There are two kinds of merchant account. The type of account offered is based on the level of risk involved in processing the payment. Financial institutions such as banks tend to consider the type of services or products offered by the merchant, to determine the most suitable type of merchant account. Adult credit card processing is primarily used to protect the identity of the customer. The user’s personal information is hidden, withheld or unknown.
Such accounts are susceptible to inappropriate dealings, including fraudulent activity. Many banks refuse adult credit card processing because there is a high risk of chargeback. At present, thousands of companies earn money from adult oriented websites, but leading financial institutions still view adult service providers as high risk merchants. Financial establishments accept adult websites are lucrative; however, the majority of banks turn down merchant account applications owing to ethical values. Hence many businesses struggle to find a bank that does adult credit card processing.
A small number of banks offer high risk merchant accounts. These financial institutions process credit card transactions for lotteries, shopping clubs, online pharmacies and online casinos, however, they are reluctant to do business with adult websites. The minority of companies offering credit card processing for adult websites tend to have stringent conditions and charge huge fees. Potential customers steer clear for fear of losing a significant chunk of profit to the card processing company.
Adult websites who decide to use expensive credit card processing services may have to increase their charges or reduce the quality of service to survive. The average business person accepts this is not good business practice, as clients will look elsewhere for good quality services and products that are more affordable.
We must accept that different merchant accounts deal with a variety of businesses, but it makes little sense to label an account as low risk or high risk. All businesses pose an element of risk to card processing companies and risks according to business. The banks and credit card processors should research the situation carefully and modify the rules used to assess future applications. Businesses that apply for adult credit card processing should be offered tailored terms and conditions to suit. This will allow adult businesses to locate a merchant processing company that enables them to sell their goods or services without raising charges or compromising on quality.
Fortunately, many banks and credit card processing companies have conducted extensive research regarding adult credit card processing. As a result, some have revised their terms and conditions used to determine merchant account applications. The recent changes have made it easier for these financial institutions to offer an adult credit card processing service to all businesses that meet current rules.