Adult Merchant Accounts: A Dive Into The Taboo

Taboo content, legal age restrictions, and reputational risks are all part of the adult entertainment industry. If you’re in the adult entertainment industry and you are exploring merchant accounts/payment solutions, you’ve come to the right place. At Corepay, our specialty is adult merchant accounts. We can swiftly get your business processing transactions and ensure that your merchant account doesn’t get shut down due to being labeled high-risk.

A few examples of adult industry merchant accounts include:

  • Live cam merchant accounts
  • Pornography merchant accounts
  • Adult dating merchant accounts
  • Gentleman/Stripclub merchant accounts
  • Adult toys and novelty merchant accounts
  • Fetish merchant accounts
  • Lingerie/clothing merchant accounts

Looking to apply for your adult merchant account?

How to apply for an adult merchant account

An adult merchant account functions like a bank account for your adult business/operation. Once consumers purchase items or subscriptions, a payment gateway processes the transactional information via your merchant account.

Why Are Adult Merchants Deemed High-Risk?

  • Reputational risks
  • Rampant fraud
  • Increased chargebacks

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.

adult merchants being high 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.

It is important to note that not all adult businesses are viewed the same by their banks or processors. For example, a lingerie store or a gentleman’s club might be viewed differently than an adult website.

If you are operating an adult business, staying compliant with your payment processor is essential. 

Your payment processing company should be with you as your company grows. Even if you have a low number of chargebacks, a bank can cite “reputational risks” and terminate your merchant account.

Adult Industry Fraud

Adult merchant security

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 adult merchant account. Corepay offers chargeback mitigation and dispute management services to reduce the impact of chargebacks on your adult merchant business with our partner product, CB-ALERT.

Adult Industry Chargebacks

chargebacks in adult industry

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 an adult 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.

Another example of a chargeback situation in the high-risk industry would be a strip club’s credit card payment.  An individual could file a chargeback and say that they were never at the strip club once confronted by their spouse.

The same principle applies to customers who purchase content online on an adult cam site.  Even though the customer explicitly agrees to the website’s terms and conditions, they may subsequently not be happy with the content they purchased. Rather than seek a refund, they attempt to alleviate their buyer’s remorse with a chargeback.

Despite the merchant obviously fulfilling their obligations and likely winning the chargeback if they fight it, the chargeback has already been filed and the merchant has to deal with its impact on their chargeback ratios with VISA/Mastercard.

Adult Merchant Accounts Checklist

Are you looking to start processing payments? Let’s get you started with an adult merchant account specifically built for high-risk solutions.

What does Corepay provide for its adult merchants?

  • Trustworthy adult industry experience spanning over two decades
  • Application, set up fees, and annual fees waived
  • Risk mitigation with tools such as Order Insight by Verifi 3-D Secure 2.1
  • As little as same-day approvals
  • Sophisticated BIN checking fraud screens
  • Low rates as little as a blended 2.95%
  • Maximization of approval ratios based on the target customer base

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.

Adult Industry categories

How To Find The Best Adult Merchant Account

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

Therefore, after a few weeks of processing, Paypal fully underwriters your account, sees that is an adult business and shuts off your account immediately. Funds are then held for up to 180 days during the chargeback liability period.

Unfortunately, at Corepay, many adult merchants come to us after getting their accounts terminated due to being high-risk.

So, what are the best ways to decide on an adult merchant account for your business and avoid having your account closed?

Search Out Payment Processors Who Specialize In Processing For The Adult Industry

payment processors for adult

There is a great deal of information on the internet about what merchants should look for in their payment service provider if they operate an adult business.

When searching out a payment processor, you should find one that has worked with many other adult businesses to avoid as many surprises as possible.

Corepay has highly competitive rates and over two decades of experience working with the adult industry.

Speak With Others In The Adult Industry

Whenever you are new to an industry, it always wise to seek out and build a good reputation with other businesses.

In the adult industry, this is no exception. Attend in-person and virtual trade shows catered to your industry and ask industry professionals what they are doing for processing payments.

How Does Being High-Risk Affect Your Adult Merchant Account?

Adult merchants will almost certainly need to keep extra funds in a reserve account in case of chargebacks, which frequently happen in this industry. Reserve accounts are sub-accounts that are attached to your adult merchant account. 

A percentage of your credit card sales are kept to cover any credit card disputes/chargebacks you may be dealt. Reserves are generally held for the life of the merchant account.

Upon closure, the funds will be released after the chargeback liability period has expired – usually 180 days. Think of a reserve as the last stand for the bank. 

If a merchant becomes insolvent, the bank has a fair recourse for repaying chargebacks.

Applying For An Adult Merchant Account

Applying for an adult merchant is different than applying for other high-risk industries. You will need all of the same information required for other industries. However, you will also need some additional information.

This is because the adult industry has legal age restrictions and comes with reputational risks.

Here’s what you need when applying for your adult merchant account:

  • 2257 record-keeping documents (stated below)
  • Certificate of incorporation
  • Voided check/proof of bank accounts, such as a signed bank letter displaying your account/routing numbers
  • Organizational chart (if applicable)
  • Personal and business financial history
  • Prior processing statements (if applicable)
  • Compliant website

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.

At Corepay, we have extensive experience in helping our adult merchants optimize their billing structures. It is our opinion that merchants should always think globally and act locally with their payment methods.  This includes adopting a truly multinational approach to billing, but ensuring compliance can be cumbersome.

Be certain that your payment service provider understands the many risks of processing payments in multiple regions.

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.

Increasing Conversions With A High-Risk Account For Your Adult Business

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

adult merchant fees

Does your payment processing provider specialize in the adult industry? If they do, apply and begin comparing rates and discussing what their company can do for your adult business. 

Many payment service providers claim to accept adult merchants. However, while they may have an appetite for the business, you will find that many do not have the stomach for it simply because they do not understand it.

With Corepay, you will never experience any hidden fees, nor will you ever pay any application/setup fees.

When it comes to the adult industry, Corepay gets it.  We have highly competitive rates and over two decades of experience working with the adult industry.

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 $500 for registration before going live and then annually, thereafter.

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.

The Adult Industry Overview

While adult businesses are taboo, they can be lucrative. Open-mindedness and acceptance drive a growing demand for adult business, whether this is in the form of adult toys, adult streaming, or anything in between. 

The global adult toys market was valued at $33,64 billion in 2020, and it is continuing to rapidly grow.

Was your Business Turned Down for Adult Credit Card Processing?

If a payment processor denied your business, the issue was likely due to the acquiring bank not supporting the industry or that you/your business is not established enough due to financial/credit limitations.

At Corepay, we can help get you approved, despite your financials/credit. If you have a legitimate, legal business, there is no reason you should not be accepting payments. Once you are approved, your business will be able to process payments for the years to come.

Why Is My Dating Business Labeled As Adult?

adult dating

Dating businesses are usually labeled as adult due to the risk of the dating platform containing nudity. As a result, some banks that support mainstream dating services will sometimes turn away a more risqué dating site.

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:

  • 24/7/365 content monitoring through artificial intelligence and live human responses to organically cycle through all content while responding to any reported content infractions and blacklisting users when necessary.
  • If a live cam/streaming website, maintaining records of models at all times. This should be in the form of a valid legal photo ID with a matching selfie to prove that they are 18 years old or older.
  • Confirming ownership of displayed content. Some poor players in the industry scour the internet for free adult material and then sell this material, unbeknownst to the original content writers.

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.

A company that has even one data breach can be detrimental to their business in so many ways. This is because an individual’s reputation or even life can be ruined from a data breach.

So, what does Corepay do to help with security for your adult business?

We have a PCI-Level 1 secure payment gateway that has 24/7 monitoring and is regularly tested for security issues.

Our gateway, Solidgate, supports full payment tokenization, including recurring billing, so that cardholder data is always encrypted with maximum security and flexibility for our adult merchants.

How Adult Merchants Reduce Chargebacks

Adult merchants can minimize chargebacks through the use of several techniques.

Here’s a quick look at what your business can do to reduce chargebacks in the adult industry:

  • 24-7 customer support team (including live chat, over the phone, and email)
  • Provide clients with explanations in both billing and refund policies
  • Provide clients with complete descriptions of services rendered
  • Keep records of your interactions with your clients
  • If a customer requests a refund, react promptly
  • Anti-fraud tools such as Ethoca and Verifi to eliminate disputes before chargebacks are filed

It is paramount that you have a rock-solid, around-the-clock customer support team

They should be available to be reached by phone, email, and live chat at all hours in the event that a customer has a question or a dispute. 

Essentially, any missed customer inquiry can be considered a chargeback.

Your payment page should contain all necessary details about their purchase. This should include purchased package, subscription, amount when packages will expire, etc. 

If there is a trial/promotional offer, the pay page needs to have an “opt-in” checkbox so that the customer acknowledges what they are purchasing. The checkbox not only maintains compliance with the card schemes but is an additional layer of protection against disputes.

Also, the pay page should explicitly state your descriptor (how the transaction will be displayed on the cardholder statement/online portal). This can help eliminate confusion when they see a transaction on their statement and direct them to a customer support number right away.

Finally, you should be utilizing available anti-fraud tools. This includes features such as a BIN checker, which is an online database containing known fraudulent credit card information that merchants should blacklist. 

In addition, features such as the various offerings of Ethoca and Verifi should be taken advantage of. Traditionally, there has been a good amount of confusion and abuse associated with the traditional Ethoca and Verifi alerts, but their benefits are undeniable

The services, quite simply, are designed to eliminate the cumbersome customer dispute process by resolving the disputes before a chargeback is ever filed. Not only are you drastically cutting down on chargeback fees with your acquirer, but you are protecting your chargeback ratios and keeping your adult merchant account healthy. 

Our partner, CB-ALERT has a single-connection platform that allows our merchants to integrate and use all of these Ethoca/Verifi features, with exceptional service and unbeatable pricing.

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.