Merchant Accounts for Adult Websites

If you own or manage an adult website, then there’s a good chance you might have already applied for payment processing services and been denied. It may seem unbelievable in today’s global economy, but there are still dozens of industries that have a next-to-impossible chance of getting approved for payment processing services. These merchant services are vital for any business, because they enable business owners to offer their customers a variety of payment solutions, including credit card, e-check, and mobile app payment methods.

Adult entertainment industry entrepreneurs have an especially difficult time getting merchant accounts for adult websites due to a variety of reasons. Fortunately, a number of high-risk payment processors do handle merchant accounts for adult websites, but some of them charge inordinately high fees, especially for credit card processing. Likewise, some merchant account processors only offer limited services to adult websites, so it’s almost not worth paying the higher fees involved.

Zenti specializes in providing a full range of processing services for high-risk accounts, including merchant accounts for adult s. Zenti enables high-risk merchants to provide credit card, debit card, e-check, and mobile app payment options for their customers. In addition, Zenti automated billing and invoicing, plus convenient payment tracking tools for adult entertainment merchants and other high-risk businesses.

Why are adult websites considered high-risk?

Why can’t adult websites get payment processing services? There’s a variety of reasons, all of them having to do with financing, backing, and perceived financial risk for high-risk industries.

You might wonder, where’s the risk? You’d be justified in wondering, because adult website revenues have grown an average of 12.7 percent each year since 2016. In 2021, the estimated market revenue for adult websites totals $803.6 million. Just one popular site, PornHub, claimed approximately 81 million visits per day in 2017, and counted 25 billion searches the previous year. Likewise, another study shows that 40 million adults regularly visit adult websites. Yet with numbers and revenues like these, gateway payment processing companies are still reluctant to take adult website merchant accounts.

From a business perspective, adult merchant accounts can include the following categories:

• Adult videos and adult content websites
• Online dating sites
• Adult toys
• Fetish merchandise
• Lotions, lubricants, and health/wellness adult products
• Video streaming
• Sex education merchandise
• Strip clubs
• Telephone entertainment services

If you own or manage a business in any of these categories, you probably already realize that you’re in a so-called “high-risk” industry for payment processing services. You may have even applied for Paypal, Stripe, or Square payment services, and been accepted — only to have your account deleted after the first credit card transaction. If you’ve been denied approval from any of these payment gateway processors, be aware that it’s not because they think your business is unsuccessful — it’s just because of the industry you’re in. And ultimately, it’s all due to underwriting.

What is underwriting?

Payment processing companies receive financial backing and protection from a variety of financial institutions. This way, they’re protected from the risks of money loss and fraud. Credit card companies, banks, and other institutions work as banking partners with these payment gateway companies, and when things go well, everyone profits in the end.

However, banks, credit cards, and financial institutions don’t like to take risks. That’s why they’ll refuse loans and funding to various businesses, including high-risk online businesses and adult entertainment merchants. And that’s also why they’ll refuse to provide high-risk merchant services. Without underwriting from these financial organizations, payment processing companies can’t afford to offer their services to high-risk accounts.

With this in mind, here’s a look at some of the reasons why adult website merchant accounts are considered to be high-risk.

Chargebacks: The primary culprit

Every company has to put up with a certain number of chargebacks — it’s part of being in business. For most industries, a typical chargeback ratio hovers at around one percent.

For some industries, however, chargeback ratios are significantly higher. For example, the tourist industry is particularly prone to high chargeback rates because people are often compelled to cancel their vacation plans and companies are required to give refunds. This has been especially true during the pandemic, when cancellations wreaked havoc on tourism.

Among payment processing companies, the adult entertainment industry has a reputation for having significantly higher-than-normal chargeback rates, and this is a primary reason why payment processors won’t work with these businesses. This higher chargeback rate is due to a number of factors, including the following:

Friendly fraud

“Friendly fraud” occurs when someone is complicit with, or has knowledge of, a transaction on their credit card — yet to benefit themselves, they still report it as an unauthorized charge. The customer actually makes or accepts the charge initially, then misrepresents it as unauthorized so the bank has no choice but to refund them. In a typical friendly fraud scenario, the customer will file a chargeback with the credit card company, rather than first trying to get a refund from the merchant.

Friendly fraud isn’t always malicious; sometimes the customer makes an honest mistake by not following the correct protocols. Whatever the reason, friendly fraud numbers are increasing rapidly each year. Statistics indicate that, by 2023, six in every ten chargebacks will be friendly fraud cases. For now, eight out of ten merchants say that they’ve seen a significant increase in friendly fraud chargebacks. And among merchants that try to contest them, at least 31 percent say that they’ve had difficulties reversing fraudulent refunds.

Adult merchant accounts are especially vulnerable to friendly fraud chargebacks. One reason has to do with discovery — specifically, when a customer’s adult website usage is discovered by a parent, spouse, friend, or employer, and the customer decides to deny it and claim the charge as fraudulent.

As we’ll discuss below, Zenti has a variety of tools that can help you decrease your chargeback rate, even in cases of friendly fraud, so your profits and revenues won’t be impacted.

Subscription cancellations

Subscription cancelations are another reason for high chargebacks. Many adult entertainment websites offer various types of subscription services. These typically offer free trials, which customers forget to cancel when the trial is over. When the first charge comes in, these customers will request a chargeback if they don’t want to pay for the subscription.

High costs and fraudulent sites

Customer chargebacks can also be motivated by the overall high cost of adult entertainment services. In many cases, a customer might get angry about the cost of services and simply refuse to pay, or dispute the charge to try to get a discount. Reputable adult entertainment companies provide full disclosure for their services; but as with every industry, there are always a few bad apples that try to get away with charging more than the customer bargained for. These hidden fees and costs by fraudulent merchants are another reason for high chargebacks in the industry.

The adult entertainment industry is also to other high-risk factors, such as regulatory and security issues.

Regulatory requirements

Certain industries, such as adult entertainment and cannabis, are regulated more heavily than others. This is especially true of industries where a minimum legal age is imposed and IDs have to be shown before purchases can be made. Many merchant account processors simply don’t want to deal with the work involved with following regulatory requirements to meet compliance.

Security Issues

Have you ever noticed the high incidence of cybercrime and hacking associated with adult websites? Hackers intentionally target adult websites, making it even riskier for automated payments to process safely. Because of this, payment gateway providers have to be especially vigilant with adult website merchant accounts, and may even have to add extra layers of security to accommodate these businesses.

Card-not-present transactions

“Card-not-present” refers to transactions that use debit or credit card information without using the physical card itself. These typically occur when either the merchant or customer manually processes the credit card information remotely. A card-not-present transaction eliminates the need for the card to be swiped through a card reader — and while this makes the transaction more convenient, it also makes it riskier. As e-commerce providers, adult websites have a much higher-than-normal rate of card-not-present transactions, which adds another risk factor to the industry.

Zenti can help you mitigate the risks of CNP transactions, with tools to verify and match billing addresses and transaction locations.

Societal stigmas

Throughout the US, there’s still an inherent stigma associated with adult entertainment products, such as sex toys, adult websites, and other merchandise and services. In this respect, adult entertainment providers fall into the same category as cannabis and e-cigarette vendors. Their products are considered to be “underground,” and not ready for prime-time retailers.

This social stigma carries over into the business arena as well. Some banks and gateway payment providers are reluctant to accept adult website merchant accounts because they fear that it will harm their reputations to be associated with controversial industries, no matter how legal they are.

Benefits of payment processing for adult websites

A payment gateway processor will enable you to provide a variety of payment options for your customers, including:

• Credit cards
• E-checks
• Mobile app payments

Statistics show that customers prefer credit cards over any other method of payment, and secure online payment processing is especially crucial for adult website merchant accounts. By offering convenient payment options, you’ll retain customer loyalty and increase customer satisfaction. Plus, a merchant account enables you to take foreign currencies, so you’ll be able to expand internationally.

Zenti offers high-risk businesses a full roster of payment processing methods, and integrates with 99.99% of payment gateways around the world. In addition, Zenti provides high-risk credit card processing tools that enable businesses to accept and process all types of online transactions quickly and securely.

Payment tracking

A payment processing company will provide real-time tracking for your payments, from the point of sale until the charges have been fully processed.

Business management tools

By using a payment processing company, you’ll have access to online management tools that will help with invoicing and billing, while eliminating time-consuming paperwork and bookkeeping.

Secure payment processing

If you’re tired of chasing bouncing checks, you’ll be glad to know that a merchant account offers safe, secure e-check processing options.

How to get payment processing for your adult website

Getting payment processing approval for a high-risk merchant account can be a difficult process. These tips can help, but it’s best to get expert guidance from a high-risk merchant account specialist.

Maintain a top-notch credit rating

It bears repeating — there’s nothing as valuable to a business as a good credit rating. Make sure your bills are all paid on time, and pay off your debts as quickly as possible.

Stash some cash

Payment processors appreciate a healthy bank account. The more cash you have, the more successful your business will appear to be.

Save your documents

Payment processors may ask for bank statements going back at least six months, plus tax returns covering several years. Be prepared to provide as many documents as you can, because you’ll need to show how successful your business has been.

Try to prevent chargebacks

Yes, it’s easier said than done, but you can actually develop chargeback prevention strategies. For example, with enough documentation, plus proof that a product or service was paid for through your website, you might be able to dispute some of your chargebacks successfully. Be sure to keep all email correspondence with your customers, as well as signed delivery slips and other documents relative to the sale.

Zenti has a wide variety of solutions to help decrease damaging chargebacks in merchant accounts for adult websites. These tools include an Address Verification Service (which matches billing addresses for every transaction), security code monitoring for credit cards, and 3-D Secure Protocol, a tool that validates identity across various devices.

Increase privacy protections

If your business has a name that associates it with the adult entertainment industry, it’s a good idea to change this name to a more discreet one on all your invoices and billing documents. This will help your customers keep their transactions private from the public eye — and in turn, will help prevent chargebacks.

Choosing a reputable high-risk merchant account company

As the name implies, high-risk merchant account companies specialize in facilitating payment processing approval for high-risk merchants. Before choosing one, however, be aware that some high-risk companies will only work with specific businesses within the adult entertainment industry. For example, some high-risk credit card processors might not work with merchant accounts for adult s.

Also, look for fair pricing policies. Some high-risk merchant processing firms may charge varying fees rates for different credit cards, but these fees should be uniform across the board. Make sure to get complete disclosure on all fees and rates.

And finally, make sure that the payment processor is experienced in working with merchant accounts for adult websites, and doesn’t impose payment limitations. A good processor will help you provide your customers with a full roster of credit card, e-check, and mobile app payment options.

How Zenti can help your adult website business

If you’re ready to take your adult entertainment business to the next level by offering convenient credit card and online payments to your customers, Zenti can help. As one of the internet’s earliest adult entertainment payment processors, our experience gives us the expertise to handle every type of adult merchant account. Our expertise covers every aspect of the adult content industry, including e-commerce sites for sex toys and novelties, adult webcams, dating sites, gentleman's clubs, strip clubs, and adult bookstores. Because of our commitment to providing adult credit card processing and helping merchant accounts for adult websites, Zenti is the No. 1 merchant processor for the adult entertainment industry.

If you’re ready to boost revenues and increase customer satisfaction, contact Zenti to learn how we can help you take your business to a whole new level of success.