Bermuda: An E-commerce Business Leader

Bermuda well known for its success as a premier offshore international financial center is establishing itself as an offshore e-commerce business leader. Moving ahead of other e-commerce want-to-be jurisdictions Bermuda was the first country in the world to specifically include e-commerce in a Cabinet Minister’s portfolio. That was two years ago. Since then Bermuda has enacted The Electronic Transactions Act, established an E-Commerce Advisory Board to advise on regulation and promotion, and set standards for e-commerce behavior. Bermuda is now clearly well on its way to establishing itself as an e-commerce hub.

Over 75 of the Fortune 100 companies have established operations in Bermuda.

The island’s commercial insurance and reinsurance market now ranks alongside those of New York and London. With a world class business and telecommunications infrastructure, Bermuda offers an excellent regulatory environment. With no income tax or capital taxes, Bermuda hosts a professional work force and offers easy access to the United States, Canada and Europe. Vital to e-commerce, Bermuda has a developed, a reliable telecommunications infrastructure with more than enough bandwidth to cover 15 million simultaneous voice and data connections. Add to this a unique partnership of government and private sector interests working together to foster an environment attractive to international corporate and private needs, and it is more than clear that Bermuda has positioned itself well to be a front runner.

E-commerce is having a dramatic impact on the way business gets done. Bermuda’s success as a world premier offshore financial center is being leveraged though the use of the electronic revolution. The core industries of insurance, reinsurance, investments and banking are ideally suited to electronic applications based on Bermuda’s expertise, experience, contacts and well-respected reputation.

The Internet is revolutionizing the financial services industry and Bermuda has taken a lead role in the development of e-commerce related initiatives and partnerships. For instance, the world’s first hedge funds crossing facility was established in Bermuda. HedgeTrust Exchange, a partnership between HedgeWorld Limited and the Bermuda Stock Exhange is matching buyers and sellers of non-U.S. domiciled hedge funds. Another example is, PlusFunds.com, a cooperative venture of Standard & Poor’s, Ernst & Young, Advent Software Inc., RiskMetrics and the Bermuda Stock Exchange. PlusFunds.com provides real time NAV’s (net asset values) of hedge fund shares, daily risk measures and analysis, and a secondary market of standardized and securitized hedge fund shares for those participating on the PlusFunds.com platform. The e-business world is Bermuda’s new frontier.

There are several key benefits of conducting e-business from Bermuda. These include privacy of information, tax neutrality and protection from currency fluctuations through use of the U.S. dollar. Bermuda’s legal system is based on English Common Law. Add to that, a flexible proactive government administration, well crafted legislation and regulations and a highly developed infrastructure, Bermuda is an ideal jurisdiction.

Keeping pace with the speed of global e-commerce, Bermuda was one of the first to pass e-commerce legislation. The Electronic Transactions Act provides a secure legal foundation to conduct electronic transactions on a technology neutral basis. This legislation was deliberately drafted to be sufficiently flexible to embrace inevitable further technology development. The accompanying Standard for Electronic Transactions Regulations are designed to encourage business to observe integrity, protect personal data, avoid abusive usage, advertise truthfully and deal fairly and openly with customers and settle complaints or disputes quickly. The stated intent of Bermuda’s e-commerce legislation is to permit and encourage e-commerce through the operation of free-market forces, promote the greatest possible degree of self-regulation by the industry and ensure that e-transactions are flexible and technologically neutral.

Operating with a telecommunications infrastructure that includes fully-equipped Commerce Centers with 7x24 support services, international voice, data and video applications, high capacity fiber-optic cable systems, direct global connectivity to high speed communications networks and bandwidth from 64K to T1, E1 and beyond, Bermuda is committed to running with the e-baton. There are a number of Internet Service Providers in Bermuda offering a variety of levels of support to offshore businesses from total hosting, partial hosting, to the rental of "electronic stores".

Total hosting, a complete e-commerce package, involves the supply of secure facilities to co-locate a client’s own technology solutions, including access to the Internet and transaction processing. Partial hosting services provide payment pages on secure facilities in Bermuda, thus allowing clients to save the expense of purchasing and maintaining a secure server, routers, firewalls and transaction gateway.

Several of the Bermuda e-commerce service providers rent "electronic stores" to allow digital business to operate from Bermuda without incorporating a company on the island. Establishing a virtual entity in Bermuda saves time, trouble and the cost of maintaining a traditional offshore company. Each "electronic store" has separate assets and liabilities and operates under the terms of a user agreement. This segregated account structure is made possible though recently enacted legislation passed by the Bermuda Government.

Apart from payment processing facilities offered by local hosting services, two of Bermuda’s three banks have also entered into partnerships to set up international payment processing solutions. The Bank of Butterfield has teamed up with a Bermuda e-commerce payment provider and is servicing local and international merchants through a new company called Promisant. The new venture provides clients processing electronic transactions via the Internet with merchant bank accounts to receive on-line payments. The Bank of Bermuda has joined Bermuda-based, First Ecom.com to provide clients the FEDS Payment Processing Solution. FEDS grants banks the authority to give their merchants access to payment processing services as well as a wide range of new services for researching, retrieving and archiving transaction data.

Given Bermuda’s fifty year experience in the international financial services market, Bermuda has attracted and developed a core of highly competent professionals who regularly handle complex structured finance, e-commerce and insurance transactions. The types of companies best suited to Bermuda’s e-commerce strategy include financial services, online publishing, online software distribution, international broadcasting, intellectual property, online business exchanges and virtual educational facilities. Bermuda is set on attracting Internet based businesses intent in playing on a global field and reaping the benefits of technology, in lower operating and management costs.

Bermuda has been referred to as "the world’s insurance laboratory" and it is evident that this same spirit is fueling Bermuda’s e-commerce industry. E-commerce entrepreneurs are being sought, nurtured and encouraged by government and the private sector, and both are committing sizeable investments in education to ensure Bermuda develops and sustains itself as an e-commerce hub. For instance, e-commerce has been established as a program at the Bermuda College and technology studies are being accelerated within many of the island’s schools. An international e-commerce conference was recently held in Bermuda, and young people interested in e-commerce are being identified and mentored. An international business has even set-up what is referred to as an e-commerce "incubator" which is backing some of Bermuda’s next highly promising ventures. Incubation. The eVentureCentre is the first e-commerce incubator to be established in Bermuda, providing investment capital, infrastructure, administrative, and technical services for a growing list of companies offering a wide range of services from digital signatures to on-line publishing. The eVC takes entrepreneurial start ups through system implementation, beta testing and "going live". eVentureCentre is a joint venture between a Bermuda-based member of the Centre Group, which is part of the Zurich Financial Services Group, and Paragon, a Bermuda based technology applications consultancy.