The Challenges of Getting A Merchant Account for The Adult Entertainment Industry

The adult entertainment industry, also popularly known as the sex industry, does not just refer to physical intercourse. In fact, the major part of the industry may not even deal with any physical contact. This also includes phone sex, adult magazines, erotic literature and sex toys where the potential customers do not come into any physical contact with each other. It also refers to the industry that provides escorts. So, anything that is related to sexual entertainment falls under the category of the adult industry.

Online merchant account for the adult entertainment industry

In most cases, the industry operates online and thus all the buying and selling happens online on the internet. This gives rise to the requirement of an online merchant that is friendly towards the trade. The merchant account lets the business have a virtual terminal where the customers can do their transactions online using their credit or debit card.

A merchant account makes it beneficial to increase the revenue of the business as it reduces cost and also streamlines the entire process.

Most highly searched keyword on the internet is sex which makes this industry a profitable one. Also, the internet has played a major role in lifting off the disgust and letting people pay for adult entertainment online. The merchant account tailors the process of payments so that it meets the needs of the client.

A merchant account is no more a value-added feature for your business. It is, in fact, a necessity today. You need to handpick what services you want so that you are satisfied with what is being offered to you.

Adult entertainment business denied by the conventional banks

Reasons why your business can be denied the merchant account service could be because of:

• Card not present

• Products that are unregulated

• Higher claims of chargebacks

• No signature for making payments

The adult entertainment industry is profitable but the banks do not take this into consideration. The banks and the institutions see this industry as high risk and reject their application to set up a merchant account.

The conventional banks tend to deny setting up a merchant account for the adult entertainment industry because they view it as a high-risk industry. This is because:

• The business is prone to thefts and scams

• The industry has many chargebacks that are not liked by the banks

• Ownership and piracy are other issues that creep into this industry that does not let this industry to survive

The erotic entertainment business is not supported by the First Data, PayPal, Stripe, Square and most banks deny the services. The rolling reserve is very high in this business because even though the payments are not fraud the customer could ask for chargebacks after some time and this puts the account into a high-risk category.

This should however not be seen as a dead end. Many merchants deal with the high-risk business and can help to grow your business.

Merchant account for the startup adult entrainment business

The problem gets even worse for companies that are a startup. Since they do not have payment processing history they may get denied even by some high-risk merchant account providers. But the good news is that there are some merchant account providers that are ready to accept the new businesses. The business can take the benefit of the ACH Processing/Check Processing and Check Drafting so that the money gets deposited into the account directly.

Most of the banks do not allow customers to use virtual cards that do not have their signature. The domestic banks consider this to be high-risk. The high-risk merchant account providers make sure that the payments go smoothly and that the account is compatible with all the payment gateway setup. They also support e-commerce platforms.

Adult entertainment industry merchant account services -Domestic and offshore options

The adult entertainment industry at times is stuck between choosing a domestic or an offshore option. An offshore account may seem to be lucrative but the domestic account also comes with their share of benefit.

The domestic account is secure and lets you get better rates. However, most of the time the business may have no option to choose a domestic account and they would have to choose an offshore account.

The domestic accounts have to follow the land laws so the banks are able to charge lower interest rates because they know that the business is secure. However, those that are dealing with high-risk accounts may have to opt for an offshore account.

The e-commerce and the new business go through some lean processes with payments and this is normal for even the established business. The payments could take time to get credited or the company could delay in making payments. The conventional banks may stop the service in such cases which leads to trouble and bankruptcy for the company. The high risk merchants do not do that because they have multiple underwriting banks. This ensures that the payments do not get stopped and that the payments go smoothly.

Conclusion

The adult entertainment industry is highly profitable. The business is also, legal but the issue arises when the merchant account providers deny the application to open a credit card provisioning account for companies in the adult industry. In such cases, a high-risk merchant account is the only solution for the business.