The adult entertainment industry is a popular one – and one that brings in billions of dollars every year. It’s pretty obvious why merchants want to cash in on the opportunity to sell adult entertainment products and services. While these products are easy to sell, they are also easy to disagree with and decide to return. That makes the industry a risky one for banks and processing companies.
When an industry is risky, it means more work for the bank or processor. The adult entertainment industry has changed the processing company in many ways and merchants who are a part of this industry now have different options for handling their sales.
What Products and Services Are Considered Part Of The Adult Industry?
While most people know adult products and services when they see them, there are some things that can blur the lines. It can be hard to determine if these things are adult material and therefore it can be hard for a merchant to determine if they can go with a traditional payment processing company or one that caters to the needs of high-risk merchants.
Here are some examples of products and services that are considered to be part of the adult industry:
- Porn
- Adult photos
- Sex toys
- Dating services
- Adult clothing
- Adult accessories
Why Are So Many Banks Reluctant To Work With Adult Industry Merchants?
There are many banks and processors that just won’t work with adult industry merchants. The adult industry has changed the game for them, and they just can’t keep up. It’s best to choose a processor that is happy to accept the changes and resolve issues that are common with the payment process in the adult industry. Here are some of the ways the adult industry has changed merchant services:
Inexperience
One of the reasons many credit card process companies are nervous about working with adult industry merchants is because it’s an industry for newbies. Many people are happy to hop into the industry with very little experience, which means they may also have very little experience as merchants at all. This adds to the risk of working with them, especially for banks who don’t want to deal with the fraud and chargebacks that the adult industry often brings.
Reputation
The reputation of certain adult industries is just one of the reasons they are considered high risk and have completely changed the way banks and card processing companies do business online. While this industry is huge and has the potential to make a lot of money, many banks and processing companies just don’t want to be associated with it. The risks of the industry have a lot to do with this, but not everyone is open-minded and some see the industry as dirty and immoral. Not everyone is willing to work with adult industry merchants to process their payments.
Fraud
The adult industry is high-risk for a lot of reasons and one of those reasons is fraud. It’s very easy for scammers and criminals to commit fraud in this industry. The type of fraud can vary and can range from stealing the credit card information of customers to selling materials and products that aren’t as described. Many processors just don’t want to deal with these risks and the confusion they can cause. This has left adult industry merchants with very few options in terms of banking and card processing.
Chargebacks
Because the adult industry is so risky, there are a lot of chargebacks. Chargebacks cost a lot of money for merchants and banks, and the investigations can take a lot of time. Many processors don’t have the time to devote to all the investigations. It’s easy to fake or misrepresent online materials, including adult content, videos, images, and even products. This means customers are more likely to file chargebacks. Only processing companies that are willing to accept the risk of chargebacks are willing to work with adult industry merchants.
Miscoding
Because many adult merchants and their sales reps are aware of how difficult it is to find processing services to work with them, they may go as far as miscoding their websites to make them seem like they are focused on selling things other than adult services and products. Eventually, the truth comes out and these merchants end up having to shut down because they have no way to accept payments. This makes it even harder for the legitimate adult industry merchants to find a processing company that is willing to work with them.
What Makes A Merchant High Risk?
There are many different companies that are considered high risk, and it’s not just a title reserved for those in the adult industry. There are certain things that make a company riskier than others and make traditional banks want to avoid working with them.
Some of those things include:
- The loss of a previous merchant account due to high amounts of chargebacks
- New business with little or no credit processing history
- An industry with higher chargeback rates
- High dollar transactions
- Subscription-based products and services
- International merchants that sell to high-risk countries
- Merchants that accept various currencies
- Merchants with bad credit history
If you happen to be an adult industry merchant and are looking for a bad credit merchant account with a processor who will work with you, be sure to consider HighRiskPay.com. We understand that the adult industry has changed the game, but we are happy to embrace those changes and help you process payments quickly and safely. We even offer bad credit merchant account instant approval! See more about high risk processor.
