[JohnBooty]

I know you've probably learned this already from your experience, but for other readers:

The (possibly) surprising thing here is that banks aren't moralizing here. You can walk into any adult bookstore and pay with a regular old credit card just fine, thank you. Visa and Mastercard are not averse to allowing you to pay for porn.

The reason why banks and credit card companies don't want to be involved with online porn because there's an incredibly high rate of chargebacks. People pay with stolen cards, and people pay with their own cards and then claim that they were "hacked" when their wife wonders why there's porn on their credit card bill.

All of this creates a certain amount of work for them, and it's unprofitable.

So in a sad way, the banks' distaste for dealing with online porn payments is a just sad reflection of our society's attitudes about porn. If we weren't a bunch of weirdos who caused a lot of chargebacks and, instead, paid for porn like actual grownups... banks would have no problem servicing this industry.

[jenmcewen]

You're absolutely right there. You can purchase adult DVDs with Mastercard/Visa at brick and mortars. Once it's online, that's when you get hit with not only the higher rates but the strict yet frustratingly vague content restrictions. Which are applied inconsistently across industries and companies, might I add. For example, as an adult app store, my company can't sell any apps that reference drugs, but you can buy GTA on Play.

Banks are quick to penalize merchants for CB fraud. I wish they would take more action against the individuals who commit it.

[doug1001]

yep--ditto for online gaming (eg, online poker, casino, sportsbook). The chargeback rate is outrageous--thought i put the decimal in the wrong place first time i prepared a monthly report. The credit card owner of course claims fraud--ie, someone stole his credit card data & played online poker and lost a fortune all on an account liked to the poor guy's visa. As anyone can guess, a large fraction of this cases are 'remorse fraud'--ie, the card holder had began losing, kept playing and kept losing and panicked at what his wife will do when she sees the $5,000 partypoker charge on his card, he does some research, learns that a "CNP" transaction has certain protections, and in this case means the he can blame someone else and the merchant has to prove otherwise.

[cassgames]

A startup idea: create a "dynamic pricing" adult payment processor that would try to undercut the competition by adjusting the amount they charge merchants depending on their chargeback history. You know, sort of like the insurance companies do (insurance is cheaper for those without claims). This way you differentiate between the true high risk merchants and those that are labeled as such just because they are adult.

Undercut the competition which charges upwards of 15%, using that process. Make a killing.

[cindygallop]

As per my commment below, we get virtually no chargebacks at http://makelovenotporn.com/ because we are a different kind of business operating in a different kind of way - out in the open, socially acceptable/shareable - but the financial institutions' compliance departments won't even have that conversation. :(