Here’s A Quick Overview of Adult Merchant Accounts

Any type of internet business will not thrive without a merchant account. This is a tool that makes it possible to collect payment from customers through the internet. In an instant, an entrepreneur could be able to get the money via automatic transfer through his or her bank account. The whole process involves having a good relationship between the merchant and payment processor provider. This is for the purpose of dealing with customer transactions when they use their debit or credit cards. Nowadays people purchase items over the internet through the means of credit card which is becoming a convenient method of payment.

There are online businesses that are considered to be high risk in nature. An example is the one related to adult entertainment. The good news is that there is a high risk merchant account specifically meant for this kind of business. It is actually the same as the standard merchant account but the fees are much higher which could have effect on their profits and return of investments. This is true when the one applying for a merchant account is classified to be a high risk one. Fortunately there are providers that specialize in this kind of account. They offer faster payouts and affordable rates in order to attract businesses that are having problems with processing their adult website transactions.

Aside from adult entertainment service, there are businesses that are termed to be high risk due to the nature and business process. Travel agencies, MLM, bail bonds, pharmacies, online gambling and several other types of businesses are classified as such. Banks and financial institutions are hesitant to offer them merchant account. Some would even charge a much higher fee and draft specific agreements. This is due to the fact that high risk businesses are often prone to fraud, chargeback, and refund. An example of which is that someone may use a stolen credit card to make purchase over the internet.

In the world of adult ecommerce, the risk factor is high because the businesses don’t actually look at the card. All they do is to take orders without verifying identity of the user and as a result the fraud incident increase. For those who will be applying for merchant account, you would need to consider several factors before getting into the contract.

As an advice, you must know your needs from the payment processor. Consider the amount of money that you will be processing from your website. As an operator of the adult site, consider the whole operation so it would be easier to define your requirements. In looking for a payment processor, go for a company with experience in serving the industry. You need to spend time to read and to do research which is a wise way to look for adult payment processor.

After short listing several companies, do an intensive comparison of various payment processors. This would give you an idea which ones are reliable. Investigate on the company and its background when it comes to serving high risk businesses. In long run, it is worth your time and effort as you can find the right one to work with your business.

Adult Credit Card Processing

Merchant accounts are classified into two based on the risk factor involved in the payment processing and transaction. Banks or financial institutions, after taking into account the nature of the business or product or service offered by the company or merchant, decide which classification is suitable for them.

Adult credit card processing includes those types of transactions, where the identity or legitimacy of the concerned customer is not known. It has been proved that such accounts are more vulnerable to fraudulent transactions. Statistically, these accounts present potential risks of charge backs which is a risk most banks tend to avoid by declining the account applications.

Today, there are a lot of companies which run on revenues from adult oriented websites. Adult service providers are deemed to be high risk merchants. This adult services business is highly lucrative, but taking into account the ethical values of the financial institution, most banks tend to turn down these merchant account applications. Thereby, adult credit card processing is quite difficult to attain.

There are high risk merchant acquiring banks which allows to establish merchant accounts for other high risk services like online casino sites, online pharmacy sites, lotteries, shopping clubs etc, but it when it comes to an adult service provider, they usually decline the request for the merchant account. And credit card processing companies, who are willing to set up these processing accounts, demand high charges for this account, which might not appeal to the adult service provider, the simple and logical reason being that they are not willing to give up a considerable amount of their profit to their account provider.

If at all these providers decide to open an account succumbing to this high charges, they will either have to reduce the quality of the service provided or increase the amount that they charge their customers. Unfortunately, implementing either of these options will adversely affect their business since it will eventually cause customers to stop using their services or products.

All these factors highlight the importance of having unique merchant accounts for all sorts of businesses. Merely classifying them as high risk accounts will not do. Every business has its own characteristics, and some might present a higher risk profile than the others. Banks and credit card processors should do more research on their underwriting which decides whether an account application should be accepted or declined. Proper assessment of the parties that are submitting the application should be done, and based on that they can put down unique rates and charges for establishing and maintaining these accounts. This way, adult service providers can ensure that they can find credit card processors to conduct their online transactions without having to cut down on the quality of their services.

There are a number of banks and credit card processors who have researched intensely on this and have come up with unique adult credit card processing accounts which depends on a host of factors that they can implement, before turning down the applications.