Adult business payment processing experts

Why are adult merchants deemed high-risk?

The adult industry is considered high-risk by payment processors and banks for a few different reasons.

There are standard reasons why companies are considered high-risk, but the adult industry faces another significant hurdle in reputational risk.

 

Reputational risk

Most adult niche content is considered taboo, which can often damage a bank or processor’s reputation. Because of this, banks such as Chase and Wells Fargo will not provide adult merchant accounts.

Reputational risks also contribute to the fact that adult merchants will usually pay higher processing fees. Whenever a bank or processor chooses to work with a business in the adult industry, they are taking an added risk, which must be factored in profitability forecasts.

Adult industry fraud

 

Fraud in all forms is rampant in the adult entertainment industry.

Confirmed/true fraud: Credit cards are stolen and then knowingly processed by fraudulent customers/merchants.

Friendly fraud: Friendly fraud is one of the more confusing terms for merchants. This is when a customer tries to gain money back from a legitimate transaction by filing a chargeback. The bank then refunds the consumer, believing it was actual fraud. An example of this is buyer’s remorse, in which the individual attempts to recoup the money spent on a purchase.

As a merchant, you must not only be aware of how common it is in the adult space, but you must be proactive in fighting it.  To do this, you must work with a payment service provider that understands the adult entertainment industry.

Many merchants are unaware that their acquirer has access to ongoing fraud data from VISA and Mastercard (called TC40 and SAFE data, respectively). Even fewer merchants can access this data in a meaningful way such that it can benefit them.

Corepay has direct integrations with all of its acquiring partners, which can help you stamp out fraud on your merchant account. Corepay offers chargeback mitigation and dispute management services to reduce the impact of chargebacks on your business with our partner product, CB-ALERT.

Adult industry chargebacks

 

There’s no way around it; chargebacks in the adult industry are rampant. While chargebacks generally occur more frequently in any industry that is considered high-risk, this is exacerbated in the adult industry.

Having a merchant account with the right provider will significantly aid in chargeback prevention. A chargeback is the reversal of a credit card payment coming directly from the bank or payment processor, stemming from a customer dispute.

An adult industry chargeback occurs typically for different reasons than chargebacks in other sectors. For example, a married individual goes online and subscribes to an adult camera service. The spouse then sees a charge on their credit card and confronts them.

Often, the immediate reaction is that the offending individual will dispute this and file a chargeback, claiming it is not a recognized transaction. This occurs in the online dating industry as well.

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What does Corepay provide for its adult merchants?

Corepay can get you processing payments in as little as 24 hours if you are in the adult industry, and we will take care of the entire setup process so you can focus on other tasks at hand.

We provide services to all legal adult businesses. Below is an example of adult merchants we commonly service.

How to find the best adult payment processing

Having a reliable merchant account for the adult industry is crucial for a successful business. Whether you’re an established business or just starting, you will need to do thorough research and compare rates.

One of the biggest mistakes that we see adult merchants make is quickly deciding on a popular payment processor, only to find out that they don’t work with high-risk merchants.

Say you operate an adult toy store, and you’re starting to produce some sales. As you will need to accept credit cards, you decide to use Paypal.

While Paypal is convenient and not a bad payment processor for specific industries, they don’t work with high-risk merchants.

Offshore merchant accounts for adult businesses

Offshore merchant accounts allow multinational adult business corporations to accept and process credit card payments in a country other than where they were initially domiciled.

For example, if you have an adult store in the United States and have customers in Europe, it is most ideal to process these transactions on a local EU merchant account. However, you must be a fully compliant merchant as per local card scheme physical presence rules.

This does not mean that applying for the merchant account will be easier than in your original location.  Generally, USA merchant accounts’ approval times are quicker than elsewhere, but you may save on fees or develop a better relationship with a particular bank.

Adult credit card processing solutions

Corepay works with all major credit card brands and alternative payment methods such as Alipay and WeChat. It is imperative that adult merchants accept and process as many payment methods and currencies as possible.

The reason for this is simple: countries are starting to go in the direction of going completely cashless, and preferred payment methods vary significantly between countries. An example of this is Sweden, as they are predicted to go completely cashless by 2023.

Improve your approval ratio

Instead of looking negatively at having a high-risk merchant account, let’s shine some light on the fact that you can increase conversions drastically with a high-risk solution.

Adult businesses will notice that they are converting more sales as there won’t be as many surprises when it comes to declined transactions. This is especially true if their payment service provider is transparent in supporting and understanding adult merchant accounts.

Increased protection from chargebacks and fraud will also help conversions as you will not be unnecessarily losing revenue. Corepay is partnered with CB-ALERT to help with the prevention of fraud in the adult industry.

Adult merchant account fees

 

High-risk registration fees

High-risk registration fees are fees you pay to the card schemes (VISA/Mastercard) to start processing payments. For example, Mastercard and Visa will each require $950 for registration before going live and then annually, thereafter. (Please note, it used to be $500, but this was changed due to the VIRP update on April 1.

Extended contracts for adult merchants

Some payment processing companies will negotiate the length of contract term while others may not. You can expect to see three-year contracts with steep early termination fees.

At Corepay, we do everything we can to ensure our adult businesses are not only happy with our service but are also growing.

Therefore, any early termination fees imposed by Corepay are strictly to prevent unnecessary losses due to poor merchants.

Authorization fees

There are essentially two phases when processing a transaction, First, when a transaction is processed by a merchant, there is an authorization (auth) phase and fee to confirm your transaction’s validity.

Second, once the cardholder’s information is confirmed as valid, the issuer allows the transaction to process, and you enter the settlement phase. This sometimes includes a separate (approved transaction) fee.

Authorization fees are still charged even if the credit card is declined. For this reason, it is essential that adult merchants genuinely understand their customer base and that their approval ratios are maximized.

Settlement transaction fees

While some banks will combine settlement and authorization fees, it is usually in the adult merchants’ best interest to separate them.

Due to the industry’s nature, declined transactions will be more common than in most other verticals. Therefore, if the merchant can reduce the fees associated with these transactions, their bottom line will benefit.

Chargeback fees

Not only are chargeback fees generally higher for adult merchants, but you will also likely be charged a retrieval request fee, and of course, the cost of the refund.

Non-compliance fees

Non-compliance fees will be issued if you or your payment gateway do not maintain PCI compliance. Typically, the fees are broken down into monthly compliance, or non-compliance, with the latter being far more costly.

What are 2257 record-keeping documents?

These are documents required for companies that produce the following:

The law states, “visual depiction of an actual human being engaged in actual sexually explicit conduct are required to keep records showing the ages of the models.”

What content should be included in a content monitoring policy?

If you are operating an adult entertainment website, it is imperative that you have an ironclad content monitoring policy that proves your many efforts to remain compliant.

Some banks will even request proof of this policy before approving your adult merchant account. This policy should include the following:

Your content monitoring policy should frequently be updated and readily available as the industry continues to evolve.

Security in the adult industry

The adult industry differs from other high-risk merchants when it comes to security. A data breach for an adult business is disastrous as it doesn’t only harm the company but also its clientele.

Reputation comes back into play as we’re not just dealing with transactional data being stolen, but also your clientele’s reputation being damaged or destroyed.

Why choose Corepay for your adult merchant account?

Corepay knows the adult industry, whether it be online dating, adult film, adult toys, or even live cam services. If you have an adult business that is legal, we are certain that we can process your payments.

With our adult merchant accounts and hands-on approach, we are confident that we can help you not only grow your business but have all of your desires come true.