Setting up US bank account for non resident

[cell_man]

Gents,

sorry something non EV related.

I really need to set up a US bank account for receiving Paypal. Now that I've been using their wonderful services for a while I can see why they are so big, they are not only charging 3.4% commission to receive funds they also have about 2.5% commission to transfer your money into a currency that you do not want. Then you get hit again by your bank for transferring it back into USD. What a complete rip off.

Any advice about setting up a US bank account would be greatly appreciated to reduce their commission from it's present cost of circa 6-7% to a just about acceptable 3.4%

 

[Tiberius]

Cell_man,

Where are you?

Most of the big banks will give you a US$ account, but it will come with business rather than personal type of conditions and charges.

You could get a local bank to operate a $ account, or try to get a US bank to open an account for you. I've tried it both ways. I also have the same issue here with UK Pounds versus Euros.

Issues to watch out for are:
Charges - both fixed fees and per transaction
Interest rates - expect 0.001% but watch out they don't go negative
Ease of remote operation - you may only be able to do the basics via internet
Speed of transfers - a US$ account that is not actually in the US may have slow transfers.

And all that is before the questions of tax and reporting.

Nick

 

[cell_man]

Hi Nick,

Thanks for the reply

I've already got a multicurrency business account in HK where I have a registered Business and I stay in China. The problem is Paypal. If you receive funds in USD they will not allow you to withdraw the funds in USD unless it goes to a US account. Paypal conveniently also gives you a rather crap exchange rate. So I buy in USD, sell in USD but Paypal requires it is convereted to HK$ before i can withdraw my money minus the 3.4% commission they charge.... So even after they've hit me for about another 2.5% I'll likely get hit again by my own bank to transfer it back to USD. The only way to get around it is to get a US account. I'm not making the sort of margin that can allow any unnecessary additional costs.

 

[ryan_lirui]

That's tough man, I know there's a few Bank of America locations in the area. You could open an account with them there. You will still be subject to money transfer restrictions that China imposes on transfers out of the country, and will be required to prepare a minimum $1000 USD balance to open the account, but perhaps it will provide you with the american account qualificaiton you're looking for.

Here's the address of one of them:
17/F Azia Center, 1233 Lujiazui Huan Lu,
Lujiazui
near Fucheng Lu
陆家嘴环路1233号汇亚大厦17楼
近富城路
6160-8888

http://www.bankofamerica.com.cn


Also, in case you're interested the american chamber of commerce in Shanghai has a directory of local banks you could look into:
http://www.amcham-shanghai.org/AmChamPortal/MCMS/Presentation/ChinaResources/Article.aspx?ResourceType=1&Guid=%7B34722033-2677-41D1-8972-9AAD9BF957CF%7D

 

[cell_man]

Thanks Ryan I'll have to look into that. My Branch of HSBC is also in Lujiazui so I'll have to get over there this week and speak to HSBC and BOA to see if they can help. I've seen stuff on the internet about this but thought some first hand experience might be better than handing over money for some special scheme/ebook that some are offerring...

 

[jonescg]

Hey paul, it looks like you're the poor bunny being slugges with the fees as my last transfer to you went prettymuch at the exchange rate, plus whatever Mastercard chooses to charge per transaction (0.8% or something?). Would a bank to bank transfer be easier? I did that when I bought my Agni motors from India. Went very smoothly (except FedEx charged me the customs fee of $532!!!)

 

[cell_man]

Hi Chris,

yeah wire transfer is much better for me. The way it stands now paypal is taking about 6% commission and then I'm left with a currency I need to then change back to USD. They're very clever how they structure their charges for sure. Well at least our money is going towards a good cause that makes the internet a safer place to shop and paypal in corporate jets :x

 

[John in CR]

HSBC has Moneygram, which can often be the cheapest way to send depending upon amount. Paypal is convenient for buyers, but those buying cells from you are often looking for the cheapest way. Direct bank-to-bank wire transfer can work too. If you can't resolve the fee issue with banking arrangements, I'd structure prices as price plus payment fees for different methods, so the buyers pay for their own convenience or security. ie pass those costs on directly instead of buried in your pricing. When I'm ready to buy from you, I'll send $ by the cheapest means possible to get the best deal.

John

 

[pwbset]

I'm also not opposed to wire transfers as long as I know it's a reputable seller. Pretty sure with your transparency of information here and once you're a little more established selling your cells people won't have a problem going direct to you. &$^% Paypal.

 

[johnrobholmes]

Have you looked into western union transfers? For the pricing of one good chunk of cells, the wiring fee is very low to china. I send my money in USD.


Otherwise maybe there is a way you can open an online account with a bank in the US? Getting the money out is still a problem though, gotta be some way to transfer the money around effectively.

 

[Tiberius]

When I said big banks, I was thinking of HSBC. That's who I use for most stuff and if they can't do it then......

(For other readers: HSBC is officially a "British" bank but it stands for Hong Kong and Shanghai Bank.)

These big banks are good for intra country, same currency transfers, but they charge a hefty fee for cross border stuff. That's what Paypal has been exploiting.

A lot depends on what size of transaction you are typically doing. It might be worth looking at taking credit cards.

Nick

 

[j3tch1u]

paul, i think you need to open an intl paypal account to get around the us bank restriction. try opening another paypal acc with an hk address and bank acc.

 

[mwkeefer]

cell_man,

I can empathize with you about paypal (and I am in the USA) and realize how frustrating it must be in china!

Since your dealing with US buyers (and currency) and US prices for S&H and probably some of your parts? the withdrawl conversion to yuen after paypal sticks you with the 2. whatever percent fee is eating into your margin and will cause higher (or is) prices to the consumer (which you seem to want to avoid, either raising prices or loosing profit... both are fine). I assume you are withdrawling funds to pay local labor, materials, etc costs?

If I understand what your trying to accomplish, to open an actual US based account in these post 9/11 times (USA) and the current political / economic climate in china is a bit more difficult.
I have ZERO experience from the chinese side of this (I've done the inverse) but I can tell you than any normal US bank requires:

A.) A US Based Business (for a business account)
or
B.) US Residency (for a personal account)

It seems to me that leaves you with 3 options (because even the larger banks will have the same requirements to open an account in US for a citizen of china who is not present or living in the US):

1.) Find a US Citizen to partner with, form a LLP or LLC here in the US (Delaware or Nevada would be best). This will be your US Business and then the partner can simply open an account on your companies behalf which is a true US account. There are tons of possible advantages to this (real merchant account for accepting credit cards etc) but there may be some legal issues.

2.) Start a US based business on your own in Nevada or Delaware and use a "Registered Agent" service who forwards your mail. I do this within the US to have a Nevada corporation and address for that company and it's fully legal (for a US citizen within the US, not sure about from China). There are tons of services available, you would want to look at the Delaware Division of Corporations... they have referrals to Registered Agents (who can do the incorp process for you or you can do it yourself, it's not that hard).

3.) Get a temporary VISA and come setup residency in the USA then open your account. I am assuming this isn't a practical option for you.

Anything you do should be checked with an attorney on both sides but you can contact the US State Department - Overseas Business Affairs Division on Monday at 8:30AM (PM your time) at 202-647-4109, they can advise you on the legalities from the US perspective and perhaps even offer suggestions or resources to assist you in doing this... there are TONS of programs for US citizens to start businesses importing or exporting (or doing anything really), even more money if you are a minority.

Another venue of support for assistance with this would be contacting the business schools in the US, schools like Wharton (Philadelphia, PA) and the like often offer free resources with everything from business plans to NAFTA import/export assistance... The Asian population at Wharton is overwhelming so even if the school has no official program, the student advisors office could likely put you in touch with some students who would enjoy the challenge and reward of assisting you in getting your business established... think about it brother, you will be a Multi National Corporation ! (I used to be, long ago)... there is somthing satisfying (even if you make squat) about being able to tell your family you are the President of a Multinational Energy Technology Company.

Sorry the State Department is closed (as is division of Corporations in Delaware) or I may have more information to provide you, sadly my own personal resources lack in the business or civil international law - if you had a US friend in china who needed a good criminal defense attorney... gotcha covered Richard Atkins Esq. of Philadelphia, PA - he was the lawyer who got the american shoplifter off with a public caneing... knowing some of the details of what the boy was facing I think you would agree - he got off VERY lightly.

Hope this helps, let me know if I can help clear anything up... I've seen what Luke has been doing with your cells and your overall very excellent attitude and figure if I can help... why not.

Regards,
Mike

PS: I assume the benefits of having a US presence are obvious but amongst them I would think:

a.) Payment to yourself via any method you choose (within the law), probably means wire transfer, western union, etc... much more flexible

b.) Opportunity to setup warehouse (rental, partner?) to store supply here in the US. This means lower cost pallette and freight forward style shipping of the bulk and direct to consumer shipping for the remainders... this could be a double edge sword with hazmat and all but it bears investigation (or maybe a hazmat certified partner who also has storage space available and bulk rate shipping in place already?)

c.) Accept credit cards to a US company via a direct merchant account linked to your US corporate account... the rates will be lower, you have much better fight back ability over paypal and the money will be in a real account not a paypal account... you will have ability to make any business transaction (within the law) that you want on behalf of your company.

d.) Overcome fears of customers who will not use Western Union for LARGE money purchases (ie: bulk), I personally will not Western Union any vendor, manufacturer, etc. I would sooner (and do) perform a normal internaltional wire transfer (which isn't cheap either).

These are just a few of the pluses, I don't know the legalities of any of the above (the offices were closed) but I believe this is the best direction to move in to acheive your goals.

 

[John in CR]

FYI everyone. Moneygram works like Western Union but costs far less. WU is 3 to 5 times as much in many cases. eg $1,000 sent to China from the US is $11 fee. $2,000 is $16, and less than 1% is incredibly cheap. You have to get into sizable amounts before even wire transfers become cheaper. The drawback is the complete lack of security for the buyer. That's where building a track record pays off in a big way for everyone. It requires trust. For me for these kinds of relatively small amounts I have no problem trusting my fellow man, especially after seeing activity here on the forum that gives me near 100% faith that you're out to do the right thing and maybe even make a small margin doing so.

My only concern in the whole deal is the stability and volume of your supply. I don't want to get too far along with orders to suddenly hear "I can't get any more". Any word on availability and pricing of the cylindrical cells, or are the flat ones it? I'd like to avoid the required compression, so I can use cells as part of the vehicle structure, which also makes heat dissipation a non-issue except in the most extreme performance usage and even then I doubt it's an issue with cells so spread out and so much surface available for air cooling.

John

 

[cell_man]

Thanks guys for all the advise I'll have to go through all the suggestions properly as there is quite a lot to take in. Paypal is very good and makes payments very quick but the costs.... So far I've been charging 3.4% paypal commission and the additional 2.5% is of course not good and does eat into my margin quite a bit. Maybe I should just add this additional cost if that option is wanted but I really didn't want to do that. There is no way around it using Paypal from outside USA. You can only withdraw in local currency or transfer USD to a US Bank account. I'm dreading what the HK$ to USD rate will be when i need to change back. I really wanted to stick with USD throughout as I can purchase in USD and it is pretty much fixed to the Chinese RMB so takes that whole currency fluctuations concerns out of the equation. HK$ also seems to be pretty much pegged to the USD but you still get hit on each currency exchange.

A few of the bigger customers have used wire transfer and if I put the Paypal price up to 6% that it costs it might pursuade more to choose the wire option. It's just 1 more bloody headache I could do without

 

[j3tch1u]

you might need to make a trip to the states to open a secured checking account using your passport and have withholding tax automatically deducted from your interest

otherwise if you have a us buddy you can trust who's willing to lend you his identity, all you need is his ssn and driver's license to open an account with ingdirect (good interest rates).

 

[cell_man]

I don't mind paying tax on my interest as long as it avoids the paypal tax. I wouldn't be leaving much in the USA for long enough for it to make much difference anyways. I'll go visit HSBC and BOA this week and see what they say. Fingers crossed.

 

[jag]

It is possible to have accounts in various currencies with banks in most countries. Here in Canada I have CAD and USD accounts with Bank of Montreal. I also have a CAD and a USD credit card. That way I can avoid exchange fees as far as possible. I buy USD merchandise with my USD credit card; pay that credit card from my USD account. And whenever I receive a USD check I can put it directly into my USD account. I also have a Euro account.

I used to have accounts with US banks, but it was somewhat difficult to manage them over a distance. Steer clear of anything with just a 1-800 customer service number. Here's my Citibank experience: They "locked" by account without telling me. I was trying to pay my credit card, but the payment requests were just quietly dropped three times. Therefore I lost that credit card and suspect my credit history in the US is no longer clean. When I called the customer service they told me I have to go to a US branch in person to show ID and unlock the account. No amount of explaining that I was thousands of kilometers from an office helped.

I take it you are originally from Europe. You could have a USD account with a major European bank. If you also have a Euro account money transfers among the Euro countries are free. In continental Europe and Scandinavia most purchases are paid by direct electronic bank transfer. (Paypal has less of a market share there I think) If I were to buy on ebay or personal ad and I don't suspect anything fishy I would transfer the money directly between my and the sellers bank account without any fee whatsoever.

For an account in Asia, my gut feeling is that an account in HK will be the more flexible than one on mainland China. You could have accounts in USD, Renmibi and maybe even GPB and Euro. HK is probably the place in the world with least government regulation.

While in principle it is possible to open accounts in absentia, it is usually better to go in person. You get a feeling for the place and people you will be dealing with remotely later if you visit once. Did you do some vacationing in HK yet? There's excellent hiking on Lantau, and visiting the fishing villages on the outlying islands for seafood is nice. I'm not much of a city person myself, but HK was one of the few large cities I enjoyed. (When I was in mainland China I steered clear of most anything bigger than village size, and hiked places where they didn't even speak mandarin in the mountains bordering Yunnan and Tibet.)

 

[Lyen]

Be aware that when someone is trying to trade underground in Hong Kong, their ICAC unit will usually get involved and treat you with a nice cup of coffee in their central location. Just my 2 cents.

我都是香港出生的美籍华人。 ：）

 

[HAL9000v2.0]

Use Moneybookers instead of paypal. For EU and asia moneybookers work without any problem. Paypal does not work in EU.

 

[cell_man]

Thanks Hal

I'll have a look at that. As long as customers are happy to use a service and it doesn't cost too much, it's all good.

 

[cell_man]

Be aware that when someone is trying to trade underground in Hong Kong, their ICAC unit will usually get involved and treat you with a nice cup of coffee in their central location. Just my 2 cents.

我都是香港出生的美籍华人。 ：）

I'm a British citizen but legally registered as non resident. It's all above board old chap

Use Moneybookers instead of paypal. For EU and asia moneybookers work without any problem. Paypal does not work in EU.

I've started the registration and had a quick look on the internet and saw some mixed reviews. Either very positive or very negative (they can lock account and it's difficult to then withdraw funds). I'll give it a go and see how it goes. It will work out a bit cheaper than Paypal anyway and it looks like they give you your money in whatever currency you require.

 

[HAL9000v2.0]

I have only good expiriance. I can't say that for Pay Pal.

 

[cell_man]

I have only good expiriance. I can't say that for Pay Pal.

Thanks Hal. I signed up and will give them a try.