Getting approved for an adult industry merchant can be a very difficult task. Keeping it up and running once you're approved is just as difficult. Banks, and the salesmen representing them, often treat business owners in the adult industry poorly. To make matters worse, they often take advantage of the industry’s high risk status and grossly overcharge the merchants. Merchants start to feel like no matter how crappy the terms, they just have to take what they get. Because of this, it's difficult for the adult industry to accept payments in an affordable and reliable manner.
The Adult Industry covers a wide range of areas and business types, and they are all legal and licensed U.S. businesses. Pornography films and magazines, adult chat sites, live video sites, adult theaters, and legal prostitution are all obvious members. But retail sex toy stores, adult modeling agencies, video rental shops and strip clubs are also considered part of the adult sector.
So if all your services are 100% legal - why is it difficult for you to get a merchant account to accept credit cards and get paid for your services?
To put it bluntly, these business types pose a considerable risk for the banks within the payment industry that would serve them. For this, it labels them “high risk”, and high risk businesses are harder to place.
Potential brand damage.
First, the adult industry is a constant source of international debate in politics, law, and religion. Public perception is very important to banks and their stockholders. Many acquiring (or processing/funding) banks choose to maintain a distance from the adult industry to protect their public image.
However, the reason the banks consider the industry a risk goes far beyond protecting their public image.
This is also an industry that’s burdened with excessive government oversight and regulation. There are regulations on age limits, zoning restrictions for where business can be located, and special licensing requirements. Excess regulations can pose legal challenges for banks.
Unfortunately, the adult industry has a track record of attracting criminals hoping to skim credit card information, bank accounts, and identities.
Adult websites of all types are often the target of malicious fraud by cunning cybercriminals. Protecting themselves requires businesses to use extensive security protocols such as multi-point ID confirmation.
High chargeback rates.
The nature of the adult industry itself causes it to have a much higher than average chargeback rate. Not only do they attract malicious fraud, but they also fall victim to their own customers “friendly fraud”. It is not uncommon for customers to call their credit card provider and deny a charge as either fraudulent, unpurchased, or unfulfilled.
Additional challenges also make it hard for high-risk adult businesses to get a merchant account to accept payments.
Businesses in the adult sector have limited options when it comes to getting a merchant account. Many of the acquiring banks within the payments industry put businesses in the adult entertainment industry on their list of prohibited merchants.
There's no chance you’ll be able to [transparently] accept payments through processors such as Square, Stripe, and PayPal. Sure, an adult business may get approved initially. But when underwriting gets around to reviewing the account, they shut the business down the minute they realize the industry. They freeze the account and put a hold on any funds they owe you.
Not only does this stop your business in its tracks, but it leaves you scrambling to find a new solution fast.
Unscrupulous salesmen plague the industry.
Unfortunately, high-risk industries such as the adult sector are a magnet for unscrupulous, and uneducated salesmen just looking to make a quick buck. They have no qualms about taking advantage of these business owners as sticking them with astronomical rates.
The salesmen in high-risk payment processing tend to come and go often. They don't take the time to get the experience needed to know how to properly place this type of merchant. Uneducated salesmen resort to sneaky approval tactics like mis-coding the merchant account to gain approval. They make their commission and move on to the next desperate merchant.
Adult high-risk businesses are subject to strict underwriting
When high risk businesses apply for a merchant account, the underwriters thoroughly vet the business. But when a high risk business from the adult industry applies, they are scrutinized even more.
Underwriters will check to make sure you're running a legal operation. They’ll also evaluate the company and the website to make sure it's operating with business Best Practices in mind.
All of these challenges make it a unique industry to navigate, even for seasoned high risk processors. And they greatly limit your choices for who you can get a merchant account through. But it also means that the ones who do work with the industry understand its challenges.
How do you find a merchant service provider who’s not only willing to work with your business, but will provide an affordable solution that is both stable and service oriented?
We believe every merchant should be concerned with the credibility of their merchant service provider. But it matters more for some merchants than others.
When you're a high risk business, not only must you have a merchant service provider that’s reliable, but you need to partner with someone you can trust. You need a reputable high-risk merchant service provider.
Often, more in-depth underwriting processes are needed to gain bank acceptance. They may require you to utilize more robust fraud protection software than other businesses.
An experienced high risk provider understands this. They know how to place you with the solution that is the best fit for your business. This will also give you the best chance of approval of your adult merchant account application.
When you’re filling out the application provided, make sure every field is completed to the absolute best of your knowledge. And provide all the supporting documentation that is requested all at once and in a timely fashion.
There will be a checklist of items requested of you. Putting together a COMPLETE package for your chosen processor is incredibly important. Acquiring banks are much more likely to want to work with a business who has all their ducks in a row. Applications are often denied simply because the package was piece-worked together and response times from the business owner were too slow.
Chargeback prevention may be optional for many merchants depending on the industry. That is not the case for the adult industry. This is an industry plagued with a high number of chargebacks, one of the main reasons it is considered high risk. It's imperative that merchants in the adult industry take a proactive approach and employ chargeback management software. But it is also a requirement of many acquiring banks that service the industry.
These additional steps are designed to protect the bank as well as protect legitimate adult business owners and their customers.
Adult industry business owners must partner with a Merchant Service Provider that is experienced and educated in the challenges the high risk industry poses.
It's only when you partner with a bank that understands the industry and is open to working with it, that you can enjoy reliable payment processing. At Bankcard International Group, we specialize in high-risk merchant services.
We respect you as a legitimate business owner and want to help you succeed. Our ETA-Certified Payment Professionals focus on pairing you with the solution that best fits your business needs. We’ve fostered strong relationships with banks that are prepared to handle these types of high-risk businesses. We offer both domestic and offshore adult industry merchant accounts.
Being labeled as a high-risk industry means your rates are already higher than traditional businesses. But to run a profitable business, you must be able to find payment solutions that are not only reliable but financially sustainable. We understand this.
Our goal is to earn your business for life. We set our clients up for success by providing transparent and competitive pricing along with outstanding customer service. Because we focus on being service-oriented, instead of profit-oriented, most of our clients become longtime business partners.
Take the first step toward the last adult merchant account you will ever need. Give Bankcard International Group a call today! Experience The B.I.G. difference!