Adult Merchant Account: Payment Processing for Adult Businesses

Table of Content

• What Is an Adult Merchant Account?
• Why Do Adult Businesses Need High-Risk Payment Processing?
• How Does High-Risk Status Affect Merchant Account Approval?
• How to Improve Your Chances of Adult Merchant Account Approval
• How to Reduce Fraud and Chargebacks for Adult Businesses
• Adult Content Compliance and Recordkeeping
• Adult Merchant Account Requirements
• How to Choose an Adult Payment Gateway

Adult merchant account solutions help eligible adult businesses accept card payments through specialized payment processing arrangements. Because adult businesses can face higher underwriting, fraud, chargeback and compliance requirements, choosing the right payment provider is an important part of building a reliable payment setup.

Paympire provides high-risk merchant account and payment processing solutions for eligible businesses, helping merchants explore card payment options based on their business model, target markets and processing requirements.

What Is an Adult Merchant Account?

An adult merchant account is a specialized payment processing arrangement that enables eligible adult businesses to accept card payments from customers. The merchant account works with a payment gateway and payment processor to authorize transactions and facilitate settlement of funds to the business bank account.

Because adult businesses may be classified as higher-risk by payment providers, they can face additional underwriting, compliance and risk-management requirements. The availability of payment processing also depends on the business model, products or services offered, target markets and the policies of the acquiring bank or payment provider.

For this reason, choosing a provider with experience in high-risk payment processing can help an adult business understand its available payment options and prepare the documentation required during the application and underwriting process.

Why Do Adult Businesses Need High-Risk Payment Processing?

Adult businesses can face additional payment-processing requirements because of higher exposure to fraud, chargebacks, customer disputes and regulatory or compliance concerns. Payment providers may therefore apply additional underwriting and risk-management checks before approving an account.

The exact requirements vary depending on the business model, products or services, processing history, target markets and the policies of the acquiring bank or payment provider. Understanding these risks in advance can help merchants prepare their business and documentation for the application process.

1. Fraud

Fraud is more common in online businesses than it is in physical stores. It is easier to hide behind a screen than in physical stores. Users may also try to use their secret information to avoid the possibility that their bank statements will be impacted by products or services that contain adult content. Stealing credit card information is the most common type of fraud in adult entertainment. Adult businesses also deal with other types of fraud.

Some frauds are obvious like using the same card information on multiple purchases within a short period of time. Other times it is not. It is crucial to keep your business running by using eCommerce and credit card fraud prevention amazing techniques.

2. Chargebacks

A chargeback is the return of money due to a consumer disputing a charge on their credit card statement. Although few people may have used their cards to access your services in good faith, adult industry chargebacks can be embarrassing and cause shame.Consumers don’t want to keep a record of the adult services they have used, so they make sure it was authorized.To get their cake

and eat it, some people resort to the fraud blame game. After using the product or service, the purchaser wants his money back and contests the charge.

Another reason for chargebacks is the adult merchant service account setup. Many adult businesses are listed on bank statements as alternate identities or as individuals. Although this is a good thing for adult-related businesses, it can lead to some problems, like misleading customers. It is possible to protect your account from chargebacks on your website.

This is also true for many adult subscription-based businesses. If people forget to unsubscribe to the recurring payments, they can then request a chargeback to recover some of their money. To avoid this chargeback situation, it is easy to remind customers about upcoming recurring payments.

3. Reputation

Common bankers rely on outdated business models and have strict service standards. The bank may be concerned about your reputation if the industry of the business is not something you are comfortable discussing at the dinner table. These terms and conditions are not applicable to adult businesses.

Companies in the adult entertainment sector have one expectation: to be able to see a bank institution or credit card processing company that is eager to assist them.

4. Applicable laws

There are a variety of laws that apply specifically to businesses that are part of the adult entertainment sector. For instance 18 U.S.C. 2257, often referred to as 2257 simply, says that you need to have the age verification information on your websites or in your stores,

and also keep an inventory of government-issued identification photos for every performer. Other laws could include the complete prohibition of buying adult-oriented toys in certain states.These laws can restrict your customer base that could, according to potential payment processors, limit your ability to market to a huge, broad market.

How Does High-Risk Status Affect Merchant Account Approval?

Merchant accounts encase all earnings for the duration of between 2 and seven days as transactions are processed, and then deposit the funds into your company’s bank account when processing is completed. The account holder on the merchant agreement links your business to your bank.

The merchant agreement emphasizes the significance of this relationship. Included in this contract is “compliance with the laws and regulations,” which brings on companies to enter the adult market difficulties. Even if you’re completely compliant to all laws and regulations certain banks may refuse to lend your business an account because it’s required to follow more regulations and laws than other companies, increasing the chances that it’ll eventually fail to become completely compliant. Setting up an adult-only merchant account isn’t the most difficult thing, however, you could face difficult moments and even situations when trying to get accepted. But, selecting the right payment service provider with whom you establish an adult merchant account can help you avoid the issue.

How to Improve Your Chances of Adult Merchant Account Approval

Adult businesses can improve their chances of a successful merchant account application by preparing clear business information and supporting documentation before approaching a payment provider.

Key factors that can help include:

• A legally registered business with clear ownership information
• A professional website that clearly describes the products or services offered
• Valid business and identity verification documents
• A dedicated business bank account
• Clear pricing, refund, privacy and terms & conditions policies
• Accurate information about expected transaction volume and average ticket size
• Previous processing history, if available
• Appropriate fraud-prevention and chargeback-management processes
• Compliance with applicable laws and payment-network requirements

The final approval decision depends on the acquiring bank, payment processor, business model, risk profile and supporting documentation. No provider can guarantee approval before completing its underwriting process.

How to Reduce Fraud and Chargebacks for Adult Businesses

The possibility of having chargebacks or fraud is one of the reasons that could cause your business to be refused the adult-only merchant account. Both of these are unpleasant circumstances that business owners must strive to avoid for the financial security of their company since chargebacks are a source of fees that could add up. Methods to avoid charges and fraud include:

Customers should be encouraged to create password-secured online profiles through your company

*Requiring that customers accept the terms of service on your website before making any purchases

*Utilizing the Address Verification System (AVS) to verify the addresses of shipping and billing addresses.

*Confirming a card verification value (CVV) is required for all CNP purchases made on your website

Utilizing IP Tracking to flag unusual purchases when the majority of your customers originate from a specific region or country.

Applying 3D secure technology with verification by three parties, for example, Verified by Visa

The authorization holds should be held for two days before shipping items or providing services, giving the card’s rightful or bank owner the opportunity to spot the possibility of fraud

There are a variety of ways for companies, including ones that are high-risk to protect themselves from chargebacks and fraudulent activities.

Adult Content Compliance and Recordkeeping

Adult businesses should maintain appropriate age, identity and consent records and ensure their content and operations comply with applicable laws and payment-network requirements. Specific requirements can vary by jurisdiction and business model, so merchants should obtain appropriate legal or compliance advice where necessary.

Adult Merchant Account Requirements

Applying for an adult merchant account usually requires clear business information and supporting documentation. Requirements can vary depending on the payment provider, acquiring bank, business model and target markets.

Common requirements may include:

• Company or business registration details
• Government-issued identification and ownership information
• Business bank account details
• Website URL and a clear description of products or services
• Expected transaction volume and average transaction value
• Previous processing history, if available
• Refund, privacy and terms & conditions policies
• Fraud-prevention and chargeback-management procedures
• Relevant compliance documentation

Preparing this information in advance can make the underwriting process more straightforward and help the payment provider assess the business more efficiently.

How to Choose an Adult Payment Gateway

Choosing the right adult payment gateway depends on your business model, target markets, transaction volume and payment requirements. Adult businesses should look for a payment provider with experience in high-risk processing, appropriate fraud and chargeback controls, clear underwriting requirements and reliable settlement options.

Paympire provides high-risk merchant account and payment processing solutions for eligible adult businesses. We can help merchants explore suitable payment options based on their business model, processing requirements and target markets.

Looking for an adult merchant account or payment processing solution? Contact Paympire to discuss your business and available payment options.