Which banks offer high-risk merchant accounts?
Payment in adult entertainment
Adult entertainment is growing inexorably. Especially in the online area, the business area is already one of the most lucrative industries. Nevertheless, retailers are having a hard time finding suitable payment service providers. This is mainly due to the high chargeback rate and the many payment disputes that PSPs have to face. This high risk discourages many payment providers.
Problems with adult websites
Companies in the adult entertainment industry have to struggle extremely with chargebacks. There are, however, many other reasons why the industry is viewed as “high risk”. For one, there is a large number of transactions. This generally increases the risk of fraud. On the other hand, many banks refuse to work with PSPs active in this area due to the strict regulations and legal restrictions that go along with the industry. This of course reduces the attractiveness of the industry for PSPs and reduces the choice for retailers. Of course, the controversial content also plays a role. Not every PSP / every bank wants to be associated with it, as it can sometimes not be reconciled with other business areas. In general, merchants and payment providers have to be prepared for a large number of cancellations, chargebacks, fee disputes and fraud activities and be prepared accordingly through excellent fraud management (see below).
Which payment methods are required?
Basically, it is up to the retailer himself which PSP he selects and thus which payment methods he offers. However, as mentioned above, adult entertainment is one of the so-called "high risk" payment sectors. Payments should therefore be quick, fluid and secure, while the chargeback rate should be kept as low as possible. Users usually want to remain anonymous. The most common payment methods besides credit cards are therefore e-wallets and prepaid cards.
Merchant accounts for credit card payments in the adult industry
In order to be able to offer credit and debit card payments on the website, companies need a special type of bank account called a merchant account. It usually retains revenue from sales for 2 to 7 days before being transferred to the merchant's actual bank account.
A merchant account is created as part of an agreement between a provider and an acquiring bank. The acceptance process includes a credit risk assessment.
High risk traders will be subject to a more comprehensive review. To avoid additional difficulties in opening a merchant account, it is recommended to work with payment providers who specialize in high risk industries. Merchant Category Codes (MCC) associated with high-risk adult industry merchants include 7273 dating and escort services and 7841 video tape rentals (adult content).
Special payment options in Adult Entertainment
Dynamic pricing, also known as dynamic price management, is understood to be a price strategy in which companies continuously adjust the prices for products and services based on current demand. This strategy is essential in adult entertainment and especially for dating websites. The erotic industry is very time-dependent. This can lead to significant price fluctuations in very short periods of time, which can be adjusted using dynamic pricing.
Pay-per-minute payments are also widely used in adult entertainment. As the name suggests, the customer pays a certain price for every minute they spend on the website / video. Since the online erotic industry largely consists of "video-on-demand" portals, this method is ideal. This type of payment falls under the term “micro-billing”, as it is mostly a question of small amounts that are often debited, however.
So-called membership payments are also popular as a monetization method. In most cases, the customer transfers a fixed amount to the retailer every month and thus receives access to web content. Many adult entertainment providers also offer the purchase of a VIP membership. This is available at a surcharge and premium content is offered in return.
More payment features
Smaller features that are still often used in adult entertainment include "One click" and "Per unit" billing. The “one click” method enables customers to make payments with one click. For this, however, all payment data must be entered by the customer once. “Per unit” means payment per unit. For example, the user pays for each video that they watch individually. “All inclusive” solutions are also popular. Often there is also the option of booking various packages.
Payment protection in adult entertainment
The adult industry is one of the "high risk" industries and is known to be prone to fraud. The more a company expands into the digital market, the more likely it is to meet fraudsters. So what can retailers do to protect themselves perfectly and at the same time reduce the fraud rate?
Increased chargeback risk
Chargebacks are always expensive and time-consuming for a company. The chargeback rates in adult entertainment are also significantly higher than in "usual" industries. Adult entertainment customers in particular often contact their credit card provider and refuse fees due to non-fulfillment, etc. If this happens too often, chargebacks can quickly overshadow the company's profits.
Solid, proven payment providers should always be trusted, especially for "card-not-present" transactions. However, the range of payment providers in adult entertainment is limited due to the strict market regulations. Thus, retailers are sometimes forced to rely on inferior payment solutions. This of course increases the risk of fraud.
Frequent fraud cases
There are several types that lead to chargebacks and fraud.
On dating websites in particular, some users want to remain as anonymous as possible. This can lead to disputes about certain payments or misunderstandings.
It also happens that criminals log on to adult entertainment websites with stolen credit cards and with a false identity rob other users of private data or they persuade them to send them money.
This seemingly harmless point is one of the most common reasons for a chargeback. Users often forget to cancel their subscription in good time and then ask for a chargeback.
Adult entertainment merchants should only work with trusted payment service providers with verified payment methods. Chargebacks must be kept as low as possible and fraud recognized in good time. Expertise is important for this, which can also be requested from a competent payment provider.
Payment provider or payment service provider in the erotic industry
Merchants from the adult industry should only work with trustworthy payment service providers with verified payment methods. This means that chargebacks can be minimized and fraud can be detected in good time. This is where the know-how of a competent payment provider pays off. Here are some examples of payment providers who specialize in working with merchants in the adult entertainment industry.
CCBill payment gateway
The American processor CCBill works with over 30,000 dealers worldwide. The company offers an all-in-one solution as well as comprehensive fraud protection and risk management services. CCBill also offers some tools that are helpful for a successful adult entertainment business. The dynamic pricing is interesting for dating websites, for example, fast check-out is used for live entertainment, as well as pay-per-minute monetization models and a large portfolio of international payment methods.
Emb - payment gateway for adult toys
Emerchantbroker works with entertainment industry companies from various sectors that offer product such as toys and novelties, books, memberships, lingerie, strip clubs, adult massage and escort services. The gateway has extensive tools for combating fraud, in particular protection against chargebacks. In addition, merchants can accept payments in multiple currencies.
Epoch - payment provider for live chat and video
Epoch processes payments using various global payment methods, recurring payments, payments per unit of account, one-time payments, or one-click payments. Adult websites can therefore cater to customers for all types of content, from monthly memberships to live chat or video. Epoch offers flat rates. This helps with economic planning in some business models, as traders know exactly what fees to expect.
Zombaio payment gateway
Zombaio processes payments for all types of online content, with a particular focus on the online entertainment industry. It supports memberships, live fees or "pay-per" monetization models. Merchants can set parameters for dynamic pricing for their products. Zombaio also offers daily payouts, a special feature of payment processing in the adult industry.
Find payment providers for adult entertainment here.
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