With the adult entertainment market recorded to have reached a global worth of $65.95 billion in the year 2024, it’s no secret this is a lucrative industry. Unfortunately, many merchants who work in the adult industry are often turned down by banks and other payment processors when it comes to obtaining credit card processing services. This can be due to a number of factors, but all vendors in the adult industry are considered high-risk, which means most banks and well-known payment processing platforms will reject these businesses when applying for debit and credit card processing. Why are adult entertainment and similar merchants considered high-risk? What are their options when it comes to payment processing solutions that benefit their business and their clientele? Read on to find out!
Why Are Adult Entertainment Merchants Considered High-Risk?
Adult industry businesses can encompass:
- Live cam merchants
- Pornography merchants
- Adult dating merchants
- Adult toys and novelties merchants
- Lingerie clothing merchants
- Strip club merchants
These businesses are meant to provide services and products to adult customers. They are companies and vendors that operate using the same transactional format of other industries, but they are often deemed taboo and controversial, which is a part of the reason why they are deemed high-risk. Vendors in the adult industry should have access to reliable and effective payment processing solutions that other industries have, but they often are not capable of working with banks and typical payment processing platforms. Some of the reasons why adult merchants and businesses are deemed high-risk include:
Frequent Chargebacks and Fraud
Businesses in the adult industry fall victim to a large number of chargebacks and fraudulent transactions. Fraudulent transactions take place using stolen payment information. Chargebacks occur when a buyer attempts to get the money back from a transaction by filing a chargeback with their financial institution. Chargebacks can occur for a variety of reasons, ranging from buyer’s remorse to being unhappy with a service/product.
Large Volume of Transactions
The adult industry encompasses a wide number of services and products, which means there are a large volume of transactions happening every day with merchants. Whether customers are paying for an experience, video, or product, the large volume of transactions that a vendor in the adult entertainment industry sees can be off putting for banks and other payment processing platforms. This is because such a large volume of transactions will often result in a larger amount of fraud and chargeback requests. This is why a high amount of transactions can be deemed too large of a risk for most financial institutions.
Subscriptions that Charge Per Minute
Because some businesses in the adult industry charge subscriptions that charge per minute, i.e. cam girl services, this can lead to a number of chargebacks. When a merchant charges subscriptions that charge on a timely basis, banks and other payment processors will be very hesitant to provide credit and debit card processing services because of the chargeback and possible fraud implications. Subscriptions can also be canceled for a number of reasons, and if a customer is dissatisfied and asks for their money back for a monthly or yearly subscription, this can be a big loss for the merchant as well. This is a factor that goes into deeming adult industry merchants as high-risk.
Controversial Content and Legal Restrictions
Many well-known banks do not provide adult business merchant accounts because of the controversy that surrounds these types of merchants. Not to mention, the age restrictions in place and legal restrictions on the adult industry is a large factor that causes many financial institutions to deny businesses who are interested in opening merchant accounts. However, adult industry merchants should still have the opportunity to provide their customers with secure and efficient payment processing options. Clientele should not have to go through extreme difficulties just to complete a transaction for a service or product.
How Can An Adult Industry Vendor Obtain Credit Card Processing?
Businesses in the adult industry face a lot of hurdles when it comes to their payment processing solutions. It can be due to the risks involved of chargebacks, the implications of the content and age-restrictions in place, and of course the large volume of transactions. So as an adult industry vendor, what may your options be? You can still get the custom payment processing solutions for your business by working with high-risk merchant account providers. USA Payments is a dedicated high-risk payment processing solutions company that is dedicated to providing high-risk merchants with the freedoms of payment processing solutions tailored to their business, whatever industry that may be.
What Does it Take to Get Approved?
In order to get approved for a high-risk merchant account, you will want to start an application with a high-risk payment processing company that has the experience of working with similar merchants in your industry. It is important to be completely transparent and upfront about the services and/or products you provide. Some payment processing accounts may want to see documentation in the form of bank statements and tax forms, in order to get an idea of the transactions your business has completed. You’ll want to work with a payment processing institution that is transparent about their fees, accepts all major credit cards, and provides a variety of point of sale solutions, as well as e-commerce solutions if your business is strictly online.
How Can My Adult Industry Merchant Account Remain Compliant?
If you’ve been accepted for an adult industry merchant account, you’re on the way to boosting your business with a number of unmatched payment processing solutions, along with technical support features and more. Now, you must ensure your merchant account remains compliant, so you can continue to enjoy the rewards of this account. How can an adult industry merchant account remain compliant in order to avoid any issues or closures? This can be done by:
- Reducing the amount of chargebacks
- Following suggestions from the payment processing provider you’re working with (i.e. perhaps taking on a fraud prevention program or software)
- Ensure all age restrictions and verification methods are set in place
- Have all content be reviewed to make sure it is not violating any code of standards, as well as not promoting abuse, trafficking, or other illegal activities
Once your adult industry merchant account is set up, you may be connected with a team or specialist who helps maintain your account and ensures everything is as it should be. The provider you work with should be helping to provide solutions in terms of risk management, fraud prevention, better payment processes, and also ensuring your business is being compliant with the necessary standards of the platform. As an adult industry merchant, having the right team and assets on your side can make a world of difference when it comes to ensuring better customer experience, smoother transactions, and of course, a better profit for your business! Take the first step into opening your adult merchant account today.
Start Your Application With USA Payments Today!
Are you a merchant in the adult industry needing reliable and efficient payment processing solutions? Talk with a provider with the experience of having worked with businesses in this booming industry. USA Payments connects vendors with the proper payment processing solutions they need, whether they depend on cloud-based terminals, PCI-encrypted card readers, or other payment processing services! Get started on your application with USA Payments today, and choose freedom for your business!