Adult Merchants Can Increase Sales With ACH Payments

Jul 26, 2022

The adult entertainment industry has seen dramatic growth, especially during the pandemic, as most citizens worldwide were required to stay home, self-quarantine, and practice social distancing. 

This trend is anticipated to continue its growth in the coming years, giving the adult entertainment industry a favorable opportunity for further development. 

However, adult industry merchants are notoriously marginalized when it comes to having easy access to card payment processing services. Most traditional banks and providers will not offer payment processing services due to the higher risks of partnering with such businesses. Risks such as higher than normal chargebacks, fraud, age restriction regulations, and reputational risks tend to keep these processors at bay. 

So what payment processing solutions do adult entertainment merchants have? Consider ACH payments. 

What Are ACH Payments?

ACH payments involve the sending of money from one bank to another via the Automated Clearing House Network. This network utilizes both vendor and customer bank account data in order to transfer the funds. 

The way it works is that an ACH credit is placed into an account, just like a weekly paycheck, and then an ACH debit is withdrawn from an account, much like a monthly subscription fee. 

These ACH payments are sent in several batches each and every business day. No credit or debit cards are involved and therefore, there are no fees from credit card processing companies to pay. 

The Benefits Of Accepting ACH Payments

A great advantage that ACH payments have is that they are incredibly secure. The ACH Network is revered as one of the safest, most efficient payment systems in the world. It has reportedly managed as much as $41 trillion every year. And more than 90% of electronic transactions in the U.S. alone are payments made by ACH. 

If you have a subscription business model or take recurring payments, ACH is incredibly effective. Credit card holders tend to change their cards repeatedly or have to be reissued. However, most consumers do not change their banks as readily. 

When you set up recurring payments via ACH, you can be sure that your payments will continue consistently. This in itself guarantees a predictable and stable form of recurring income for your business. There is no need to chase down customers whose cards were denied, expired, or in order to get their updated information. 

Here are more advantages to accepting ACH payments:

  • No expired cards

Credit cards typically cease to release payment if it happens to expire. However, with ACH recurring payments, this is not an issue. As long as the customer still has the same bank account, those ACH recurring payments will continue to be processed. 

  • For customers who don’t have credit cards

It is estimated that close to 1 in 6 adults or 17% do not own a credit card. However, according to the Federal Reserve, only 5% of consumers don’t have a bank account. Therefore, ACH payments could definitely be an option for those who do have a bank account. 

  • Fewer fees

Credit card transactions tend to have higher fees per transaction. ACH fees typically run from $.20 to $1.50 for every transaction. Credit card transaction fees can be as much as 1.3% to 3.5% of a transaction. If the business happens to be in the high-risk space, as in the adult entertainment industry, expect to pay even higher percentages. 

Drawbacks To Accepting ACH Payments

Although ACH payments have plenty of benefits for adult entertainment merchants to take advantage of, there are a few drawbacks to consider. Let’s take a look at a few:

  • Insufficient funds

In order for ACH payments to work, there must be a consistent amount of money in the account every month. If not, the ACH payment will fail. Plus, the customer will be responsible for paying overdraft fees and insufficient fund fees. 

  • Unable to access bank account details 

In order to set up ACH payments, customers must have easy access to both their bank account and their routing number information. Sometimes, customers may not have access to this information.

  • Mostly U.S.-Based

Although international ACH payments are possible, they only comprise less than 0.5% of the total transactions on the network. 

What Do You Need To Accept ACH Payments

In order to begin accepting ACH payments is to seek a merchant account provider that offers it. For adult business merchants, this will most likely be a high-risk merchant account provider. 

By acquiring an ACH merchant account, you will have access to the ACH Network, allowing direct withdrawals from your customers’ bank accounts. What you will need to apply for this type of merchant account is the following:

  • Certification of incorporation
  • An estimate of processing volumes
  • Proof of the company’s address
  • Valid ID for company owners
  • Federal tax ID

As soon as you are approved for an ACH merchant account, your next step would be to request authorization from your customers. It can be likened to receiving a signature on a paper check. Some of the authorizations that can be considered valid include:

  • Signature on a written order form
  • Verbal agreement recorded over the phone 
  • Online payment form submission

Once your authorization is complete and you have gathered all payment details such as the customer’s name, bank name, and routing number, the last stage involves entering that information into the ACH system. You can do this via a payment gateway, a third-party method, or processing software. The entire process, including transaction verification and funds clearance, takes only between three to five business days. 

ACH Payments Can Benefit Adult Merchants 

ACH payments really have a lot to offer adult merchants than the most popular and most used payment method, the credit card. The fact that they are cost-effective, secure, and convenient are just more reasons to consider implementing them as another important payment method in your business.

Let us help you get a high risk merchant account today!

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Having a merchant account allows an account holder to take advantage of merchant cash advances. When a merchant is approved for an advance, the business agrees to receive a lump sum of cash in exchange for an agreed-upon percentage of future credit card sales.

Pricing varies depending on the merchant’s industry, past credit card processing history, the type of business seeking the account, average ticket sales, and average transaction volumes.

Yes, EMB works with merchants who are building their credit, as well as those who have poor credit. EMB also approves merchants that have no credit card processing history and businesses that have lost their merchant accounts due to high chargebacks.

Several factors influence a merchant’s risk level. Though only one factor likely will not get a merchant classified as high risk, a combination of these may: business size, location, and industry, credit score, credit card processing history, a industry’s reputation for excessive chargebacks, a prior history of high chargeback ratios, and whether a merchant exclusively sells online.

Virtual terminals are stationed on a merchant’s website, making it easy for customers to make a payment or purchase online. Merchants or a payment processor can easily set up virtual terminals, so online businesses can accept credit and debit card and e-check transactions.

A merchant account is a business account with an acquiring bank. Without this business account, which actually works more like a line of credit, a merchant cannot accept and process credit and debit card transactions. Businesses need a merchant account to accept major credit cards via a static point-of-sale terminal, mobile card reader, or through a virtual payment gateway.

After filling out EMB’s simple online application and submitting any necessary, requested documents, many merchants get approved within 24 and 48 hours.

EMB specializes in working with high-risk merchants. EMB works with many merchants, including but not limited to businesses in these industries: gambling and gaming, adult entertainment, nutraceuticals, vaping and e-cigarettes, electronics, tech support, travel, high-end furniture, weight loss programs, calling cards, e-books and software, and telecommunications.

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