The adult entertainment, products, and services industry is one of the most lucrative sales sectors in the world these days. It’s no wonder that you want to cash in on some of the profits for yourself. Before you do, it is important to get educated on the complexities of this type of business, one of the most important of which is the world of payment transactions and business accounts.
An important definition.
As you contemplate your adult business’s customer base and product or service selections, there is yet another factor to which you need to give equal consideration: The concept of the high-risk business. That’s because all retailers who sell adult-only items, videos, live chat, and other services will without question be deemed a “high-risk” business by the credit card processing industry. It has nothing to do with how much money you can make; this designation is based on the perceived risk that your type of business could pose to the companies that handle your customers’ payments.
What sets the adult industry apart?
A logical question at this point is this: What about my 100% legal ecommerce store makes payment companies so squeamish and forces me to work only with a high-risk credit card processor?
The following elements combine to cause these companies to give your store extra scrutiny and that high-risk status.
- You sell your products and services online. By their very nature, ecommerce transactions are card-not-present, meaning that you have no way to physically see the customer’s card or verify their identity in person.
- These companies are constantly aware of their own brand and its reputation. Affiliating themselves with businesses that market edgy merchandise and services has the potential to transfer an unwanted whiff of scandal to them.
- There is a higher likelihood of chargebacks, i.e., forced refunds from customers in the adult industry.
- Intense industry regulations require extra time and resources to monitor compliance both for you as the merchant and your high-risk credit card processor.
- You sell products or services with age restrictions. As such, there is always a greater potential that a juvenile will find a way to slip through the cracks, thus bringing the taint of scandal to your processing company and potentially subjecting them and you to legal repercussions.
- High monthly volume. The great news is that adult businesses can be profitable. However, this does put them at greater risk of fraud.
In general, your business will be considered high-risk if you sell the following.
- Live chat.
- Adult toys, books, videos, and other paraphernalia.
- Dating sites.
- Adult magazines and subscriptions.
- Male enhancement products.
Being designated as a high-risk business is the status quo in your industry and is nothing to worry about as long as you carefully choose the payment processing company that will best meet your current and future needs.
As a high-risk client, you will find that you are asked to undergo a more protracted application process. Most likely, you will need to provide additional documentation and it might take longer to be approved. Additionally, you can expect to pay higher ongoing transaction and monthly fees.
However, there is no question that there are many reputable processors who can partner with you to ensure that your adult business runs smoothly. While your fees may be higher, taking some time to shop around will allow you to find the vendor offering you the most competitive prices while still providing the insider knowledge of your industry that will help you to succeed now and in the long run.
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