The adult industry can be highly profitable but getting a merchant account is not as simple as for businesses in other sectors. That should not stop you but you need to know how to go about successfully applying for an offshore adult merchant account.
Federal regulations governing offensive material and allied laws mean US card payment service providers feel safer steering away from the adult industry. But we have solutions for you.
What exactly is involved with an offshore adult merchant account?
It simply means that you open a bank account in a foreign country and conduct business with an acquiring bank that will provide you with the appropriate merchant account to fit your specific needs. Card payments are made in the usual way and the funds are wired back to your regular US business bank account.
It is completely legal to operate an offshore account as long as you obey IRS regulations. Your card payment processing bank will operate the card payments processing from start to finish, for your particular business and niche’.
Finding the right country and bank is key to obtaining an offshore account. Regulations are different in European countries such as Switzerland, Germany and the UK compared with jurisdictions that specialize in offshore banking such as Nevis, Belize and Panama for example.
Why is getting a merchant account difficult for an adult industry business?
When considering merchant accounts, banks categorize industries by the level of risk they present while also evaluating their profitability to the various card payment processing service providers. The adult industry is considered a high risk sector. That’s why most US banks do not offer payment services to adult businesses.
What risks do banks believe the adult industry presents for payment processing?
Unfortunately, chargeback ratios are typically extremely high and fraud is prevalent in the industry. In simple terms, they cost banks money in several ways. That means reduced profits or even potential losses form handling card payments transactions.
Regulation is another factor. Card payment processing companies fear that they might somehow be complicit and liable if a merchant were to break the law.
Fraud covers a whole bunch of customer activities in the adult products and entertainment world and not just stolen credit cards. For example, people don’t want friends or family to know what that unusual transaction on their credit card statement actually represented.
That quickly leads to a chargeback request to the credit card iisuing bank. The merchant occasionally knows nothing about this until the bill with fees arrives from the card service provider. The customer presumably received the product or service and is now fraudulently claiming it never happened and is playing the “I have no idea what that’s for” scenario and disputes the transaction.
How can foreign banks provide offshore merchant accounts when US banks say No?
Every bank, in every country, has its own rules and guidelines for how it conducts business. In fact, the major card networks like Visa and MasterCard divide the world into several zones and have different rules for each zone.
The point is that rules vary by country – for banking and card processors as well as for citizens. It means that some foreign banks have a much more relaxed approach to handling payment transactions for the adult industry.
What businesses are “Adult” for card payment processing companies?
There is no fixed list of what businesses constitute the adult industry but these are typical:
- Escort services
- Lapdancing clubs and “Gentlemen’s Clubs”
- Adult stores, sex toys, bondage equipment etc.
- Adult books, films
- Adult clothing and lingerie stores
- Massage businesses
- Pornography sites / adult content
What must I have to successfully apply for an adult offshore merchant account?
Underwriters follow strict guidelines about requirements for any business seeking to set up card payment processing facilities. They pay especially close attention to businesses that operate in high risk industries and want to fully understand your operation.
Website – If you were an underwriter for an acquiring bank you would certainly want to view the public face of the business. That’s the website. You would want to satisfy yourself that the adult business is in operation and run in a manner that shows responsible ownership:
- Products and/or services offered match what is stated in the application
- The website is a professional online shop window for the business that works properly
- Content is real and not a mock-up and does not include banned words or phrases
- Security is demonstrated by having an SSL certificate (https:/)
- Card processing facility meets with PCI Security Standards Council requirements
- Contact details are clearly visible, including the legal name, contact postal address, customer service email or phone number
- Responsible policies are incorporated into the website and clearly visible, such as
o Terms of Service / T&Cs
o Refund Policy
o Cancellation Policy
o Shipping Policy (for physical goods)
Financials – Vetting by card processing company underwriters is very similar to that for loan applications. The payment processing service provider of your offshore adult merchant account wants to see evidence of good business practices and a profitable operation.
- Money in the bank – The business should have a reasonable bank balance that reflects its stated trading statements. You will need your 3 most recent bank statements too.
- Not in arrears – Scheduled payments should be up to date with no arrears and liens should be cleared.
- Valid ID – You must provide current government-issued ID, such as a driver’s license, as well as your Social Security Number and/or Employer Identification Number (EIN) from the IRS.
- Bank details – Proof of your business bank account either by a voided pre-printed check or a letter from your bank.
- Card processing history – If you previously had a merchant account, the underwriter will want your previous 3 months card payment processing transaction statements.
These are the basic requirements. Because the adult industry sits in the high risk category, an underwriter may request more information. We will advise you when you make your application.
Where to start for an adult offshore merchant account
You need expert guidance from people like us at SecureGlobalPay. We specialize in matching high risk businesses, such as in the adult industry, with banks in foreign jurisdictions.
We have spent years building up a network of friendly acquiring banks with offshore card payment processing services.
It means we know which ones are perfect for applications from businesses operating in the adult sector. We can guide you through the application process for the best chance of success.
Take action now
Click here to go to our online application page. Offshore adult merchant accounts take a few days longer than domestic US to process applications, given that they operate in foreign countries.
We aim to get back to you with a status update in between 3 to 7 days, or often sooner.
Or call us on 1-800-419-1772 and speak with one of our offshore experts for high risk industries. We will be happy to answer all your questions and help you through the application process.