Acquiring An Adult Merchant Account

Frankly, acquiring an adult merchant account is going to take a lot of patience, work, and compliance with bank regulations. This has been by far the greatest struggle in the adult industry.

People who purchase a genuine item then call their credit card company and say, “I didn’t buy this” create what is called a chargeback. Falsifying that is a crime. Instead of our rich banks waiving those transactions, the business (you) is forced to pay a monetary fee because someone stole from YOU. It isn’t fair. It’s unfortunate. It happens. But if you want to accept credit cards, it’s one of those things many adult businesses encounter.

The challenge we face, as erotic hypnotists, is that we sell digital items that banks consider “high risk.” Because it’s digital, there is greater risk of a consumer creating false reports of never having received the product or that they never purchased it of sound mind. The reason banks consider us “high risk”  is because the adult industry is an easy target for chargebacks, fraud, negligent customers, underage buyers, upset spouses who see credit card statements, etc. Due to this, banks consider anything adult – and especially digital only adult products – related to be a “high risk” as far as transactions go. This applies to people all across the adult industry including video salesmen, gay porn sites, casino and gambling sites, alcohol sites, and pornography in general.

I was around in the days when Paypal used to accept adult transactions. Life was fabulous for everyone! Unfortunately too many customers made chargebacks resulting in a complete shut down for adult sites like ours. Funny thing is, although adult transactions no longer comply with Paypal’s new Terms of Service, customers clearly miss using that option.

In order to accept credit cards on your adult, commercial website, it is important to acquire your own adult merchant account. To my knowledge, before your application will be accepted by banks, you will need to create: 1) A terms of service page accessible everywhere on your site; 2) A privacy policy also accessible. This is required.

Understand what you offer is going to be high-risk and you will have to deal with chargebacks. What that means is: if someone chargebacks, you don’t receive the money you thought you were going to get. AND YOU, yes you will be required to pay the bank a penalty fee on top of it. If you get too many chargebacks, your account is at risk of being terminated with that merchant account. To avoid chargebacks, it is important to be as up-front as possible with customers so they know what they expect from the beginning. This is why I am a fan of giving detailed descriptions of my products, long disclaimers on the page, and I list a refund policy to avoid chargebacks of all kinds. I hear that falsifying a chargeback is a federal crime with a shot in the pen.
The only genuine chargebacks are ones where the client wasn’t given a product and the servicer did nothing to appease this via refund or credit or if an underage user purchased something. If you do not offer refunds that is fine, just put it in your refund policy.  As a business, I’ve had banks require I publish my refund policy on my site even if I accept no refunds. Ultimately, this is the bank’s way of reducing the risk of chargeback. If you have a website, you will need an ability to ban or block customers who implement fraud or chargebacks. Failure to do so could result in a worst case scenario in which the banks terminate their agreement to process credit cards that run through your shopping cart.

Sites with nudity or sex are considered high-risk. My gut instinct behind the reason for most chargebacks: buyer’s remorse or unexplained erotic emotions. Gay porn has a higher risk of chargeback than heterosexual porn. So be sure to be as up-front as possible with customers to reduce risk of chargeback. Providing excellent customer service puts you in good standing with banks and credit card companies.

If you are serious about protecting your assets in your business, get an LLC or a Corporation. Submit the business tax ID or your social security number on the application when submitting for an adult merchant account. Consider hiring a lawyer on retainer to protect your business. Hire a lawfirm that has experience with business litigation and/or entertainment and public relations.

Most overseas accounts will readily accept adult websites by accepting a higher per-transaction percentage rate per sale.

Adult merchants want assurance there will be minimal chargebacks, so they will likely give a list of requirements they expect us to comply such as adding a privacy policy, terms of service, disclaimers, etc.

If you want to have credit card processing on your site, you’ll want to apply to have your own merchant account.

Here are some:

Instabill.com
http://zombaio.com/
Verotel.com

For others, do a Google search for “adult merchant accounts” — but I cannot vouch for any because I’m going through a new application right now. I’ve been screwed out of $17,000 from overseas accounts because it’s hard to sue people in other countries, so do your homework by researching and reading reviews from other adult companies. Find out who pays on time and look for the best interest rates so you can charge your customers a fair price for your creative endeavors.

Be willing to comply with the banks as much as possible but if they start to tamper with your grand vision, find a competing merchant who uses another bank that has different standard policies.

If all else fails, there is always a plane trip to Barbados. Bribing bank managers is probably legal there, but you’ll have to check

Good luck!

Love
Isabella
xoxoxoox