News / 2020 / How to set up your e commerce shop in Cyprus

How to Set-up Your E-commerce Shop in Cyprus

In light of the current global pandemic, many people have been forced to work from home as many businesses have shut their physical operations. One of the few industries that have taken advantage of these measures is the e-commerce business.

Many retail businesses, from fashion to technology, home and garden or even consulting services have been forced to turn their business into online shops as people could not visit their shops physically. In certain cases, e-commerce shops were able to reach geographically new customers, compared to their local customers, as they could advertise their products online to various countries. However, certain e-commerce business owners still struggle with setting up their online business; especially when looking at tax matters and online banking and merchant accounts.

In this article we will walk you through the steps of setting up your ideal e-commerce shop and having an effective Electronic Money Institution (EMI) for accepting bank payments.

Major obstacles faced by new e-commerce businesses

Even though e-retailers can be working from home without the need to rent a space to display their products, they still need to invest into their business. The most important investment is setting up your online website and shopping card.

The rest of the challenges that e-retailers face, do not have to do with money but the operation of the business. One of them includes the compliance issue of setting up a Bank account and Merchant account. Opening a Bank account for your business is not as easy as someone would think of, especially with a traditional bank. Never-ending compliance issues restricts new entrepreneurs from establishing their business as they fear of losing access to the financial system of their company. Being labelled a high-risk business could cost you your bank or merchant account leading to the prevention of accessing your revenues.

As we all know, the world is shifting away from cash and is leaning more towards cards, especially when shopping online; if a customer is not offered their preferred digital payment method they will not proceed with the payment and will look for another online shop.

Online retailers should be able to embrace various digital wallets including Google Pay, Apple Pay, PayPal and more. Aside from that, new digital payment platforms are being introduced all the time, being able to keep up and accept a wide variety of them, will keep you in the competition with other e-commerce businesses.

Why you should register your e-commerce business in Cyprus?

First of all, Cyprus is a member of the European Union and is well known for its favourable tax status, this makes e-retailers to access the second-biggest economy in the world freely. Adding to this, Cyprus has one of the lowest corporate tax rates in the European Union, being 12.5%. Last but not least it is a distinguished place for shipping, logistics and fintech.

These are some of the many reasons that companies choose to register their company in Cyprus, not to mention its fast economic growth and its ideal geographic location, as it is at the intersection of Africa, Asia and Europe.

How to Register your Company in Cyprus

You can register your company in Cyprus hassle free and from the comfort of your home as it can be done online.

The first thing that you will be done is checking the availability of the name. Next, is filling up all the required documents as well as to submit them to the Department of Registrar of Companies. We will make sure that you are registered with the tax department and have your unique VAT number. If you would like to know more about the process of registering your company please click here.

Having an agent like ourselves to help you with registering your company is mandatory as you will need someone to solve all the legal and tax requirements of the company. Those include having a registered address located in Cyprus in order to have the statutory records or any other documents ready for review. Other than that, having a local secretary who will take care of any statutory and regulatory requirements is also compulsory. Adding to this, limited companies are obligated to include financial statements audited or certified by officially authorized auditors or accountants.

Setting up your e-shop

Now that you have successfully set-up your company in Cyprus, we focus on what else is needed your e-commerce business.

A set up includes the formation of the company, your corporate bank account, your tax and VAT filings, your domain and last but not least your payment gateway. Being able to accept credit card payments online is a crucial part of your online shop. If the process is not easy, it will scare clients away. For this reason, we have a specialised banking department who can assist you with the best solutions for your business.

What are my banking options? Where should I open an account?

An online payment system is your key to success of your online business. EMIs (Electronic Money Institutions) are operated in an electronic online platform which also offers the use of debit cards. Adding to this, you can get an IBAN in a few simple steps and send and receive payments on behalf of your company. Adding to this, EMIs are suitable for storing the funds of your business on a separate account.

Why not a normal traditional bank?

As mentioned previously, it is not easy to open an account with a traditional bank as they have become cumbersome and it is very difficult to work with. They require customers to fill in numerous forms before even considering to open an account for them. Not only that, but it is riskier to have a traditional bank account as it could be closed down in no time and destroy your business.  

EMIs are a great alternative to traditional banks as they are considerably smaller in size which makes them operate faster and without the need to physically meet their clients. Having a company registered in the EU, especially in Cyprus, makes it much easier as it is a preferred jurisdiction for EMIs.

How should I use an EMI for my e-business?

As discussed earlier, EMIs are faster and simpler, even if in some cases they could charge you more than a traditional bank, they are considered more efficient and prompt. The following 4 simple rules should be followed in order to be accepted:
  • Prove that you are a legit business with good structure and a solid image.
  • Explain what your business does and provide estimated projections.
  • Be ready to hold a reserve account. A merchant account may require you to set up a reserve account and give access to them in case of future losses or other unexpected financial issues of your business.
  • Always have your supporting documents such as a CV, utility bills, Education certificates ready as due diligence is a crucial part of your bank account set-up 
Having a large amount of funds just sitting in your bank is uncomfortable for many owners, nevertheless we have a simple solution for that, so no need to stress about it. Luckily, you can periodically transmit funds to your personal account as a dividend.

We provide regulated EMIs that follow all the necessary rules and due diligence procedures and ones that offer better protection against any sudden account closures, compared to a traditional bank.

What should I do next? I need a Merchant account asap!

The first thing we need to do is to assess which merchant account is right for your business and then establish the payment processing system. There are several Merchant Account solutions with various banks and providers. For this type of business we have solutions for all major debit/credit cards such as VISA, MASTERCARD, and AMERICAN EXPRESS.

These payment providers can be integrated into your website which will allow your customers to place their payment directly on your website. Following that, your clients will be directed to the secured payment site of the card processor, where the landing page will be custom-made to fit to the design of your website. Once the payment is successful, the client will receive a confirmation email of their order.

Each merchant account provider requires different fees depending on the volume and size of the transactions. Having a large network of contacts, we are able to offer you several solutions at the most advantageous rates and help you with the selection of the best solution for your business.

Are you excited about structuring your online business the right way?

In this article we have explained the best way to structure your online shop in 2021. Our team of experts is here to advise and assist all e-commerce entrepreneurs with finding the most advantageous solutions and take their business to the next level. With our professionalism, confidentiality and experience we can offer a one-stop solution even in the most difficult situations.

If you would like to know more about our structure and how to accept payments for your website the right way, contact us now va the form below! 

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