Adult Merchant Accounts - What You Need to Know

First, what exactly defines an "adult" business? Many adult-oriented companies—such as stores that sell adult toys, erotic novelties, sexy lingerie and related adult apparel—are considered normal-risk businesses and have little trouble acquiring a merchant account. This is not the case for businesses that provide hard-core pornography for sale or download, whether full-length movies, shorter videos, or sexually explicit or nude photos.

Approve or disapprove of pornography, the fact remains that the pornography industry, whether professional or amateur, is wildly lucrative. But it carries attendant risks and dangers other kinds of businesses might not have to face.

For one, pornography has for decades suffered the taint of criminality, partly because of obscenity statutes and other means used to try and curtail its spread. Even though it is a multi-billion dollar industry in the United States, many people consider it morally objectionable and socially destructive. It should also be noted that adult sites have to manage the complications of barring children from viewing its content, which can generate other legal risks.

Aside from this, or maybe partly because of this, the adult market can attract scam artists in disproportionate numbers compared to other areas of business. Consumers may be more likely to see an adult site as illegitimate or fraudulent, simply because of the type of business it is. Adult sites have higher levels of chargebacks than other businesses, as well. To use a common example, if a wife discovers her husband's adult website purchases on credit card transaction slips, he might try to claim his card was stolen and attempt chargebacks.

Because of the unique problems adult businesses face and the higher rate of chargebacks, an adult business will typically be considered to need a high risk merchant account. A high risk account, though generally similar to a normal merchant account, will charge much higher fees, may have a large start-up fee, and may require some amount of the merchant's funds be held in the event of excessive chargebacks and fraud.

Many so-called adult businesses that sell products like clothes and toys and do not provide pornography will be treated like conventional businesses, but some providers will still treat them as high risk. If you are operating such an adult business, search around for a provider who will not classify you as high risk. If you are operating a business that sells pornography, on the other hand, you are probably out of luck and will have to acquire a high risk merchant account.