Tag Archives: Adult Merchant Account

Continuing to publish articles to help businesses with their adult merchant account services is the goal of Adult Merchant Service. Focusing on all aspects of the payment processing industry as it relates to adult businesses has been our mission for over 10 years.

For instance, the importance of keeping merchants updated to changes with compliance regulations is second to none. Operating as a noncompliant merchant can become costly through excessive fees and possible liabilities. As the payment card industry works to improve the payment networks, changes and upgrades are always occurring.

In addition to compliance, operational and technology changes are constantly being implemented to improve the merchant services industry. Understanding how to use these technologies is beneficial to any merchant accepting payments.

In conclusion, Adult Merchant Services’ purpose is to continue reporting important adult merchant account news. Keeping adult businesses updated and properly educated helps the industry as a whole.

Best Adult Merchant Accounts

May 1, 2018ReviewsAdult Merchant Account

How important is finding 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 adul 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.

What Is a Chargeback?

March 15, 2018InformationAdult 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 with the adult credit card processing industry since 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 merchants to periodically check to ensure 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, possibly 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.

What is a “High Risk” Merchant Account?

April 24, 2015InformationAdult Merchant Account

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.