Best Adult Merchant Accounts for Online Businesses

cris : May 1, 2018 19:49 : adult merchant account, merchant account

Why do merchants need the best adult merchant accounts?

With the growth of the online adult entertainment industry, the need for merchants to be able to accept payments from their customers through the internet has never been greater and the need to find the best adult merchant accounts for this niche industry has become equally important. The adult industry generates some of the largest revenues on the internet, with countless membership sites, advertising companies and novelty stores, the growth of the industry has continued year over year with no slowing down in sight.

Most banking institutions have viewed adult credit card processing as a high risk industry for a number of factors that are common among higher risk businesses. Since most adult businesses operate over the internet, the percentage of card not present (CNP) transactions is excessively high, with many adult merchants experiencing 100% of their transactions occurring online in a CNP environment. This high percentage of card not present transactions has traditionally had a strong correlation with high percentages of chargebacks, with some businesses experiencing chargebacks exceeding 3% of sales, placing them into a high risk level among payment processors.

While the risk of illegal actively or fronts is not necessarily a reason for considering these merchants high risk, the nature of the business along with the financial track record is enough to cause concern among payment processors and banking institutions alike. Because of these concerns, its essential for merchants to find and partner with the best adult merchant account providers on the internet to insure their business has a strong financial partner.

What makes the best adult merchant accounts?

Merchants that have decided they need an adult merchant account might have a number of different requirements that are usually important to look for in payment processors while comparing services and features to fit the needs of their company. Even though every business, store and website are different and the needs of the business owners might vary, there are some functions that make adult credit card processing more efficient and affordable across the board.

In the merchant services industry, there are a number of merchant acquires, payment processors and merchant services companies that have been formed to provide a variety of credit card processing services. Many of these companies have online reviews to help provide an outsiders thoughts and reactions to a companies services, but merchants should remain conscious to the fact that many review sites and review boards are paid services and do not generally provide unbiased viewpoints.

One of the most important points to confirm when shopping is if the payment processor and financial institution allow adult businesses in their terms of service, and if so, are they prepared to properly register the business with the card association.  What might seem as a redundant question to ask a merchant services company, the truth is that it does happen that an adult businesses is set up at a payment processor that does not allow adult, and while that merchant account might remain intact for months or even years, at one point or another an audit of merchants will expose the nature of the business and force an automatic account shutdown, creating a potentially expensive disruption of services.

Similar to insuring that the merchant acquirer and payment processor are capable of handling an adult business, merchants should also check that the payment gateway they are integrating into on their website also allows adult merchants within their terms of service.  Having a non-adult payment gateway inform the merchant they have only days to find and integrate into a new payment gateway can put a business into an unnecessarily stressful and difficult situation that could have been avoided from the start.

Adult merchants have a number of ways online to check up on a merchant services company and confirm after the fact that the services they are using will be the best solution for their company. Once a merchant is able to find and determine who is the best adult merchant account processor for their business, they should not have much concern about future changes or surprises with their merchant services.

How do they provide the best adult merchant accounts?

After narrowing down the adult credit card processing companies to a few choices, merchants can begin to compare the services offered to figure out which payment processor will offer them the best services to fit their needs. Online businesses might be more concerned about the features and functionality of the payment gateway while an adult club might be more concerned about the point of sale (POS) system that is offered and the functionality it provides, every business has different needs.

A general concern of all adult businesses and many times the deciding factor between payment processors has to do with the pricing of the merchant accounts offered. Depending on the acquirer and the type of adult payment processing that is being applied for, the rates of the merchant account can vary from less than 1% to well over 5%, a huge difference that can prove very costly to merchants doing large monthly sales volume.

A common cost that adult merchants occasionally have to pay when establishing an adult merchant account is a reserve, either a one time charge or a rolling fee that changes based on sales volume. Many higher risk businesses and higher risk payment processors assess these fees onto their merchants to insure that the business will be able to pay for any potential losses or fines that may be imposed during the course of the merchant account relationship.

Adult merchant accounts that have an acquirer based outside the USA,  also known as offshore acquirers, will usually be subject to weekly settlements from the payment processor in addition to the reserves placed on the merchant accounts. Though the use of reserves can be possible with domestic payment processors, the slow payout schedule from offshore payment processors is not generally the case for adult merchants using acquirers based in the USA since these banks generally payout daily.  In addition to weekly payouts, offshore processor will usually charge wire fees that can cost merchants over $50 per settlement, making the payout process not only slow, but expensive.

Merchants can verify that the payment processor they are planning on working with is the best adult merchant account provider by checking a number of different factors that can effect many decisions. Once it is confirmed that the payment processor is able to accept and work with an adult company, a check of the fees, reserves and payout schedule can help adult businesses decide which company will provide the best adult merchant account.

Where do you find the best adult merchant accounts?

Using the internet is the most common way for merchants to find a merchant services provider for their adult or other higher risk business, but that does not necessarily mean they are the best payment processor for their needs. In addition to the internet, merchants can check a number of other place to find other adult credit card processing companies or to check on the companies that they have narrowed their search down to.

New webmasters and other adult business owners entering the industry have found that many of the message boards and forums online for the adult industry can provide a good amount of information about payment processors and other adult services. Like other websites and information sources on the internet, users are suggested to take the information they find and use it during their research to insure that they are partnering with the best adult merchant account for their needs.

One of the best and most reliable ways for adult merchants to find and learn about an adult payment processor is from other merchants. This can be done by talking to other adult merchants and businesses at trade shows, webmaster events or other forums where information is trusted and provided in an unbiased format. Many times merchants are introduced to their payment processor or merchant services company through a referral from an existing merchant, insuring that the new merchant will be set up with a reliable and trusting credit card processing company to handle their businesses sales.

Who provides the best adult merchant accounts?

As a provider of adult merchant accounts and adult merchant services for over the last 10 years, Adult Merchant Services has built a reputation of providing quality merchant services through our affordable merchant account fees and reliable merchant account services.  Adult merchants that are looking for a merchant account to work with their adult business are encouraged to call one of our helpful payment processing professionals to answer any questions or concerns a merchant might have.

Adult Merchant Services offers full domestic and offshore credit card processing services along with a payment gateway that was designed for use with higher risk and higher volume merchants in mind, preventing adult merchants from having to search for custom solutions to fit each part of their business.  Our affordable services insure that every merchant is receiving the best adult merchant accounts with affordable and quality services that will grow with the merchant as their business takes off.

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Best Adult Payment Processor

cris : April 23, 2018 23:21 : adult merchant account, payment services

Why do you need the best adult payment processor?

Experienced merchants in the online adult industry understand the importance of partnering with the best adult payment processors to build their business, while newbies to the industry might search out only the lowest rates and fee schedules, points that do not guarantee that a company is the best adult payment processor to work with. Understanding the common problems and issues that plague the adult credit card processing industry will help merchants ask the right questions so they can find the best adult merchant account provider to partner long-term with and grow their business to the fullest potential.

Many experienced adult webmasters and business operators will tell startups looking for adult payment processing services that finding a consistent and secure payment processor is more important than the payment services provider that promises the lowest rates. Many adult payment processors operating in Europe or other locations outside the USA will advertise processing fees under 5% for their services, and while those costs might be very appealing to newbies, the questions and unknowns surrounding the payment services might outweigh the any possible benefits.

As is the case with most of the high risk credit card processing companies, their payment services are only as good as their banks and banking relations that power their credit card processing services. Working with a payment processor that might not have a solid relationship with their acquiring bank could possibly create trouble for merchants with delayed payouts, holding of funds or account termination, very costly and potentially devastating financial occurrences that are all so common.

The choice of a payment services provider for an adult business is an important decision for the business to make, having consistent funding while providing customers with quick and easy payouts can help grow an adult business. Doing some research on the payment processor and asking the right questions of the customer service representatives can help a merchant narrow down their choices of find the best adult payment processor.

What makes a good adult payment processor?

Working with a payment processor that operates as a complete merchant services provider can make it much easier for a business to navigate the payments systems and networks that power the card acceptance process.  An informative payment processor can offer merchants a variety of options and help find the best solution for their businesses needs and budget, eliminating the hassle of making businesses educate themselves on available products and search for the solutions that offer it.

There are a few ways that payment processors can separate themselves from the other companies, one of the most common methods is by providing discount or low priced merchant services to their clients. Some merchant services providers have opted to focus on providing their services at discounted prices as their means of attracting customers and build a customer base, and while this method is can be beneficial to a merchant’s bottom, it can also mean for merchants that other services or benefits could become substandard or non-existent, possibly even making it harder for the merchant to operate their business in the long run.

The features and functionality of an adult merchant account can be the difference for some merchants when comparing the offers from various payment processing companies.  Some merchant accounts might be very limited to the types of transactions they can accept or the amount of sales they will allow per month, this can make finding an adult payment processor that has a wide range of acceptance methods and flexible terms an important feature for adult merchants that have special needs and requirements for their payment processing services.

Working with a payment processor that makes an effort to provide great customer service and support is many times what separates a merchant services provider from another, even if their fees are not the lowest when compared to other adult payment processors. Partnering with a merchant services company that can help navigate a merchant and make the payment side of their business easier can truly distinguish one company verses the others – imagine trying to figure out technical issues on a Friday afternoon and having to find your way through an automated tech support line alone.

Other payment processors have focused on their technical offerings by providing merchants with a quality payment gateway that can help make transactions flow faster and assist merchants by providing functionality within the gateway to help the business run smooth and save merchants time through simple management and reporting capabilities.  A quality gateway will usually work with the major shopping carts while offering a fast and simple integration process through an API that can plug directly into the merchants shopping cart. Some lower priced shopping cart programs might be included with the merchant account, but the functionality of many of these payment gateways might not be as advanced as others, making such functions as re-billing and transaction management more difficult for merchants.

Merchant accounts and payment processors comes in all different shapes and sizes making the hunt for the best adult payment processor somewhat of a challenge for merchants looking for a solution that fits their special needs or business requirements.

Where to find the best adult payment processors?

Finding merchant service providers for adult businesses can be challenging at times since most payment processors and financial institutions will not work with businesses in the industry due to their classification as high risk.  This has forced many merchants with no option but to find a solution for their adult business on their own, with most companies turning to the internet to find an adult payment processor.

One of the easiest and fastest ways to find an adult payment processing company is by doing a search engine query for suggestions of payment processors.   A quick search of either “adult merchant account” or “adult credit card processing” can lead a merchant to finding a number of different payment service providers that specialize in the adult industry. This method can give merchants a number of different options when contacting prospective payment processors, but knowing if the payment processor is one of the best in the adult industry can be difficult without having much information beside the search results about these companies.

A common way that many merchants find a payment processor for their business is by accessing some of the online forums that specialize in the adult or other high risk industries.  Many of these forums allow for merchant services providers to advertise their companies and allow for easy access by merchants to ask the necessary questions of the companies.  Some forums will rank payment processors due to a number of factors, while many of the websites might provide good information, some websites can use other ranking factors that can lead to skewed results and potentially misleading information.

Probably one of the better ways for adult merchants to find the best adult payment processor would be to ask for referrals from other business owners in the industry. When receiving a referral from another merchant, customers will know that the merchant services provider has experience in the adult industry and that the payment processor has provided good customer services in the past.  This unbiased information can be worth its weight in gold in the future if the merchant and merchant services company can build a solid, long term relationship.

However an adult merchant finds a payment processor, it is always best to make sure that the payment processor can accept adult clients and that they are available to help you throughout the term of the agreement.  Stability in the merchant services along with a good customer services program can make the management of an adult merchant account much easier and help the business run much smoother.

How do you know they are the best adult payment processor?

Verifying the claims of a merchant services company can be complicated at times, operating in an industry that is small and not widely discussed, finding quality information about different companies can take some effort. One of the best ways to learn about a specific payment service provider, or to find a list of the best adult payment processors is to read industry publications geared towards businesses and the business owners.

Many of the credit card processing review sites and blogs work on a pay to play basis, meaning not all payment processors are reviewed or listed in the rankings, rather its only the companies willing to advertise. Such companies as Card Payment Options require users to pay to be listed on their sites, with the highest bidders receiving the top spots in their reviews of merchant services companies. How can websites that operate in this manner give merchants an unbiased and accurate review of a payment processor’s services when these determinations geared towards advertisers?

Another common place for merchants in the adult industry to go and seek out information is online at the various industry forums. While many of the users have an association with the adult industry at varying degrees, its been known for some companies to enlist employees to follow these forums and post replies as being the best adult payment processor that might otherwise not warrant such high regard. Similar to the review sites of the internet, merchants might want to take information found on forum with a grain of salt and research into greater depth on their own.

Many times businesses will find quality merchant service providers after speaking with other companies in the industry, by asking for a reference to their payment processing service many merchants have found solid companies to partner with. As one of the safest and most reliable sources of information, other businesses can usually give merchants an idea of how good one company is and what to services to look for or features to ask about when applying for merchant services.

As most information on the internet, merchants should be critical and question the sources of the information they are reading. Many review websites and industry forums provide biased information that might not always be accurate and the payment processing services might not be the best option available to merchants. Using information from trusted sources from within the industry or by conducting in-depth research on the various payment processors firsthand might prove to be one of the better ways to determine the best adult payment processor for an adult business.

Who are the best adult payment processors?

Many companies working in the adult credit card processing industry offer a variety of different services for different segments.  As a full service adult merchant account provider, we have always felt that our staff at Adult Merchant Services is one of the best companies for adult merchants to partner with.  We urge merchants shopping for a new adult merchant account to contact one of our helpful adult payment professionals for more information about what we can offer and what we can save most businesses that partner with us.

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Adult Merchant Underwriting Guidelines

cris : April 7, 2018 00:56 : adult merchant account, compliance

In the merchant account industry, the payment service providers and merchant acquirers are required to follow the procedures established by Visa and MasterCard’s payment card association to complete the proper adult merchant underwriting process while higher risk payment processors and acquiring banks have additional guidelines and requirements to follow when considering an adult merchant account application. Many of these higher risk payment processors and acquiring banks also have their own internal guidelines and protocols in place that they follow in addition to the payment card association guidelines to determine the risk of a prospective business apply for adult merchant services.

Who enforces the adult merchant underwriting guidelines?

The payment card association of Visa and MasterCard has established strict rules and regulations for the members of their payment card network to follow, whether they are underwriting new merchants or are the merchants themselves. These guidelines help insure that the products or services being offered along with the other practices of the merchant members of the network fully abide by all local and federal laws and assist in the maintenance of the card brand reputation.

Underwriters from the various payment service providers, acquirers and other payment facilitating organizations are required to verify that the guidelines set forth in their payment card network agreements are maintained by merchants and prospective merchants before being admitted to the network. Failure to maintain compliance with these guidelines can jeopardize both the merchant’s and the merchant acquirer’s relationship with the card association; resulting in warnings, fines or the possible loss of their card network relationship.

What are the adult merchant underwriting guidelines?

Adult businesses operate in an environment that can open themselves up to many potential legalities or other problems that more conventional businesses do not normally face. This has lead the card brands that are part of the payment card association to create their strict guidelines and provide underwriters and payment service providers with updated information about their concerns and potential problems they may face when reviewing new or auditing existing merchant accounts.

To keep payment services providers updated and informed with the card association guidelines, each member of the payment card association has created their own acquirers program; Visa named their program the Global Brand Protection Program (GBPP) and MasterCard refers to their program as the Business Risk Assessment and Mitigation (BRAM).  Both companies regularly review and update their programs to reflect the changes and concerns that they want to inform acquirers and merchants to.

Though each program has different guidelines and regulations to follow,  higher risk industries share most of the terms and conditions, including the requirements of adult merchants accepting credit cards.  A few of the most important conditions that both companies require are:

  • 2257 Compliance
  • No Child Exploitation
  • No Offensive Adult Pornography
  • Certified Web Scan Completion
  • Members Area/Password Protected
  • Proper MCC Coding

One of the most important requirements of online adult merchants is the 2257 Compliance required by federal law, meaning that whether they produce content or publish content, they have to know that the material being used is within the guidelines of the law. Producers, both the creators of the content and the organizations that publish content, print and/or electronically, must maintain specific records that can be produced upon request by the FBI during unannounced visits, failure to maintain these records or any violations will lead to strict punishments.

Another important audit done by payment service providers checks that the content on the merchant’s website do not portray, reference or otherwise imply any type of offensive pornography, including images or speech from the webmasters or users alike. Using companies such as G2 to run onsite and offsite scans to check for any violations or questionable content is a common practice of underwriters prior to accepting a merchant and periodically during the merchant services agreement.

During the adult merchant underwriting process, the acquirers check that the content published by the merchant is legal and compliant with federal compliance guidelines and are also confirming that the website is not accessible by non paying web browsers. To maintain the security of an adult website and to prevent any potential legal ramifications, it is important for webmasters to install a members area that prevents adult material from being viewed by users that might be underage in the jurisdiction.

One of the final rules that the payment card association enforces is the use of the correct MCC (merchant category code) for the adult businesses. Content providers, publishers and other publications are generally placed in MCC 5967, requiring USA acquirers to charge merchants an annual registration fee for being an adult business.  Adult video stores and similar type businesses are generally placed in MCC 7841 whose merchants are not necessarily required to register with the card association and pay the annual fee.  This is the reason why MCC enforcement confirms that all merchants are properly coded to their correct industry to prevent any problems with the card association or other legal consequences that might be affecting the industry in its entirety.

Why are the adult merchant underwriting guidelines so strict?

The payment card association realizes that the adult industry generates a substantial amount of revenue for the themselves and the banks they partner with, but there are also large risks that come with allowing these merchants to access their payment card network. As an industry that operates in an area that attracts a significant amount of attention, and many times the attention is negative, has the potential for legal problems that can loom overhead.

Insuring that merchants are in compliance with 18 U.S.C. §2257 can help protect the merchant services companies, merchant acquirers and card brands from any potential legal problems that might arise from a violation on the business side.  Merchants can face enormous fines and up to 5 years in jail for their first violation, while companies or individuals that may not be publishing material but are otherwise benefiting from the sales of content can also potentially face large fines and up to a year a prison for a violation of 2257.

How do acquirers keep merchants compliant?

Upon approval with the payment services provider or acquirer, merchants of MCC 5967 are registered as an adult provider with MasterCard of the payment card association. The annual fee for registration in the USA is $500, charged to the merchant by the acquirer informs MasterCard that the acquirer has verified the merchant’s compliance and that the merchant remain in compliance during their tenure as an adult content publisher.

Another way that the acquirer and payment service providers check on merchants in MCC 5967 is by running site wide scans of their content along with offsite scans to verify that no violations or potential violations have occurred since the last yearly review. Protecting both the merchants and acquirers helps keep the adult industry compliant with federal laws and helps fuel its exponential online payments growth year over year.

Where do you start your adult merchant underwriting process?

Merchants operating an adult business that feel they should become compliant with the payment card association guidelines or are processing outside the USA and want to change to a domestic bank are encouraged to speak to one of our adult merchant account professionals. Our team at Adult Merchant Services will be happy to answer any questions or clear up any uncertainties about your company and help direct you to the best solution for your adult credit card processing and adult merchant account needs.

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Best Adult Payment Gateway Options

cris : March 29, 2018 02:46 : payment gateway, payment services

E commerce companies have many options for payment processing services available to them, with well over 50 different payment gateway service providers and countless merchant services  and merchant acquiring banks, there are thousands of options available to businesses.  Deciding on the best payment gateway for a merchant can depend on the bank they are working with, the functionality required of the gateway and the budget of the business.

Payment gateways are a PCI compliant payment application that allows a merchant’s website to be connected to their acquiring bank in a secure environment, preventing the threat of fraud or other security breaches that could compromise the safety of the customer’s payment card information.  Most payment gateways are able to connect with the various payment platforms and acquiring banks, allowing for flexibility among merchants with a merchant account already.

Most payment gateways are designed for easy integration into the larger merchant acquiring banks, payment processors and financial institutions that primarily work with general e commerce businesses.  While most payment processors have specialized in the retail or person to person (P2P) payments industries, there continues to be a need for gateway services for businesses operating in the medium to high risk niches, including adult merchant account,s firearms merchant accounts another restricted merchant account categories.

Most merchant services providers have either purchased or built their own payment gateway to provide in house services for their clients, a function that makes the integration process easier for merchants and more profitable for the merchant services providers. While there many different payment gateways available in the industry, we will try to touch upon a few of the larger and more commonly used gateway service providers to help clarify the functionality and capabilities of these applications.

Authorize.net:

Formerly part of CyberSource and most recently acquired and now part of the Visa network, Authorize.net has been handling payment transactions since 1996 and is one of the largest and well known payment gateway service providers in the industry today.

Payeezy Payment Gateway:

Owned by First Data, Payeezy provides integration into over 70 of the largest and most widely used shopping cart programs along with integration into their proprietary POS system Clover, Payeezy provides First Data customers a uniform payment experience across their various platforms.

PayFlow Payment Gateway:

PayFlow, by PayPal, allows merchants to accept payments in 25 different currencies from over 200 different countries, making it a versatile solution for merchants around the world or looking to expand their customer base globally, offering solutions for both PayPal  processing services or 3rd party merchant accounts.

Inovio Payment Gateway:

Owned by North American Bancard, Inovio is the recommended gateway for their payment processing network – offering merchants full payment gateway services and independent sales organization the ability to offer white label and private label solutions.  Please note, not much information is available on the Inovio payment gateway website about products or services offered.

Allied Payments Gateway:

Built for clients of all sizes from startup to Fortune 500, the Allied Payment Gateway accepts a wide variety of merchants types, including medium to higher risk clients. Features of the gateway allow for multiple merchant accounts, invoicing and billing services along with multiple user management.

 Virtual TerminalMobile PaymentsRecurring PaymentsMultiple Merchant AccountsInvoicingAccept eChecksQuickBooks IntegrationAddress Verification Services (AVS)PCI-DSS CompliantAccept High Risk Industries
Authorize.net
(Visa)
YesYesYesNoYesYesYesYesYesNo
Payeezy
(First Data)
YesYesYesUnknownYesYesYesYesYesNo
Inovio
(NA Bancard)
YesYesYesUnknownUnknownUnknownUnknownYesYesYes
PayFlow
(PayPal)
YesYesYes (additional fees apply)NoYesYesYesYes (additional fees apply)YesNo
Allied Payment GatewayYesYesYesYesYesYesYesYesYesYes

Best Payment Gateway for Startups

Most merchant service providers can offer a payment gateway solution that is either automatically or very easily integrated with their merchant account services.  While the recommendations below are only for the payment gateway, it is always suggested that businesses check other providers for merchant account fees.  Our recommendations for startups looking for a payment gateway service are:

  1. PayFlow: With options starting at $0/month to $25/month and transaction fees as low as $0.10/transaction, merchants can potentially lower their costs by using the PayPal application with their existing merchant account. Many merchants might consider using a merchant account through PayPal once they open their online doors or utilizing a hosted payment page for products eliminated the need of a payment gateway.  Security and other add on features are a la carte, so merchants using AVS or recurring billing might consider other options as fees can become costly.
  2. Authorize.net: The Visa gateway is a versatile payment application that most merchant services providers already offer to clients upon merchant account setup. Nearly every shopping cart has built their integration around the parameters of Authorize.net, insuring a quick API integration by the web developer and a seamless buying experience by the customer.
  3. Allied Payment Gateway: This gateway offers a simple API integration for use with over 100 of the most common shopping cart programs used today, including woocommerce, ubercart and opencart. Transaction fees are comparable to Authorize.net and PayFlow with low cost AVS and no cost recurring billing features.

Best Payment Gateway for Larger Merchants

Most larger businesses need a way to manage customers and handle their accounts receivable, tasks that are usually handled by accounting or other software programs. Unlike most startups or some smaller businesses, established companies need a more advanced payment gateway that can simplify their process and provide the necessary functions required by larger organizations.

  1. Allied Payment Gateway: Designed to accommodate the largest of merchants, the gateway provides the options to allow businesses with multiple merchant accounts a simple way to manage their transactions between accounts.  The gateway also offers businesses the ability to have multiple users, invoice and store payment card information on file in a remote location, simplifying the billing process.
  2. Authorize.net: As one of the largest payment gateway services with nearly 20 years of service history, businesses can integrate into this Visa gateway with relative simplicity. While high volume or multiple merchant accounts are not as easily managed as the Allied gateway, many merchants have used this application.
  3. Payeezy Payment Gateway: Partnering with First Data will insure that merchants have a reliable and secure merchant services provider. Payeezy provides integration into the First Data Clover POS system to help businesses with both e commerce and retail storefronts to manage their sales and inventory.

Best Payment Gateway for Adult Businesses

Operating an adult business requires using an adult merchant account provider that is familiar with the industry and can set merchants up with all the proper payment services. While First Data, PayPal and many of the other merchant services providers will not work with adult, there are a few adult payment gateway service providers that continue to partner with higher risk industries.

  1. Allied Payment Gateway: Specializing in high risk industries, this gateway was built with startups and smaller businesses in mind but is customizable for the largest clients, including high volume and recurring billing businesses with multiple merchant accounts.
  2. Inovio Payment Gateway: As a part of the North American Bancard product portfolio, this gateway is able to accept adult merchants without any trouble. Its ability to accept higher volume or multiple merchant account businesses is unknown with the limited information available online.
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Best Age Verification Software

cris : March 21, 2018 18:52 : compliance

Age Verification Software for Adult Websites

Operating a safe and secure website is one of the most important functions for any adult webmaster and business and a requirement of adult merchant account providers, but the importance of age verification has become especially important in Europe with the German Government and the Parliament in the London passing legislation requiring better protection of youth’s ability to access adult websites. It has never been more important for merchants today to understand and find the best program to handle their age verification services to insure complete compliance with adult payment processor and new legal regulations.

The first government to begin enacting laws protecting underage internet users from adult material was Germany in 2002 with the passage of Jugendschutzgesetz (Youth Protection Act). This legislation focused on the content providers to insure that they did not deliberately or maliciously provide or make available adult content and products to underage individuals. With stiff penalties including large monetary fines and the possibility of prison, it made online providers check and self regulate themselves to insure that they were not violating the law and eliminated any potential of liability once the act went into effect in 2003.

In the UK, the passage of the Digital Economy Act has taken the Youth Protection Act in German to another level, making it necessary for adult businesses, including online content websites, to insure that every visitor in the UK is verified as being over the age of 18 or risk fines upwards of £250,000 per violation. Though the deadline for the start of the UK law has been pushed back, adult companies are still scrambling to find age verification solutions that offer the functionality required by the new government regulations while providing users the highest level of protection and security of sensitive personal information. Finding this solution has become a challenge that has plagued many adult companies with users in the United Kingdom over the last couple years, opening the door for a new age verification industry.

One of the largest internet based adult content companies, Mind Geek, has come out and supported the UK Government’s new age verification legislation guidelines and set out to provide a solution by creating their own program called AgeID. This new age verification software program will require the name, address, telephone number and date of birth to be provided by users for verification by an outside 3rd party company, ultimately creating verified profiles that will allow users to access their content across all their websites within the Mind Geek network.

Smaller adult companies, including websites with a limited user base or a small UK presence, have been forced to figure out an economical solution to insure their compliance in the coming year. While use of the AgeID across other platforms could be a possible solution for smaller companies, many have raised concerns about having one company becoming the dominant adult age verification software provider, especially a company that is also a competitor in the same industry, concerns that have lead many companies to look elsewhere for solutions.

Best Age Verification Software Programs

There are many different age verification programs available to webmasters, depending on how in depth of a verification process a business wants to put their customers through prior to accessing their website. Some verification programs simply ask users to fill out a popup with their birthday to gain entrance, while other programs will take additional customer information and perform a detailed background check to verify the users identity.

One of the higher rated products and commonly used on WordPress website offers both a free verification and paid version of their program is AgeVerify. While both the free and paid programs from AgeVerify do not provide verified results, it does provide an affordable solution for throttling access to age sensitive websites. The paid version allows for webmasters to customize the background and information displayed on the popup page, customize the length of time user information is retained to prevent repeat age prompts along with offering geographic specific requirements.

With the changing government landscape, the use of popups is slowly becoming an outdated and inefficient means to verify website users. More and more websites have turned to paid services that check each verification request against public databases to determine the validity of the user’s submission. Companies such as Mitek and AgeChecker.Net have developed software that uses a combination of government issued IDs, public database background checks and even facial recognition to insure that the web users are who they claim to be from the IDs provided.

Unlike AgeVerify, the AgeChecker.Net system takes the information input by the web browsers and uses it to verify with 3rd party identification companies that the details are correct – checking name and date of birth records to confirm the indentities. When an ID can not be verified, whether its due to information not being correct or if there is reason to warrant additional information, users will be asked to provide a mobile photo of a government ID to confirm the data on hand.

A more aggressive alternative to AgeChecker.Net is the Mitek Mobile Verify age verification software that provides businesses with additional different layers of ID verification services, some of the most sophisticated available to merchants today. When a user request is made, customer details are checked against the information stored at various identity service providers and images of IDs are checked and confirmed with proprietary software as to their validity. In cases where additional information is needed to render a decision, facial recognition software is used to verify the web user is the person on the ID, providing multiple levels of ID and document verification without requiring users to leave the comforts of their own home.

Why Some Age Verification Software Programs Don’t Work

More basic age verification programs, specifically programs that do not use any external verification services, can allow users to fraudulently enter age or identification information and gain access to the age sensitive website content that is prohibited to underage users. Depending on the guidelines of the business, the requirements of the payment processor for e commerce websites or even the laws governing that industry in a specific jurisdiction, the extent of the age verification services needed to operate can vary drastically.

In the USA, most businesses are protected today by the Computer Fraud and Abuse Act, where an age verification popup allows merchants some legal protection from use by underage individuals by stating their terms and conditions were violated when the user knowing entered false information upon entering their website, a significantly different set of laws when compared to the British government’s new guidelines.

With many choices of age verification software programs available to businesses, it is up to the merchants to decide how they want to verify their users, while some countries have begun requiring extensive age verification programs, others have not opted to place that requirement on businesses. Utilizing a cost effective identity verification program can help businesses build a solid customer base while limiting legal liabilities and other potential fraud stemming from unverified users.

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What Is a Chargeback?

cris : March 15, 2018 18:56 : high risk merchant account, merchant account

What is a chargeback?

A chargeback is a required reversal of a transaction filed by the card issuer, on behalf of the customer, against the merchant. Chargebacks can occur due to a fraudulent sale or a problem with the transaction that has not been resolved between the customer and merchant directly.

What is the chargeback process?

The chargeback process starts when the customer contacts their card issuing bank to explain their situation and what attempts they have made to resolve the problems associated with the merchant and the transaction. At that point the card issuing bank will begin their investigation into the transaction by checking if there was any instances of fraud or stolen identity, then further investigating into the sale to confirm if there is enough reason to reverse the transaction through the use of a chargeback. During this part of the investigation by the issuing bank, the bank will credit the amount of the transaction back to the customer’s account until they render a decision.

If the card issuer feels that the customer has not received the agreed upon product or service or that the merchant has not fulfilled their part of the sale, the card issuer will inform the payment network of their findings and the impeding chargeback. In the case of fraud, the card issuer will work with the customer to resolve the problems and will issue new card account information and the customer might not have any legal liability for the transactions that occurred fraudulently.

If a chargeback is authorized, the card issuers will inform the card network to inform the merchant acquiring bank and payment processor that a chargeback has been filed and that the merchant does have the opportunity to dispute the claims by the customer. At this point, any fees incurred from the chargeback, including the amount of the transaction, the administrative cost of the chargeback, plus any additional transaction fees are assessed to the merchant.

If the merchant decides to file a dispute, the merchant can include copies of receipts, signed documentation or any other information that might help explain their side of the transaction and the reasons for the problems. The card issuing bank will review the documentation and decide if they feel that the customer claims are valid, warranting the need of chargeback or if the merchant has delivered on their promised goods or services, eliminating the need of the chargeback. If the issuer feels that the customer was correct to file this chargeback, the funds will remain with the customer – if the issuer feels that the merchant has fulfilled their part of the transaction, the funds will be returned to the merchant.

Merchants do have the opportunity to dispute the finding of the card issuing bank, requesting a second round of review of the chargeback claim. If during the second phase of the chargeback investigation, the findings are in favor of the other party, the transaction can be escalated to an arbitrator who will provide a final answer.

Types of Chargebacks

There are a few different types of reasons why charge backs are filed, while some can be due to theft of payment card information, other types can be as simple as a friendly misunderstanding or fall on the other side of the spectrum and stem from malicious intent by the cardholder.

Friendly Fraud

From time to time, transactions can occur where the customer authorized the payment at the the point of sale, only to dispute the charge once the transaction appears on their statement history. While the customer might have all intentions of paying for that transaction, the name or the amount of the transaction may have slipped the customers memory or information on the statement might not appear correct and trigger the call to the card issuing bank that begins the chargeback process.

Unauthorized Transaction

The largest and most common reason chargebacks are filed is due to unauthorized purchases made using a customers bank card. Credit card theft can occur with either a physical card being swiped in a retail location by a thief or using stolen card account information for an online purchase, which has become most common place where fraud occurs today.

Fraud

In some instances, customers will authorize a transaction at the point of sale, whether online or in a storefront only to decide to chargeback the transaction as a way of obtaining the product for free. Customers that commit this type of chargeback fraud cause significant and unnecessary costs and problems for merchants in the hope of receiving free products, knowing that it is very hard for merchants to dispute or challenge the claims made by the customer.  Merchants do see this as a common problem in the adult credit card processing industry as many customers do use this tactic after a trial period or an impulse purchase.

How do I know I have a chargeback?

Depending on the card network and the merchant acquiring bank, the notification policies can differ between networks, banks and payment processors. While some networks and acquiring banks will inform merchants with a physical letter, other banks and processors might only provide an online notification, requiring merchant to periodically check to insure that there are no losses for preventable reasons.

It is wise for merchants to check with their payment processors to know exactly how they will be informed of a chargeback and if they can assist at all in the dispute process, possibility helping stop any preventable fraud before it happens.

How to Dispute a Chargeback

One of the best ways to prepare and remain ready for any potential chargebacks is by keeping complete files to all of your transactions. While this might seem like a daunting and challenging task, by simply requiring customers to sign receipts, checking signatures on payment cards and filing all transaction information is a great start to remaining prepared for any problems.

Merchants must remember, the more information you can provide to prove that the services you provided or the products that you sold were complete and accurate, the better the chance you will have to win the dispute. Keeping records of service calls, warranty information and a clear and concise terms and conditions can make a merchants claim hold water in the event that anything is contested.

How to Prevent Chargebacks

Shipping items or delivering services in a timely fashion or billing clients quickly and correctly can prevent many unnecessary costs from unhappy customers who were expecting what you had offered at the time of the sale. Batching settlements late or billing incorrectly can be a recipe for a slew of chargebacks, but being astute and organized can prevent any of these problems before it becomes costly.

Offering an easy line of communication, such as a help line or website, can ease customers in the event of delays or problems and can help prevent many immediate chargebacks. Speaking to merchants first can drastically help curb chargebacks, allowing for customers to have their questions answered and get the information they need.

Online merchants can help lower chargebacks by insuring that their contact information is readily available and information displayed on credit card statements clearly states the product name or website address and a phone number where customers can call for questions and more information.

For more information, the Visa website provides some good information about chargebacks and how insulate your business from them in the future.

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Using An Adult Payment Processor

cris : March 4, 2018 03:49 : adult merchant account, merchant account

Using an adult payment processor can help merchants reduce long term costs of operation while insuring the longevity of their business on the internet.  Working with an adult payment processor that takes all the necessary steps for account underwriting, registration and maintenance of banking relationships can limit the potential of service outages, unnecessary fees or other costly disruptions.

A common occurrence in the merchant services industry is directly attributed to the sales person or organization that handles the merchant application submission to the payment processor, since many merchant services sales agents work on commission with a performance based pay scale, the best interests of the merchant are many times overlooked in lieu of the commission payouts. By not using an adult payment processor, this practice has lead to many adult merchants inadvertently applying for and being quickly approved as another type of business, thus avoiding registration fees and other business guidelines needed to be an adult provider.

One way to find the best adult payment processor that understand sand abides to the guidelines set forth by the card association for adult content providers is to insure that their merchants are properly set up with the payment processing partners and merchant acquiring banks. Failure to properly identify the industry of the business can result in suspension or closure of the merchant account along with funds being held for a 6 months to prevent any potential charge backs. In a worst case scenario, merchants run the risk of being placed in the Terminated Merchant File or MATCH List, a list managed by the card association that tracks merchants who have violated guidelines, their agreement or owe fees and are generally unable to apply for a merchant account in their name for up to 7 years.

One of the important questions adult merchants should ask a potential merchant services provider is about how they handle the yearly registration fee that is charged to adult merchants by the card association. Some payment processors will not charge this fee for one of two reasons; either they include the fee as part of the merchant account or they do not require the fee because they are not registering the merchant in the proper business category; while the latter can potentially cause problems in the future for the business, the adult merchant account providers that include the registration fee will generally charge higher fees during transactions, allowing the processor to recoup the registration fees and usually more.

When merchants are coded incorrectly, it means that the payment processor has set them up under a business category that does not pertain to their actual business. Merchants operating adult websites, whether its a membership website, directory site or another similar type business will generally be assigned the codes of either 5967, 7841 or 7311, requiring full review of the website and registration to insure that all guidelines are followed and compliance is maintained by the merchant.  By using an adult payment processor, merchants can know that this will not be an issue in the future.

One of the final checks that adult merchants should inquire about is the type of payment gateway being used by your merchant services providers, because not all gateways are adult friendly. One of the largest and most sold payment gateways, Authorize.net, who is part of the Visa corporate, does not allow adult oriented or pornographic websites to use their services. Similar to having their merchant account set up with the wrong business type, merchants in the adult industry will soon be relieved of gateway services once an audit is completed of the gateway account.

A simple solution to prevent any service disruptions or unnecessary fees associated with a merchant account is by using an adult payment processor from the get go, by working with a professional that understands the industry and does not try to cut corners can save merchants a lot of time and money in the future. Merchants looking to start an adult business, or currently operating an adult business and have questions are encouraged to contact one of our payment professionals for more information and to get started processing credit cards.

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Adult Merchant Annual Registration Fee

cris : February 15, 2018 19:58 : compliance, high risk merchant account, merchant account

A common question for experienced adult merchants, and usually a surprise for merchants new to the adult industry, is if businesses need to pay the adult merchant annual registration fee commonly required by Mastercard in order to accept credit cards. When merchants are inquiring with adult payment processors and adult merchant services providers, the answer to the question whether this registration is necessary for adult businesses might yield a different answer from every company spoken to.

The introduction of the Mastercard Business Risk and Assessment Mitigation (BRAM) program was done as a way for Mastercard to monitor and control the types of businesses and products being sold using the Mastercard network. While Mastercard do not approve or underwrite merchants that apply for network access individually, they do try to periodically check merchants for any legal or intellectual property/rights violations using web crawling programs or referrals from customers and inform the merchant acquirer to their findings.

When merchants are approved for a merchant account, they are assigned a 4 digit Merchant Category Code (MCC) number by their merchant acquirer depending on the type of products or services that their business offer. This use of MCC codes is accepted and required by Visa and Mastercard when a merchant acquire approves a business for merchant services, allowing Visa and Mastercard an easier way to manage their vast networks of merchants and easily make changes to standards or guidelines to the entire category if needed.

Merchant acquirers with merchants processing with the MCC codes pertaining to adult content providers; 7273 (dating and escort services) or 7841 (video) will be assessed a yearly compliance fee for registration of $500 per merchant for providing access to the Mastercard payment network. This fee is usually charged as a pass through cost to the merchant and the merchant is usually required to pay this fee when the acquirer is billed by Mastercard.

Its important for adult businesses to understand that some payment service providers will advertise that they do not charge these registration fees, but merchants should beware that the payment service provider will be assessed this fee by Mastercard and the payment services provider will recoup this registration fee through other excess costs or hidden fees wrapped into their merchant services program.

Another misconception that merchants have when being informed about the Mastercard adult registration fee is that they would like to decline the use of Mastercard and only accept Visa with their adult business. While the thought of saving hundreds of dollars a year by not accepting one card type runs through many merchant’s heads, the merchant acquirers and payment processors are unable to issue a merchant account with only one of the card association networks integrated into the merchant, thus making it not possible to avoid the Mastercard compliance.

Merchants in the adult industry with additional questions about the adult merchant annual registration fee or looking to lower their credit card processing fees might be interested in speaking to an adult payment processor that is familiar with the adult industry and a leader in providing low cost merchant account services. Our payment processing professionals are available to speak to any adult merchants with questions, concerns or looking for a quote for their payment processing services.

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What is PCI Compliance?

cris : May 12, 2015 23:20 : adult merchant account, compliance

PCI Compliance 101
As technology advances and credit card usage increases, the threat to both cardholders and merchants of payment account theft continues to grow.  Large corporations such as Home Depot, Neiman Marcus and TJ Maxx have all fallen victim to data breaches from cybertheft.  These instances end up costing corporations hundreds of millions of dollars and affect the tens of millions of cardholders who used these retailers.  In an attempt to prevent future attacks and protect the information of the cardholders, the PCI Security Standard Council was formed to combat this growing problem.

In 2006, the Payment Card Industry (PCI) council was created to help train and educate vendors, merchants, hardware and software manufacturers along with other financial institutions about fraud and securing customer payment card account information. Through educational material and industry-wide guidelines, PCI security standards were set in place to help combat fraud and provide safe and secure environments for customers shopping online, over the phone or in a retail locations.

Who is the Payment Card Industry?

The Payment Card Industry council, comprised of the members who are responsible for creating the Payment Card Industry Data Security Standard (PCI-DSS) are the largest payment card brands and payment card networks in the financial services industry, including:

  • Visa
  • MasterCard
  • American Express
  • Discover
  • JCB

These members are all responsible for creating, maintaining and updating the PCI standards that vendors, merchants and financial institutions are required to abide by when handling customer card account information.

What is PCI-DSS Compliance and Why Does It Exist?

As technology has evolved and payment cards have grown to become the most common form of payment, the threat of fraud and the cost of payment card theft has also increased. In 2017 alone, over 1 million cases of payment card fraud was reported to the FTC, resulting in over $900 million worth of fraud losses by merchants, financial institutions and credit card networks.

By creating the PCI-DSS standards and requiring financial institutions to insure vendors and merchants are compliant every year, the Payment Card Industry is working to prevent some forms of credit card fraud. The goals that were set forth by the PCI council include:

  • Building and Maintaining a Secure Payment Network
  • Protecting Cardholder Account Information
  • Maintain a Network Security Management Program
  • Require Strict Access Controls by Merchants
  • Regular Monitoring and Testing of Network Security
  • Maintain a Policy of Security Measure for Network Users

Maintaining a Secure Network: Merchants utilizing credit card terminals, point of sale systems and/or payment gateway applications are required to maintain a firewall to strengthen the network security and lessen the threat of any security breaches. When merchants are set up with new payment card services and equipment, when an employee leaves the business or as an ongoing security precaution; merchants are required to maintain strong passwords that can not be easily guessed and are encouraged to change passwords on a regular basis.

Protecting Cardholder Data: Businesses that store cardholder data for future billing are responsible for maintaining the account information in a secure manner that prevents the possibility of theft or fraud. Account information should never be written down or stored in a physical manner, rather it should be held in a PCI Compliant location that prevents full account information from being accessible. When sending card account information online from a shopping cart through a payment gateway or through a wireless card reader, card account information is required to be encrypted to prevent any possible threats from vulnerable connections or programs.

System Management Programs: Merchants operating e commerce websites or using wifi connections to transmit payment card transactions should maintain a strong system security protocols; whether its by using a secured WiFi connection, utilizing anti virus software on a computer or maintaining a TLS/SSL certificate for e commerce websites, maintaining this high level of protection will help insure that transactions are sent through secure environments, reducing the chances of information being compromised.

Physical Access Control: One of the most common ways that cardholder account data is lost and compromised is through the physical handling of payment card information. This threat can be limited by controlling the access by employees to the cardholder information, restricting this account information to only individuals that are required to handle the cardholder data. Merchants using POS systems, using a payment gateway or virtual terminal can restrict employee access to cardholder data by implementing user accounts and controlling the permissions within those account. Merchants should never store cardholder account information in a physical form, rather utilize a secure PCI compliant storage application to retain this sensitive data.

Ongoing Testing of Networks: PCI Compliance requires merchants to perform annual, if not more frequent, testing of their systems to insure that all security protocols and programs are functioning properly. These scans are conducted through various companies, whether its sponsored by the merchant acquirer or from an outside company, demonstrating that all part of the network are fully PCI Compliant.

Maintaining Current Security Policies: Keeping employees, along with the merchants, up to date on PCI regulations and guidelines is one of the best ways to insure that the business remains compliant during the course of the year. By providing ongoing information and training, merchants can make sure that all facets of their business from their website and credit card terminals to their payment gateway and employees are fully aware and current with all aspects of the PCI-DSS regulations.

Why Does PCI Compliance matter?

The members of the Payment Card Industry came together to help create an environment for merchants and customers alike that promoted security and trust among all individuals using the payment card networks. When security is strengthened by all users, it excels the growth of the network by allowing for more customers to feel confident and use their payment cards more often while merchants will to realize more sales and larger revenues.

Without guidelines for the network access, merchants and financial institutions along with the payment card brands risk losing the trust of customers, a potential threat that could cripple the industry indefinitely, this is why PCI-DSS standards and guidelines have been established and required the compliance of merchants, vendors and financial institutions.

Non-compliance by companies can create a variety of potential costly and troublesome problems with not only the Payment Card Networks, but also a number of different industries closely associated with the financial system. Potential problems that could arise from non-compliance includes:

  • Increased costs of merchant services
  • Fines and penalties from the Payment Card Industry
  • Termination of merchant services by the PCI
  • Costs from legal judgments and any settlements
  • Loss of customer trust with a business
  • Decline in revenues or incomes, potential loss of job
  • Closing of the business

Though some of these scenarios can appear to be extreme, the costs associated with non-compliance can become tremendous if a theft or fraud does occur due to a merchant’s inaction to become or maintain compliance.

Who Needs to be PCI Compliant?

Any business or company that has access, provides a payment service or builds hardware to accept payments is required to follow the PCI guidelines for compliance. These businesses include, but are not limited to:

  • Merchants; including all employees regardless of their industry
  • Financial institutions; including merchant acquirers and payment service providers
  • Manufacturers of credit card terminals and POS systems
  • Payment gateway service providers
  • Web hosting companies providing e Commerce hosting services
  • Online shopping cart services
  • e Wallet service providers

Some of these businesses might not directly handle payment card transactions, but the security protocols and services they provide that are used by merchants should at minimum reach the standards set forth by the Payment Card Industry.

How do Merchants become PCI Compliant?

PCI Compliance for smaller companies can be accomplished through self assessments that are provided online by the merchant acquirers. Answering a series of questions as to the practices and methods of payment card acceptance, the merchant acquirer can determine if the business is operating in a way that limits their potential for payment card fraud. Some of the questions that are asked of merchants during their PCI Compliance scan are:

  • If anti-virus security software is used on their computer systems
  • If the merchant uses a firewall to prevent remote access to their computer systems
  • The strength of the passwords and the frequency of which they are changed
  • The type of software they using on their computers
  • The name of their payment gateway service
  • The name of other security services providers (SSL
  • The types of credit card terminals (if they accept EMV chip cards)
  • The practices of employees for accepting payments ( mail order, phone order and in store)
  • How card account information is stored for future billing purposes

Merchants that are located in throughout the world are required to maintain their PCI Compliance, while the level of compliance and the dates that compliance is required by might vary, the program does exist throughout the world where payment card transactions are accepted.

Merchants are classified as one of a 4 levels depending on the amount of transactions per year that they are processing through their networks. Larger merchants require additional security measures than small merchant. The levels of PCI Compliance are determined by the following:

  • Level 1 – More than 6,000,000 transactions annually
  • Level 2 – Between 1,000,000 and 5,999,999 transactions annually
  • Level 3 – Between 20,000 and 999,999 transactions annually
  • Level 4 – Less than 20,000 transactions annually

Level 1 merchants are required to do the annual self assessment questionnaire along with an annual onsite audit conducted by a certified security assessor. Merchants in levels 2 – 4 are required to complete a yearly self assessment questionnaire and partake in a remote scan of their merchant hardware and software.

Who Checks that Companies are PCI Compliant?

Level 1 merchants along with third party payment processors that are connected to VisaNet and MasterCard are required to participate in yearly onsite audits of their software, hardware and procedures. Level 2-4 merchants have remote scans available to them to audit their business in a rather quick and simple process, some annual audits can be finished in under 10 minutes.

Onsite PCI DSS compliance audits are administered by Qualified Security Assessors (QSA) that are located throughout the world, servicing various regions, countries and markets. With well over 100 different companies throughout the world that are recognized as qualified by the Payment Card Industry as authorized assessors, merchants and payment processors can rather quickly find an assessor to audit their company.

Questions about PCI Compliance for Adult Merchants

Merchants and other companies operating in the adult industry that have any questions or concerns about their current PCI Compliance or about becoming PCI Compliant can contact one of our adult merchant account professionals at Adult Merchant Services. Our team will be happy to speak with any merchants and help direct them in the right direction.

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What is a “High Risk” Merchant Account?

cris : April 24, 2015 19:19 :

In the adult payment processing industry, merchants are generally viewed to be “risky” or a “high risk merchant”, which can create complications when applying for a merchant account. Depending on the underwriting guidelines of each payment processor, a merchant can have a different perceived risk level between each processor. Most payment processors focus on general retail and eCommerce business models. Fortunately for merchants higher risk industries there are payment processors that specialize in medium to high risk businesses, including adult merchants. In this post we will try to help explain what is a high risk merchant account and how they work.

A business could be considered high risk for a number of reasons. This could vary from the financial history of the business or the business owner to the location of the business. Businesses or business owners with low credit or a history of payment processing issues could make a merchant higher risk. Businesses located outside of the USA (offshore) will also make them a higher risk. The most frequent reason for a high risk classification is the business model itself. Operating a business, such as adult, will not work with a majority of the payment processor’s underwriting guidelines after assessing their risk potential.

Merchants in adult and other high risk industries unfortunately do not have many options when it comes to finding payment processors. These higher risk payment processors tend to operate with higher fees than most retail and eCommerce processors. Merchants generally have to accept these terms and operate with the higher fees if they want to continue processing payments. During the application process, merchants should research every processor and determine if their funds are safe. Many of these higher risk payment processors have a history of closing accounts and not paying merchants. Know the companies you are dealing with and check with current merchants to see their opinions before applying for a high risk merchant account.

Another element that is important for merchants pay attention to are the fees, terms and conditions associated with the merchant accounts. Many times these processors with not only charge high transaction fees, but also have application fees and may collect a reserve. Application fees, or sometimes charged after the account is approved as a set up fee, can usually be negotiated down since they are generally a junk fee. Many times the broker is marking up this fee and just padding their pocket. Another fee, the reserve, is something put in place by the processor to insure that the merchant can cover chargebacks and other fees associated with the account. Reserves can either be collected and held or they can be set up as a rolling reserve, where funds are held for 6 months then released on a monthly basis while new fees are being collected. These funds are usually based on a % of total sales – and that number is commonly 10%.

Merchants looking for an adult merchant account need to understand what they face when searching for a payment processor. One thing is that their fees will be higher than most other e commerce businesses. Established adult websites have leverage when applying, but merchants will have to show they have good monthly volume. Adult merchants though should always pay attention to all the fees associated with their account and try to negotiate some of the setup or application fees. Though reserves might be required to approve the account, these can also be discussed with the processor and from time to time negotiated lowered. The final point for merchants to remember is to research the payment processor. Make sure you are working with a trustworthy company that will pay consistently. We hope that this post has helped clarify what a high risk merchant account is and what a merchant should know before processing payments.

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