) package, including documentation on the ultimate beneficial owner (UBO) and proof from the EU business registrar.
- Setting up an EU-based bank account. This is required for deposits. EU acquirers won’t wire to a U.S. bank or outside their jurisdiction. You need to register for value-added tax. Your EU bank will expect proof of tax registration within your selected country.
- Secure a local address. If you’re physically moving to the country, your residence can be the official address if you don’t plan to open a physical office. If you’re not personally moving, you’ll still need a valid local office address and a lease agreement to present during the onboarding process.
- Designate a local director. Someone with signing authority is required. It’s a bonus if you also have in-country staff. You will need to provide passport and utility bill documentation for directors and UBOs. The ultimate beneficial owner (UBO) can reside outside the country.
Lastly, be aware that card brand compliance rules travel with you. Card brand rules around content moderation and age verification apply globally. Moving offshore won’t exempt you from U.S.-style AV expectations.
Don’t Forget the Tax Man
Even if you move your business abroad, if you are a U.S. citizen, you are still required to report worldwide income to the IRS. A good international tax accountant can help you avoid double taxation by leveraging foreign income exclusions or tax treaties. Also, if your name is on a foreign business or bank account — as mine is at Segpay in our EU/U.K. entities — you’ll need to file additional IRS forms with your annual return.
The Upside of Going Global
Yes, moving your business is a major change — but there are some great potential benefits, including more banking options. In the EU, there are more acquiring banks in competition for your business. Processing costs are substantially lower.
In addition, Visa and Mastercard are regulated in Europe and the UK, and all banks are required to be transparent on costs and margins. Imagine knowing what your U.S. acquirer’s markup actually is and what your U.S. acquirer is making on your account?
Finally, EU transaction approval rates are higher. If a large portion of your traffic is European, moving offshore could lift your approval rates by 5% or more. That said, your U.S. traffic may decline if you take this volume away from a U.S. bank.
Balancing Risk and Reward
The Great Digital Exit isn’t just about sipping wine in Prague. It’s a serious business decision that requires careful planning, substantial investment and a strong understanding of global compliance. But for many adult merchants, the benefits — better banking access, higher approval rates for EU traffic, and clearer regulatory frameworks — are starting to outweigh staying stateside.
Moving your business abroad is not a magic fix. You’ll still be navigating global KYC protocols, maintaining full card brand compliance and reporting to the IRS. The key is to treat this like a strategic expansion, not an escape. If you’re considering relocating overseas, talk with your tax, legal and banking partners early.
There’s no one-size-fits-all approach — but for certain merchants, setting up in Europe or somewhere else abroad may unlock long-term operational stability in a rapidly changing industry.
Cathy Beardsley is president and CEO of Segpay, a merchant services provider offering a wide range of custom financial solutions including payment facilitator, direct merchant accounts and secure gateway services. Under her direction, Segpay has become one of four companies approved by Visa to operate as a high-risk internet payment services provider. Segpay offers secure turnkey solutions to accept online payments, with a guarantee that funds are kept safe and protected with its proprietary Fraud Mitigation System and customer service and support. For any questions or help, contact sales@segpay.com or compliance@segpay.com
