Is a balance held by a UK payment processor a foreign financial account for the FBAR?

FinCEN has not published guidance naming payment processor balances. The regulation at 31 CFR 1010.350(c) covers an account with a person in the business of accepting deposits as a financial agency. In our reading, a balance the business can hold, top up and withdraw fits that wording and should be reported as type 'Other'. A pure in-transit settlement is less clear. Reporting carries no tax cost.

Do I report my UK company's merchant and marketplace balances on my personal FBAR?

Yes, if you are a US person who owns, directly or indirectly, more than 50 percent of the voting power or total value of the company's shares. The regulation then treats you as having a financial interest in every reportable account the company holds, at full value. The UK company itself is not a US person and files no FBAR. An owner with exactly 50 percent is not caught by attribution.

I am a US director with no shares. Can a processor dashboard login create an FBAR duty?

It can. Signature or other authority means the ability, alone or with someone else, to control the disposition of money in an account by communicating directly with the provider. A director or employee who can trigger payouts or redirect settlement has, in our reading, that authority over a reportable balance. The exceptions in the regulation are aimed at regulated banks and US-listed entities, not private UK companies.

How do I work out the maximum value of a merchant balance that changes daily?

The FinCEN instructions ask for a reasonable approximation of the greatest value in the account during the calendar year. For a processor balance, export the daily balance or payout history and take the highest figure, including any reserve shown in the account. Convert it using the Treasury reporting rate for the last day of the year. If the result is negative, enter zero.

What is the penalty for a non-wilful Missed FBAR covering several accounts?

The inflation-adjusted table at 31 CFR 1010.821 showed a maximum of $16,536 for a non-wilful violation for penalties assessed on or after 17 January 2025 when we checked it. Following Bittner v. United States, the non-wilful penalty applies per report, not per account, so one missed year is a single violation. No penalty applies where there is reasonable cause and the balance is properly reported.

Does HMRC already know about my online sales if I use a marketplace?

Quite possibly. Under the UK reporting rules for digital platforms, platform operators that connect sellers with customers report seller details and income to HMRC. GOV.UK guidance says software that only processes payments is not a digital platform, so a standalone card processor falls outside those rules. Either way, the takings are business turnover and must be reported to HMRC in full.

Missed FBAR: UK Merchant and Payment Processor Accounts

Missed FBAR filings among US business owners in the UK very often trace back to money that never felt like a bank account: the balance sitting with a UK merchant acquirer, payment processor or online marketplace before it settles to the business current account. The short answer is that a balance you can hold, top up and withdraw with a UK provider should be treated as a reportable foreign financial account, while a pure in-transit settlement is a genuinely grey area on which FinCEN has published no item-by-item guidance. Because the FBAR carries no tax and costs almost nothing to complete, we report these balances in the returns we prepare, and where earlier years were left off we correct them through a late filing or the Streamlined procedures.

This guide is written for US citizens and green card holders who run a UK business that takes card and online payments, whether as a sole trader, a partner or a company director and shareholder. It separates what the regulation says from what is a preparer's reading of it.

What does the FBAR regulation count as a financial account?

The governing rule is 31 CFR 1010.350, which you can read at https://www.ecfr.gov/current/title-31/subtitle-B/chapter-X/part-1010/subpart-C/section-1010.350. Paragraph (a) requires each United States person with a financial interest in, or signature or other authority over, a bank, securities or other financial account in a foreign country to report it for each year. Paragraph (c) defines the three types of reportable account.

Bank account: a savings deposit, demand deposit, checking or any other account maintained with a person engaged in the business of banking.
Securities account: an account with a person engaged in the business of buying, selling, holding or trading stock or other securities.
Other financial account: an account with a person that is in the business of accepting deposits as a financial agency; an insurance or annuity policy with a cash value; an account with a broker or dealer for futures or options in commodities; or an account with a mutual fund or similar pooled fund that issues shares to the general public with a regular net asset value determination and regular redemptions.

The phrase that matters for payment businesses is the first limb of 'other financial account'. The term 'financial agency' is defined in the Bank Secrecy Act itself, at 31 U.S.C. 5312(a)(1), as a person acting for another as a financial institution, bailee, depository or agent, or acting in a similar way related to money, credit or securities, or a transaction or service in respect of them. FinCEN's own filing instructions for the form put it more loosely still: a financial account includes, but is not limited to, a securities, brokerage, savings, demand, checking, deposit, time deposit or other account maintained with a financial institution or other person performing the services of a financial institution.

Two points follow that are published rules. First, the list is not confined to banks: the wording deliberately reaches a non-bank that takes in and holds other people's money as part of its business. Second, the only business-to-business carve-out in the regulation that resembles settlement is narrow. Paragraph (c)(4)(iv) excludes correspondent or nostro accounts maintained by banks and used solely for bank-to-bank settlements. That exception belongs to banks, not to a merchant whose sales proceeds sit with a processor.

Are UK merchant acquirer and payment processor balances reportable?

Here the published material stops. Neither the regulation, the FinCEN filing instructions nor the IRS FBAR page at https://www.irs.gov/businesses/small-businesses-self-employed/report-of-foreign-bank-and-financial-accounts-fbar names merchant acquiring, payment processing or marketplace seller balances. We are not aware of any FinCEN ruling that settles the point product by product. Everything in this section is therefore a preparer's reading of a general definition, and we label it as such.

The reasoning in favour of reporting is strongest where the arrangement behaves like an account. The features we look for in the merchant agreement and the online dashboard are these.

A running balance in the business's name, shown on a statement or dashboard, that persists from day to day rather than clearing automatically.
Control over timing: the merchant can leave funds in place, switch from automatic to manual payouts, or choose when to withdraw.
The ability to add funds, for example to cover refunds, chargebacks or fees, or to pay suppliers and other third parties directly from the balance.
Multi-currency holding, where sales in several currencies are kept as separate balances until the merchant chooses to convert them.
An account number or merchant identifier, a named legal entity that maintains it, and periodic statements showing opening and closing balances.

An arrangement with those features is, in our reading, an account with a person in the business of accepting and holding customers' money as an agent, which is what 'accepting deposits as a financial agency' describes. We report it on the FBAR as type 'Other' with a short description such as merchant settlement balance.

The reasoning against is strongest for a pure pass-through. Where a card acquirer simply collects the day's transactions and remits them to the merchant's bank on a fixed cycle, with no facility for the merchant to hold, direct or top up the money, what the merchant has looks more like a short-lived trade receivable from the acquirer than a deposit. There is no balance the merchant can deal with by instructing the provider, and it is arguable that there is no 'account' in the sense the regulation uses. That is a respectable position, but nothing published by FinCEN confirms it.

Most real arrangements sit between the two. The test we apply is practical: if the business could log in on any given day and see a balance of its own money that it can instruct the provider to pay out, hold or use, we treat it as reportable. If the provider's legal entity and the place where the account is maintained are in the United States, it is not a foreign account at all, so the first step is always to read which entity the merchant agreement is actually with.

Why is reporting the balance usually the safer course?

The asymmetry is the reason we lean towards inclusion. The FBAR is an information report filed with FinCEN, not a tax return. It produces no tax, and listing one more account means recording a name, an address, an account designation, a type and a maximum value. We know of no penalty for including an account that later turns out to fall outside the definition. Omission is the opposite: if the IRS takes the view that the balance was reportable, the filer has an incomplete or missing report and the civil penalty rules in 31 U.S.C. 5321(a)(5) are engaged.

There is a second, quieter benefit. These balances regularly decide whether a filing is due at all. The threshold is an aggregate one: an FBAR is required when the combined maximum value of all foreign financial accounts exceeds $10,000 at any time in the calendar year. A business owner with modest personal accounts can be pushed well over the line by a seasonal peak sitting with a processor for a few days.

Who has to report: the owner, the company or the director?

Paragraph (e) of the regulation sets out financial interest, and paragraph (f) sets out signature or other authority. Which one applies depends on how the business is held.

A sole trader is the owner of record. The merchant agreement is in his or her own name, so the balance is reported as an account owned separately, alongside personal and business bank accounts. A US partner in a UK partnership has a financial interest in the partnership's accounts if he or she owns, directly or indirectly, more than 50 percent of the interest in profits or capital.

The company case is the first gap we see most often. A UK limited company is not a United States person and does not file its own FBAR. But under paragraph (e)(2)(ii), a United States person has a financial interest in every account for which the owner of record is a corporation in which that person owns, directly or indirectly, more than 50 percent of the voting power or the total value of the shares. A US citizen who owns 60 percent of a UK trading company therefore reports the company's business bank accounts and, on our reading above, its processor and marketplace balances, on a personal FBAR at their full value, not at 60 percent. Many owners who list their personal accounts have never listed the company's, still less the balances it holds away from its bank.

The test is 'more than 50 percent'. An owner with exactly half the shares does not have a financial interest by attribution. That is not the end of the matter, because signature or other authority is a separate filing trigger. It means the authority of an individual, alone or with another, to control the disposition of money in the account by direct communication to the person with whom the account is maintained. A director, finance lead or employee who is a US person and who can log in to the processor's dashboard and trigger a payout, issue refunds from the balance or change the settlement bank details has, in our reading, that kind of authority, even with no shareholding at all. The regulation's exceptions are aimed at officers and employees of regulated banks and US-listed or SEC-registered entities, which a private UK company is not.

How do you value the balance and convert it to dollars?

The FinCEN filing instructions describe the maximum account value as a reasonable approximation of the greatest value of currency or non-monetary assets in the account during the calendar year. Periodic statements may be relied on provided they fairly reflect that maximum. For a processor balance, a month-end statement can understate a mid-month peak before a payout. We ask clients to export the daily balance or payout history for the year and take the highest figure.

Each account is valued in its own currency and then converted using the Treasury's published rate for the last day of the calendar year, even if the peak fell in the summer. The rates are published at https://fiscal.treasury.gov/reports-statements/treasury-reporting-rates-exchange/. If no Treasury rate is available, the instructions allow another verifiable rate, with the source noted. If the result is negative, which can happen after a run of chargebacks, the instructions say to enter zero. The $10,000 test is applied to the aggregate of the maximum values, so the same proceeds can be counted at the processor and again in the bank.

What about reserves and rolling reserves held back by a processor?

This is the second gap, and we have found almost nothing written on it. Processors commonly hold back a fixed sum, or a percentage of each day's sales for a set period, as security against chargebacks and refunds. The merchant cannot withdraw a reserve until it is released, so it resembles security held by a counterparty more than a deposit the merchant controls.

Our reading goes the other way where the reserve is shown inside an account we are already reporting. The published instruction is to report the greatest value of currency in the account, not the greatest value the filer could have withdrawn. A reserve is still the merchant's money, recorded by the provider in the merchant's name and returned when the risk period ends. If we are listing the processor balance, we include the reserve in its maximum value. Where the reserve is the only thing the processor ever holds, the position is finely balanced and we explain both readings before the form is signed. This is a preparer's judgment, not a published FinCEN rule.

How does Form 8938 treat the same balances?

Form 8938 is a separate report filed with the income tax return, with its own definitions set out at https://www.irs.gov/instructions/i8938. For that form a financial account is, broadly, a depository or custodial account maintained by a foreign financial institution, and a foreign financial institution is a non-US entity that accepts deposits in the ordinary course of a banking or similar business, holds financial assets for others as a substantial part of its business, or is engaged primarily in investing or trading. The instructions do not say whether a UK processor meets that description, so we decide case by case.

Two structural differences are clearer. First, the thresholds are far higher for people living abroad: the instructions give $200,000 on the last day of the tax year or $300,000 at any time for an unmarried filer, and $400,000 or $600,000 for a married couple filing jointly. Second, there is no 50 percent attribution rule of the FBAR kind. An individual does not generally report a non-disregarded company's accounts on Form 8938 merely because he or she owns the company. What may be reportable instead is the shareholding itself, as an interest in a foreign entity; the instructions should be checked for how that interacts with other forms already filed for the company. For a majority shareholder, the company's processor balances therefore appear on the FBAR and not, in most cases, on Form 8938.

How do you fix a Missed FBAR for merchant and processor balances?

The route depends on what else is wrong. Under FinCEN's rules the FBAR is due on 15 April following the calendar year, with an automatic extension to 15 October for which no request is needed. So an FBAR for calendar year 2025 filed on or before 15 October 2026 is on time, so the first step is to get the most recent year right and complete.

For earlier years, there are two routes that remain live. The IRS withdrew its separate web page on delinquent FBAR submissions in mid-2026.

Late FBARs through the BSA E-Filing System. Where the income was fully reported on the US returns and the only failure was the FBAR, the missing reports are filed electronically at https://bsaefiling.fincen.gov/, selecting the reason for late filing from the list on the form or choosing 'other' and writing a short explanation. The IRS FBAR page says that a person who has not been contacted about a late FBAR and is not under civil or criminal investigation should file late FBARs as soon as possible. An FBAR that was filed but omitted the processor or company accounts is corrected by filing an amended report for that year.
The Streamlined Filing Compliance Procedures. Where the missed FBAR sits alongside unreported income or missing information returns, and the failure was non-wilful, the Streamlined Foreign Offshore Procedures described at https://www.irs.gov/individuals/international-taxpayers/u-s-taxpayers-residing-outside-the-united-states call for the most recent three years of tax returns, the most recent six years of FBARs and a signed certification on Form 14653. For those who meet the non-residency test and comply fully, the IRS states that failure-to-file, failure-to-pay, accuracy-related, information return and FBAR penalties will not apply. The procedures are closed to anyone whose returns are already under IRS civil examination or criminal investigation.

For a company owner the second route comes up more than people expect, because the misunderstanding that hid the company's accounts from the FBAR has often hidden the company from the US return too. In late-filing cases we generally prepare the same six most recent FBAR years that the Streamlined procedures ask for, as a matter of practice.

What penalties apply if the accounts are left off?

The statutory amounts are adjusted for inflation in the table at 31 CFR 1010.821, published at https://www.ecfr.gov/current/title-31/subtitle-B/chapter-X/part-1010/subpart-H/section-1010.821. When we checked the table for this article, the column for penalties assessed on or after 17 January 2025 showed a maximum of $16,536 for a non-wilful violation and a base figure of $165,353 for a wilful violation. Under the statute the wilful ceiling is the greater of that base figure or 50 percent of the balance in the account at the time of the violation. The FinCEN instructions add that no penalty is imposed where there is reasonable cause for the failure and the balance is properly reported.

The Supreme Court's 2023 decision in Bittner v. United States settled how the non-wilful penalty is counted: it applies per report, not per account. The Internal Revenue Manual at https://www.irs.gov/irm/part4/irm_04-026-016 now records that a failure to file a compliant FBAR is a single reporting violation, while wilful penalties continue to be applied account by account. For an owner with a bank account, two processor balances and a marketplace balance, that matters. A non-wilful failure for one year is one violation, not four, though that offers no comfort if the conduct is characterised as wilful.

A worked illustration: a majority shareholder with four balances

The following is an illustration only, with assumed figures and an assumed exchange rate of 1.25 US dollars to the pound. The real rate must be taken from the Treasury table for the year concerned.

A US citizen living in London owns 70 percent of a UK limited company that sells online. She has filed US returns every year, including the company reporting, but has never filed an FBAR because her personal accounts never exceeded the threshold. For the year in question the highest balances were: personal current account 7,000 pounds; company business current account 48,000 pounds; the company's processor balance 22,000 pounds on a day in late November, with a further 9,000 pounds shown as a rolling reserve on the same statement; and a marketplace seller balance of 6,500 pounds.

At the assumed rate, the personal account is 8,750 dollars, under the threshold on its own. Because she owns more than 50 percent of the company, its accounts are attributed to her at full value: 60,000 dollars for the business current account, 38,750 dollars for the processor balance including the reserve, and 8,125 dollars for the marketplace balance. The aggregate maximum is 115,625 dollars. An FBAR was required, and four accounts belonged on it.

Her income was fully reported, so the correction is a set of late FBARs through the BSA E-Filing System, each with the reason for late filing, covering the six most recent years, plus a complete report for the current year. Under Bittner, if the failure is treated as non-wilful, each missed year is a single violation regardless of the number of accounts.

What records should a business owner keep?

31 CFR 1010.420 requires every person with a financial interest in or signature authority over a reportable account to keep records showing the name in which the account is maintained, its number or other designation, the name and address of the foreign bank or other person with whom it is maintained, the type of account and its maximum value during the reporting period. The retention period is five years, which the FinCEN instructions measure from 15 April of the year following the calendar year reported, or from the filing date if later.

For processor and marketplace balances the usual bank statement does not exist, so we ask clients to save the following at each year end, since many dashboards only keep a limited history: the merchant agreement showing the contracting legal entity and its address; the merchant or account identifier; a daily balance or payout report for the full calendar year; any reserve statement; and a note of who had authority to move funds.

What is the UK side of the same receipts?

None of this changes the UK position. Card and online takings are business turnover and are reported to HMRC in the sole trader's or partner's Self Assessment return or the company's accounts and Corporation Tax return, whether the money is in the bank or still with the processor at the year end. Turnover is recorded gross of processing fees, so the processor's net payout figures should not be used as the sales figure.

HMRC also receives data independently. Under the reporting rules for digital platforms described at https://www.gov.uk/guidance/reporting-rules-for-digital-platforms, operators of platforms that connect sellers with customers report seller information and income to HMRC. That guidance says software that only processes payments is not a digital platform for this purpose, so a marketplace is within the rules while a standalone card processor is not. The practical message is one of consistency: the turnover shown in the UK accounts, the figures a marketplace reports to HMRC and the income on the US return should reconcile, and the balances behind them should appear on the FBAR.