They say “sex sells” so it should be no surprise to anyone that a lot of financial transactions take place daily in the adult entertainment industry. With lots of money changing hands in one form or the other in adult digital market places, merchant accounts have become quite essential for vendors operating in this space. This has given rise to what is known as Adult Merchant accounts which is a subsection of the credit card processing industry.
But Adult merchant accounts are peculiar as the industry they serve. Generally, merchant accounts that serve adult businesses in payment processing are classified as high-risk merchant accounts. Due to this fact, many merchant account providers outright refuse them credit card processing services. Those who do charge them high processing fees and set stringent conditions for them.
Why are adult merchant accounts high risk
There are various reasons why merchant accounts belonging to businesses in the adult entertainment industry are classified as high risk. Common reasoning among processors is that these merchants are often used to front illegal activities. But a more widely accepted reason is the high rate of chargebacks on transactions.
Because adult transactions are mostly shrouded in secrecy, it is common for customers of adult businesses to dispute charges that are made to their credit cards when they receive their credit card statement. It isn’t rare for people to claim they didn’t join an adult paying site or didn’t purchase an adult content or product they are being charged for.
Most of these chargebacks occur when customers don’t recognize or remember a purchase they made or didn’t expect payment to be charged for the service they did subscribe to (probably when they fail to cancel a subscription or any other similar scenario. To avoid issues like this, businesses in this niche need to always add create a clear description of the billing, which should include the company or website name, date of transaction, and contact number.
Communication is another way to avoid chargeback problems. Sending automatic receipt on completion of any transaction will reduce the probability of disputes later. Adult merchants are also better off offering a refund instead of a chargeback. This will help avoid problems in credit card processing at all. You may also consider using ACH payment processing or any other check solutions.
Getting Credit Card Processing for Adult Merchant Accounts
Although it is more difficult to get credit card processing services for an adult merchant account, some providers indeed offer this service. These types of providers typically specialize in credit card processing for high-risk businesses including the adult entertainment industry. There are also some companies that offer offshore merchant accounts for high-risk businesses because they are in partnership with offshore banks. However, as a general rule, as a vendor in the adult industry, you should expect a higher setup fee and transaction processing fees for your adult merchant account compared to regular merchant accounts.