Choosing the Right Payment Processor for your Adult Business

Finding the right payment processor has never been without its challenges.

But now, with increasing regulations adding pressure to various aspects of the adult industry, including age verification legislation in some states, securing a merchant services account could be even more difficult for some.

For merchant service providers, there are a variety of revenue-generating companies that fall within the adult entertainment category.

Everything from businesses that provide adult photos and videos, sex toys, lingerie, fetish items, and sex education. Dating websites fall within this category as well. It’s important to know that merchants don’t all work with these various sectors in the same ways. Some merchants may focus their services on a select few.

For some time, merchant service providers have considered the adult industry as high risk when compared to other industries.

The reasons vary. One is the volume of chargebacks.

High-risk merchants could see chargebacks in the 1%-5% range, for example, whereas businesses considered low risk often see chargebacks at less than 1%.

The highly regulated nature of the adult industry and the industry being considered controversial to some also contribute to it being considered high risk.

But it’s not just the adult industry that falls into this category.

Industries rife with newer businesses with no documented financial history, businesses with high sales volumes, over $20,000 or more each month, and services with an increased potential for fraud are all considered high risk.

More general factors like reputational risk and corporate policies could also prevent payment processors from working with high-risk industries. Additionally, differing regulations and legal requirements across states for adult businesses make managing payment processors challenging.

Complicating these factors are the ongoing data privacy concerns and data breaches across all e-commerce sectors. Payment processors consider this high risk.

Despite these hurdles, there are a number of payment processors who specialize in supporting the high-risk market.

Many in the adult industry are familiar with merchant service providers such as SegPay, which says that “banks and credit card processors often consider adult, cam, fan sites, and dating merchants to be high risk due to extensive traffic from around the world, the ability to control content, manage chargebacks, and meet the card brands compliance requirements. Segpay navigates these risks accordingly and offers a reliable solution for businesses with an industry-leading secure payment gateway.”

But according to Forbes, other high-risk merchant service providers include Payment Cloud, Host Merchant Services, Durango Merchant Services, SMB Global and Soar Payments.

The small business website Merchant Maverick identified a similar list along with a few others, including Corepay, PayKings, Instabill and SeamlessChex.

When applying for an account, beyond just having a bank account, it’s important that you have all of the documentation required, including a business license and government ID. Be sure your business is fully compliant with all adult industry regulations and that you have a history of financial transactions, including chargebacks.

No matter the provider, these services aren’t without high fees. Shop around to determine what works best for your business.

Securing an adult merchant account can seem daunting. It’s no fun being denied.

But keep in mind that the adult industry is included in the high-risk category, and you should expect additional hurdles in your search for the right payment processor.