Anyone who has attempted to open a traditional merchant account from the same provider as their retail store while offering “adult content” on their website can tell you how quickly they are told “sorry, but we cannot establish an account for adult content”. But what is “adult content” and why can’t you get a typical merchant account for it?
Adult content is usually describe as offering pornography for download or for sale through a website. Videos, full length movies, and photographs of sexual acts and nude models are your typical examples of adult content. Websites that offer this kind of material traditionally have much higher rates of chargebacks versus traditional businesses. There are various reasons for this including:
1) Some people don’t feel guilty scamming a pornography website.
2) Some people purchase content from these websites and have their spouse discover what they have done. To cover their tracks, and save their butts, the claim the card was stolen and charge back their transaction.
3) A disproportionate number of porn sites are scams relative to other websites and help to ruin it for everyone else.
The result of this high chargeback potential is all adult websites must seek a high risk merchant account. These accounts work in a similar fashion to a traditional merchant account but the fees are usually higher and include a large set up fee (but not always) and usually some of the merchant’s funds are held in reserve as “insurance” against fraud and chargebacks.
But just because a product is adult in nature doesn’t mean it necessarily is adult content. What isn’t adult content are tangible adult products that aren’t pornography. Stores that sell adult toys and apparel typically can establish a merchant account without any extra work or hassle. This is because those kind of products do not share the same high rate of chargebacks as pornography does.
So, if your product is of an adult nature, you will need to determine whether it is pornography or just an adult product. If it is pornography, you will need a high risk merchant account. If it tangible products aimed at adults, a traditional merchant account should work just fine. Keep in mind the policies of merchant account providers do vary so some may consider adult products as adult content, too. In those cases just look for another provider who doesn’t. They’re definitely out there.
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