Easy accessibility, 24/7 availability, and greater anonymity caused the adult entertainment industry to explode in the digital marketplace. To keep up with the interest and the evolving industry, purveyors of this type of entertainment need to stay on top by giving consumers a number of ways to pay, including credit and debit cards.
Unfortunately, building a healthy business isn’t as easy as getting an adult merchant account, which is needed to accept and process credit card payments safely. Banks and credit card processors classify the adult entertainment as “high risk” due to excessive chargebacks, friendly fraud, and perceptions that they are fronts for other illegal activities. Though there are challenges, you can get an adult merchant account from a high-risk merchant account provider if you take some steps to prepare your business.
6 Steps to Make Your Business More Account-Worthy
1. Build and/or Clean Up Your Credit
If you don’t have a business credit score, start building one by opening a business line of credit or getting a business credit card. Once you get them, pay them on time or even early, if possible. Once you have established credit, check your scores with the major reporting agencies, Equifax, Experian, and Trans Union, to ensure that there are no mistakes. Get the mistakes fixed and pay off anything that isn’t an error. Better scores mean better rates and financing options.
2. Tell the Truth
If you have had other businesses that have gone bankrupt or you have had other merchant account terminated, be ready to explain and tell the truth. These situations don’t automatically disqualify your business. However, if a merchant account provider does some digging and finds out these facts, it likely will work against your business.
3. Save Some Money
To protect themselves, many high-risk merchant account providers ask adult-related businesses to set up a reserve account. This is a separate account where a specified amount of funds are held in case the merchant defaults on chargeback fees or refunds. By stashing away these funds and having them ready, you are showing a provider you can be taken seriously.
4. Expect to Pay the Price
There’s no sugar coating it, higher risk equals higher rates and fees. Also, expect to adhere to other restrictions, such as monthly transaction volume caps, that other lower risk businesses don’t have to follow. Don’t worry. If you can prove your business is operating well and chargeback ratios are low, most merchant account providers allow you to renegotiate terms.
5. Consider the Way You Bill
Adult merchants receives numerous friendly fraud chargebacks. Friendly fraud is when customers receive products or services, then, they decides they don’t want to pay for them, so they dispute the credit card charges. This happens a lot when a partner or spouse sees the charge on a credit card and wants to hide the fact that he/she purchased an adult item. Some of this can be avoided by charging customers one-time annual fees. It is often easier to hide or explain one charge, then, multiple recurring payments. Also, create ironclad an refund policy and terms and conditions, to reduce potential chargebacks.
6. Get Your Documents Ready
Before you apply, get your documents together. Merchant service providers will want to see credit processing histories, valid state-issued identification, like a passport or driver’s license, a few months of bank statements, and contact information for all owners/stakeholders.
The Final Say
By taking these steps, you are likely to get approved faster. The quicker your business gets approved, the faster you can begin collecting revenues and making your business more credit-worthy. As you establish and better your business credit, you are opening yourself to better rates and other financing opportunities.
Though there are fewer merchant account providers that want to work with adult merchants, there are enough for you to research and find the one that is best for you.
eMerchantBroker.com (EMB) is merchant account provider that specializes in working with high-risk businesses, such as adult entertainment merchants. EMB offers a simple, streamlined online adult merchant account application process.