Getting an Adult Merchant Account For Your Business
If your business revolves around adult entertainment, then you need an adult merchant account. Adult entertainment is one of the oldest industries and has survived for centuries. But the internet completely changed the adult entertainment business. It brought adult entertainment out of the shadows and into our homes. You can find anything from escort services to adult toys with a simple mouse click.
But as an adult merchant, you need to understand how merchant accounts work. Although the adult entertainment industry is huge, it is not easy to set up your merchant account. Many banks are reluctant to offer merchant services to adult businesses. But there are many adult merchant service providers who can help you. This guide will explain the process and show you how to obtain an adult merchant account. The process is straightforward once you understand the challenges you will face.
What is an Adult Merchant Account
It is hard to imagine just how big the adult entertainment industry is. But estimates put the annual turnover at $100 billion worldwide. With so much money involved, you would think that banks would love your custom. But alas, that is not the case. In the bank’s eyes, adult entertainment carries a higher risk than any other industry. This is because the adult industry suffers more legal issues and chargebacks than any other business. Therefore an adult merchant must obtain an adult merchant account. And this is the difficult part if you wish to get into this booming industry. Many banks that offer merchant accounts to high-risk companies, will shy away from an adult merchant.
They worry about their reputation and fraud issues. And as with all high-risk businesses, you need a merchant account for credit card processing. This is why you need adult merchant service providers to help you get your adult merchant account. Adult merchant accounts have higher fees and stricter contractual agreements. But once you have your merchant account in place, you are ready to join one of the fastest-growing industries. An adult merchant account functions like any other merchant account.
Once cleared, the money from your merchant account transfers into your normal bank account. But to get to this point, your provider needs to help you with chargeback prevention. This is the single most important thing in the adult merchant industry, as the risk of chargebacks is unusually high. Knowing this, the bank will have much stricter criteria for offering merchant services.
Why is Adult Entertainment Considered a High Risk Industry?
Adult entertainment is a very broad term. It is a huge industry with many niches. Countless businesses are offering live streaming services, telephone sex hotlines, and adult videos. Other businesses sell adult toys, sex education courses, adult books, and novelty items. While some sectors are obviously more high-risk than others, all adult merchants fall into the same high-risk category.
While a lingerie store is very different from an adult video website, they are both considered adult entertainment. And some adult merchants tread a fine line between what’s legal and what’s not. Escort services, for example, are often seen as dubious businesses. This causes banks to be reluctant to accept adult companies regardless of what service they provide, and they deem them all as high risk. But there are other reasons why adult entertainment is a high-risk industry. The most prominent of these is the high rate of chargebacks.
No other e-commerce business encounters as many chargebacks as the adult entertainment industry. Usually, a chargeback occurs if a customer is unhappy with their purchase. But with adult credit card processing, many other situations arise. A spouse may see a charge on their partner’s credit card bill for an adult service. The partner denies it and files a chargeback. Or people may buy sex toys or fetish items and later have buyer’s remorse. Rather than try to negotiate a refund, they file a chargeback. With so many extra issues, all adult entertainment is branded high risk.
Is it Easy to Get Approval For an Adult Merchant Account?
It is difficult for any high-risk merchant to get approval for a merchant account. That makes finding the right payment processing provider essential. They specialize in helping high-risk businesses get merchant accounts. And since getting an adult merchant account is even more challenging, it helps to prepare in advance. Getting a merchant account will depend on many factors. You will need to provide details of your previous processing history.
If this is your first e-commerce venture, then you won’t have any processing history to provide. In this case, your credit history will be important. Make sure your credit cards and bank accounts all show positive traits. Any documentation that shows you have money behind you will be useful to your application. And being upfront with your payment processing provider will make the entire process easier. The more honest you are with them, the higher your chance of approval. You will need to have a clear business plan, a valid business license, and be honest about what your business may become.
Many adult merchants successfully acquire merchant accounts only to later have them frozen. This is due to giving misleading information when they first set up their merchant accounts. Business is business, and payment processing companies want to be your provider. So if you are a legitimate adult merchant then they will be more than willing to help you. But if you are dishonest with them, expect the process to be twice as hard next time around.
What to Look For When Choosing an Adult Payment Processor
Getting an adult merchant account is not an easy task. But there are many payment processing providers who will do the hard work for you. As long as adult businesses are honest in their application, the right processor can help get the best merchant account. If you already have an adult payment gateway, then look for easy integration with their payment processing software. Next, a variety of payment options is vitally important. To purchase adult goods, customers may wish to use specific credit cards.
And since adult-oriented products and services attract more chargebacks, preparation is key. Make sure your credit card processing provider helps with chargeback prevention. They should have excellent customer support as you’re likely going to need their help. And last but not least, make sure you understand their costs and that there are no hidden fees in the contract.
Reasonable and Clear Contract Terms With No Hidden Fees
We know that fees for an adult merchant account will be higher than for a regular merchant account. So make sure your contract clearly states all the fees and costs for the service. Life as an adult merchant e-commerce business is going to be hard, so make sure you don’t get hit with unexpected fees. A common mistake an adult merchant can make is to skim over things like early termination fees.
A payment processor adds this to the contract to cover expenses in the event you close your business. Many contracts can run for up to 3 years, and if you end your contract prematurely, the costs can be high. If your processor includes a payment gateway, check if you have to pay for this service. Your account provider should be transparent with all the fees that you might face.
Many adult payment processors provide you with their own adult payment gateway. This helps payment processing to run smoothly. Your payment gateway is like an electronic cash register. If it does not work, then you are losing sales. But if you have your website already set up, you probably have your own adult payment gateway. Then it is imperative to be able to integrate this payment gateway with your merchant account.
If you are not very tech-savvy, then try to find a provider that will help you set it up. Credit card processing is the most important aspect of your website or e-commerce store. And if you run a brick-and-mortar store, you will also need to have a variety of terminals or mobile card swipers. Many payment processors can provide these for you. But make sure they integrate well with your website or other payment processing software.
Accept All Card Brands
As an adult merchant, you need to be versatile. Your online payment methods need to cover as many options as possible. And no matter what adult-oriented products and services you provide, the majority of your sales will be with credit cards. And your customers will want their processing history to be discreet. For that reason, they may like to do their credit card processing with a particular card.
And if the customer cannot make an online payment with that card, you have lost a sale. Most customers abandon carts if they cannot find their preferred credit card processing option. Therefore, make sure that your payment processor can accept all credit cards. There is no point in having an adult merchant account if you cannot get payments into it. And plan for the future as you may later expand into other states or countries.
Knowing that you will pay more for an adult merchant account should not make you cut corners. There is a reason you pay more for this type of merchant account. But it is common for a high-risk merchant to go out of business because a bank freezes their account. A frozen account means a loss of sales and your business might not withstand the loss of profits. So while you should shop around for payment processors, the one with the lowest fees may not be the best fit for your business.
But, the competition among adult merchant account processors is good for adult merchants. If you know the type of adult merchant account you need, then you can find reasonable rates. Most payment processors will give you a quote quickly, so you can get a feel for the type of costs you can expect. But don’t commit to any payment processing provider unless you are 100% sure they can facilitate your needs.
In any business, having good customer support from your payment processors is important. But when you have an adult merchant account, this is vital. Adult payment processing has many extra risks attached to it. Adult entertainment businesses have the highest rate of chargebacks and fraudulent payments. And these can cause the bank to freeze your merchant account at any time. So your provider should help you in all aspects of chargeback prevention.
Your adult merchant account needs to be up and running at all times. Look for a provider that offers you great customer support and is available to help when you need it most. If an adult merchant receives a chargeback that is not their fault, they need to get on it right away. This requires adult payment processors that know the adult entertainment business. Cooperation is key, so make sure they offer you great customer support.
Which Payment Processor Is Best For Your Adult Entertainment Business?
Getting a merchant account for a business in the adult entertainment industry is a difficult process. But applying for one is easy, and high-risk adult businesses can apply online within a few minutes. But you need to choose the provider that best suits your adult entertainment niche. The best adult merchant account provider for adult entertainment is the one that understands the industry. More so, the best adult merchant account provider is the one that understands your particular business.
Some providers offer an offshore adult merchant account if that’s what your business needs. As long as you are honest in your application, they should secure you the right merchant account. But make sure your provider specializes in merchant accounts for your sector of the adult industry. Whether you deal in adult toys, books, or offer escort services, you are a high-risk merchant. You need a provider that can handle your sales volume and help deal with any chargebacks or issues.
Different providers offer different merchant accounts depending on your niche. So you should research what adult merchant accounts the account provider normally deals with. The provider will advise you on the best merchant account to suit your needs. An adult merchant should only have to focus on their adult businesses. It’s the job of the payment processor to get you the adult merchant account and deal with your credit card processing.
Top Adult Merchant Processors
We have chosen the 3 top adult merchant account processors you can use in 2021. They deal with the adult industry and know how to get you the best merchant account. A high-risk merchant account costs more than a regular merchant account. For that reason, we recommend to every adult merchant that they get several quotes. By applying for several adult merchant accounts you will understand the costs better. You only need one merchant account as long as it fulfills your needs. But some adult entertainment businesses opt for multiple merchant accounts. You can distribute sales volume over 2 or 3 accounts and keep your chargebacks low on each account.
Durango Merchant Services
Durango provides an excellent merchant account for high-risk companies. If you are an adult merchant with a poor processing history, they may be the best adult merchant service provider for your business. They provide a personal account manager to each adult merchant and offer offshore merchant accounts. This allows an international high-risk merchant to do business in the US.
If they provide you with an offshore adult merchant account, be aware they do not have 24-hour support, so check your time zone compared to the US. They deal with every adult merchant on a case-by-case basis. So the contract terms and costs depend on your role in the adult entertainment industry. It is standard to get a 3-year contract, and the early termination fee depends on the terms you agree. They also offer their own payment gateway for a monthly fee. Overall, they provide an excellent merchant account for any adult merchant.
eMerchantBroker is a great choice for merchant accounts if your company is very high risk. They offer merchant services to riskier adult businesses such as escort agencies. If you are in one of the more high-risk areas of adult entertainment, then they probably offer the best chance of getting an adult merchant account. In return for taking on adult merchants that are very high risk, they have stricter contractual agreements.
Expect an early termination fee and higher rates than other adult merchant processors. They offer a tiered pricing model for your merchant account which is not ideal for an adult merchant. But their approval record is quite high. So if you are having difficulty securing a merchant account, they are a great choice. It is worth noting that they provide your merchant account via a third party. So if you have problems you need to deal with your credit card processor directly.
Payline Data offers excellent merchant accounts. They have transparent pricing and provide a merchant account with a unique merchant ID. With interchange-plus pricing, they have no early termination fee for your merchant account. But note, they only offer merchant accounts to low-risk businesses. Therefore, check your terms if you are a high-risk merchant or adult merchant as they use a partner company. For high-risk companies in adult entertainment, they provide adult merchant accounts via SMB Global.
So if you have an adult merchant account, the pricing model will be different. So make sure to read your merchant account contract thoroughly. However, SMB is also one of the best providers for adult merchant accounts. And they offer adult merchant accounts to almost any high-risk company. SMB also provides an offshore high-risk merchant account for international sellers in the US. So although Payline Data primarily offers merchant accounts, they will still assist you as a high-risk merchant.