I'm sure this will end well for them. I guess if you go out of business, you don't have to worry about running afoul of your choice of payment provider's requirements.
So far as I know, Gumroad is basically the artists' OF. Without porn, what will they really have left?
Reminder that NSFW content has disproportionate amounts of fraud and chargebacks. This is also why Stripe, PayPal, Visa, etc. hate it just from a business perspective.
That's "common knowledge" but I wonder how true that is.
I have a feeling NSFW attracts more problems from a "moral", political and pressure groups perspective than actual fraud and that's the main reason companies don't want to touch it.
The rate depends, but take OnlyFans: They cascade (I.e. spread out) payments across at least 3 providers, and automatically rotate between them to avoid any of them getting a rate too high.
Seems like quite a bit of logistics if it was not really an issue.
That doesn't really make sense unless they have a way to flag higher-risk charges and route them to a processor that is more risk-tolerant (and usually more expensive). Eg. I could see segmenting the charges for the first month or two into a higher risk bin, and then moving recurring customers into low-risk bins on processors with cheaper rates.
There is a difference between straight up porn and fan-service (OnlyFans) and the adult artwork and erotic educational content on Gumroad. I would be surprised if these suffer from the same amount of chargebacks.
I know. But I also know that if NSFW content makes up the majority of your store and/or sales, it behooves you to find a payment processor who accepts that risk (albeit at a higher cost).
Funnily enough, I bought lots of stuff on GumRoad and wasn’t aware that NSFW is huge there. I only knew it as the platform for online courses, ebooks and mediocre notion templates
Then the artist can take on the risk by establishing their own business and finding a payment processor who accepts that risk instead. Will they? Won't they?
If everyone on your platform does that, you no longer have a platform though.
Banning/outlawing the majority of your users, no matter how annoying or costly they are, is generally not a winning move for a platform that lives off its users.
So why not offer payment methods without chargebacks? Here in Europe, i pay 95% online payments with direct bank transfers, which do not offer chargebacks.
Because in America, direct bank payments are a pain, and come with the risk of more money being taken out than displayed onscreen. Your bank account information might also get re-used.
There’s a reason why it’s common advice to use credit cards and not debit cards, simply because the fraud protections and laws are stronger.
But if you can't accept credit cards for some reason, no one would tell you to close up your business instead of accepting debit cards.
"This specific category has a high risk of chargebacks, so it's using a less convenient/safe system" does not seem like an absurd thing for a payment processor (or a storefront) to say. Services like Paypal support direct bank access for payouts, right? The systems may not be ideal, but payment processors are not so uncomfortable with them that they won't support them at all.
This doesn't really explain why payment processors couldn't restrict payments for adult material to a subsystem or charge higher transaction fees for it specifically. If this is just about risk, then... risk can be priced. It doesn't seem that complicated. You calculate the chargeback rate for the category and you price transactions for that category accordingly. Part of the financial cost of payments online goes into subsidizing risk, this is already something that we all do every time we use a credit card on a service with transaction fees.
Stripe couldn't have a different pricing tier for payments or businesses operating within specific categories?
Aren’t there payment processors that allow adult content? Makes me wonder why a platform like Gumroad couldn’t just use a different processor for customers that mark themselves as NSFW.
I wish there was an easy way to handle subscriptions with crypto. Like if MetaMask or other wallet apps agreed on a "pull-based" billing system. That would probably never happen, but I can dream.
As an operator, I'd also want a smart contract that collects payments from a list of tokens/altcoins and immediately converts it to USDC.
You can do that by making a smart contract that the payee can only pull X amount from on certain block intervals, and the payer can deposit and withdraw from a often as they like. It would essentially be a checking account.
Also re: auto converting tokens - you can jusr make a service to do that, it doesn't have to be a smart contract. A smart contract probably could be used with a DEX though, but I think that may be needlessly complex.
> You can do that by making a smart contract that the payee can only pull X amount from on certain block intervals, and the payer can deposit and withdraw from a often as they like. It would essentially be a checking account.
Honestly it's pretty trivial. I haven't tested it (it does at least compile), but I had GPT-4 write a contract for this[0]. Obviously don't use this for anything meaningful, just meant to convey the idea. More features could be added to do things like allow the account creator to add / remove more payees with their own withdrawl rates, allow them to directly transfer to someone besides themselves (analogous to paying with a debit card).
I don't see why not though? One of the benefits of a decentralized currency is that it is not subject to censorship by any central authority who disagrees with the content you are purchasing. That is exactly the problem these guys are having. Granted, they'll have to pay a lot of transaction fees/gas, and the volatility still makes it hard to fix prices, but for one-off transactions, you can ignore day-to-day volatility as long as the minute-to-minite volatility is bearable.
Modern blockchain payment systems (see Base) have transaction fees that are an order of magnitude cheaper than any trad processors; they don’t discriminate based on moral grounds; transactions settle in seconds rather than days; they are not bound to only certain countries; funds are not custodially held by a single centralized tech company; the list goes on.
Much of the rationale for anti-crypto among communities that would most benefit from it (eg: NSFW art) is ill conceived and held together by an almost religious zeal.
> “We have been asked to be more rigorous in enforcing our ToS and must comply,” Gumroad founder Sahil Lavingia told TechCrunch. He declined to say which company asked Gumroad to enforce stricter rules.
This refusal to even name which payment provider is being an ass irks me, and makes me worry that this may just be a convenient excuse to get rid of adult content 'because the payment providers made me do it'.
Gumroad already was hostile to adult content by forcing anyone looking for sex-related content (regardless of its type) to repeat every search by explicitly ticking the 'Show NSFW' checkbox way down the bottom of the filter list, and have to repeat this for every search, with no way of opting in in the settings.
> “Should Gumroad hire a lobbyist?” he asked in an email to TechCrunch.
Yes? I'm a little confused as to why platforms that feature adult material wouldn't be lobbying around payment processing requirements and regulations. I don't know much about the porn industry, but are there seriously not lobbyists in that industry?
OnlyFans got (effectively) banned from multiple states. They absolutely have a legal team and a PR team that's focused on the government. How would any platform that features adult content not be looking at OnlyFans and thinking, "maybe we should start prepping for legal/regulatory battles."?
I mean, heck, how are they not "lobbying" payment processors? TikTok basically unleashed its entire userbase on the government over a potential ban. When a payment processor starts messing with the content you can allow on a storefront, is there a reason why Gumroad isn't making contact information available for those payment processors and encouraging users to write to them? I'm sure it wouldn't help Stripe's relationship with Gumroad be any more chummy, but like... this is a business relationship, not a friendship. I don't know, these platforms act like they just got an edict from God rather than that they are being pressured by a business partner to make a business decision that their userbase dislikes. Am I out-of-line on this? I feel like when business agreements get restricted and that affects customers, it's relatively common for businesses to use that discontent as leverage in negotiations and not just say, "well, hands are tied, sorry everybody." When Sony restricted Spiderman, Disney was not shy about encouraging people to contact Sony.
I guess I assume there are complications with business relationships with payment processors that makes that harder? I don't know if there are any payment processors that do work with adult content, maybe Gumroad just knows that it doesn't have any bargaining chips to work with?
But I kind of get whiplash between looking at how companies respond to things like iOS restrictions vs how they respond to payment processing restrictions. I would have assumed that these types of businesses were already lobbying, everybody else seems to be. Maybe Gumroad is too small to have those kinds of legal resources? Is Patreon working with lobbyists? Is Kickstarter?
So far as I know, Gumroad is basically the artists' OF. Without porn, what will they really have left?