Adult Payment Processing

Merchants have found that many of the payment processors today, like PayPal or Stripe, will not work with higher risk industries like adult merchants. These limitations in the payment processing industry have created demands for other forms of payment to be accepted in these high-risk categories. One of the alternatives to accepting credit or debit cards that have emerged is the use of checks as a reliable and secure payment processing option for businesses that have experienced problems with the credit card industry.

Check processing services has been used by many different adult businesses since it provides long-term, stable payment processing accounts with lower transaction fees and overall costs than many of the services credit card processors can offer. Though viewed as a non-conventional payment method when compared to credit card or debit card payments, customers have migrated and accepted the use of checking accounts to make direct monthly payments as a much more convenient and simple financial process that eliminates more monthly credit card bills.

The payment processing professionals at Adult Merchant Services have over 10 years of experience with the handling of adult payments, allowing us to work with merchants to provide the best solutions for their business needs, whether it’s accepting credit cards or using an ACH or eCheck services. Our network of payment processing services and banking institutions has helped us grow to become a leading adult payment processor for many of the businesses in the adult industry.

Types of Payment Processing available

There are a number of different payment processors available to online merchants, but only a few of them can offer services to adult businesses. Some of the most common types of payment processing services available to adult merchants include:

Adult ACH
Adult eCheck
Adult Check 21
Adult Check 22
Adult Credit Card Processing

One of the most common payment methods used in the adult industry are bank cards; including debit and credit cards for online and retail purchases.  Credit card transactions are managed by the card sponsoring bank that issues the customer’s bank card and maintains the customer’s account. The payment processing services used by the merchant for credit and debit cards are handled by the payment processor and payment card associations that regulate the merchants and industries using their services.

An alternative type of payment that is has been gaining in popularity is the use of check processing services for online adult transactions. The different types of check processing services available in the adult industry include ACH, Check 21 and Check 22.  These methods of payment draw funds directly from the customer’s checking account instead of the funds being sent from a credit card company. Each check payment service is set up differently in accordance with the various financial laws and regulations regarding their services.

Merchants can determine what service will best fit their business’ needs,  whether its lower fees with checks or the convenience of accepting debit and credit cards.  At Adult Merchant Services, we have the ability to set merchants up with a variety of different payment services to best fit their company’s needs.

ACH Processing

ACH processing, also known as the Automated Clearing House, is an electronic banking network used in the United States for sending financial transactions.  Every year the ACH Network handles billions of transactions worth trillions of dollars comprised of direct deposit and direct payments used for most interbank transactions, including bill payments and payroll transactions.

The Automated Clearing House network is managed by over 10,000 different financial institutions making up NACHA (National Automated Clearing Housing Association), a self-funded, self-regulated not-for-profit organization.  Though the Federal Government does not oversee these transactions, Federal Reserve member banks account for about 60% all ACH transactions. Guidelines for these transactions are strict and closely monitored, subjecting financial institutions and merchants to any fines or fees assessed by NACHA or the Federal Reserve.

An ACH transaction involves a number of different organizations to complete a payment. These organizations include:

• ODFI – Originating Depository Financial institution
• RDFI – Receiving Depository Financial Institution
• ACH Operator

The ODFI receives an ACH request from the individual or company, the Originator, wanting to send or receive money from another bank account, known as the Receiver. These requests are cued up until the predetermined time of the day when the batch of requests will be sent to the ACH Operator. The ACH Operator operates through either the Federal Reserve or NACHA, accepting requests and determining how to process each transaction. Once the determination on the action requested by the Originator, the transaction details are released to the RDFI so either payment can be credited or debited to the Receivers bank account. Credits will generally take between 1 to 2 business days to complete while debits will be completed in 1 business day.

Check 21 Processing

Check 21 Processing is an alternative payment solution for financial institutions that was put into effect through the Check Clearing for the 21st Century Act in 2004 as an alternative solution for our vulnerable ACH system. Check 21 was designed as a way to reduce the dependence financial institutions have for physical checks by allowing for substitute checks to be created and electronically processed.

Changes to the financial system after September 11th allowed banks to use electronic images of checks, called substitute checks, instead of physical checks to process transactions. Using remote deposit capture software, original copies of checks could be scanned and converted to a 2 sided image to be used for clearing. Once the checks are successfully scanned the files are sent to the Federal Reserve either directly or through the depository financial institution.

Check 21 is held to a different standard than ACH or eCheck transactions due to the process of which transactions are handled.  Unlike ACH or eCheck that are regulated by NACHA and the Federal Reserve, Check 21 allows banks, credit unions, and other member organizations to accept checks directly with a physical check.

Check 22 Processing

Similar to the Check 21 program that allows banks to create digital checks, Check 22 allows for the customers to initiate, create and process their own digital checks for purchases. Check 22 transactions allow customers to input the amount of money for the transaction along and add their electronic signature to the check from their signature listed on file.

Many merchants have approved of the Check 22 process because industries that are prone to chargebacks are positioned better to contest these problems.  Customers that authorize a Check 22 transaction are required to accept the terms that state any problems are to be resolved directly with the merchant and violations to these terms can result in significant collections and other banking costs.

Unlike NACHA or the Federal Reserve that requires merchants to abide by strict guidelines, including thresholds for returns and NSF transactions by customers, Check 22 provides a good alternative.  For many of the higher risk businesses, including adult that accept checks, using a payment service that has a high tolerance for bad transactions while giving the merchants better operating terms is a fantastic option for growing their business.

eCheck Processing

Another common payment method used in the adult industry are Electronic Checks, otherwise known as eChecks.  Electronic checks operate in a very similar manner to that of an ACH payment when processed through the banking network. Checking account information is entered by the consumer or by the merchant into their payment gateway to create the electronic check. Once the check has been created, account information is sent to the Federal Reserve and processed in a similar manner as an ACH transaction.

Settlements will generally occur within 2-3 days of the transaction being initiated by either the merchant or the customer.  Though checks are not the most common payment method, the fees are generally lower and have enticed many merchants to offer this alternative to cut costs.  Merchants with higher levels of returns, generally higher risk merchants, do not find eCheck as good of a solution due to the strict NACHA and Federal Reserve guidelines.

Differences between Check 21, Check 22, eCheck & ACH

ACH, eCheck, Check 21 and Check 22 all provide reliable and affordable payment options for merchants in the adult industry looking for a primary or complimentary payment processing method in lieu of credit cards.   Depending on the business’ billing model, Check 21 or Check 22 might be a more suitable solution for the merchants’ needs if they experience higher than normal chargebacks or excessive NSF declines.

Some of the main differences between Check 21 and Check 22 with eCheck and ACH include:

Check 21 & Check 22

• Same or Next Day Clearing
• Disputes Require Written Claim
• 40 Day Dispute Window
• No NACHA or Federal Reserve Rules
• The customer creates check with eSignature (Check 22)

eCheck & ACH

• 3-5 Business Days for Clearing
• Disputes filed over the Phone
• 60 Day Dispute Window
• Follows NACHA and Federal Reserve Rules

Types of Check Processing Services for Merchants

There are many different types of adult merchants using the high-risk check processor services of Adult Merchant Services. These services are generally used for membership or recurring billing purposes but there are other types of check processing services available including:

• Adult Membership Website Check Processing Services
• Adult Dating Website Check Processing Services
• Adult Toy Store Check Processing Services
• Adult Video Check Processing Services
• Check Processing Services for Bath Houses
• Escort Check Processing Services
• Check Processing Services for Escort Directories
• Massage Parlor Check Processing Services
• Massage Therapist Check Processing Services
• Check Processing Services for Penis Enlargement Products
• Phone Sex Check Processing Services
• Check Processing Services for Sexual Enhancement Products
• Check Processing Services for Strip Clubs
• Check Processing Services for Swingers Clubs

Most adult businesses accepting checks are operating online with a membership billing program, but merchants offering one-off services or products are also able to accept payments either online or in person with the proper payment processing equipment.

Requirements for a Check Processing Services

Most check processing services will require merchants to submit an application along with supporting documentation for proper underwriting of the account.

• Completed Application
• Voided Check from Merchant Checking Account
• Copy of Government Issued ID
• Prior Processing History (not always required)
• Prior Checking Account Statements (not always required)

Check processors will require a proper KYC (Know Your Customer) search of merchants to ensure there are no concerns or potential problems working with their business. Normal underwriting to perform all checks on a merchant can take between 1-5 days depending on the extent of information provided.

Aside from a background check, underwriters will also want to make sure that the applying business has a good track record for accepting payments. High returns or NSF transactions will alert underwriters as to the type of check processing account the merchant will need to use for their business.

Upon account approval, merchants will be issued credentials to log into the check processors portal for reporting and other account services. Merchants will also be issued an API to seamlessly integrate their website into the processor’s payment gateway.

Payment Processing FAQs

For more information on check processing services, check out answers to some frequently asked questions from the governing bodies.

• Federal Reserve Check 21

Get Started Processing Payments Today

Contact one of our payment processing professionals at Adult Merchant Services to ask any questions about check processing or to determine if accepting checks might be a good solution for your business. Our staff will be more than happy to answer any questions or to give assistance to merchants with existing payment processing services in need of help or assistance.

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