Although vast advantages of accepting credit cards via Cyberspace are readily available to most e-merchants, gaming and adult vendors lag seriously behind in the race for virtual reality revenue. That avenue to awesome profit has been closed to those industries because of perceived excessive risk. Merchant account providers cite many stats as facts to back up policies of blanket denial to protect their bottom lines.
The pecuniary paradox of e-business platforms
Like all online merchants, adult and gambling website operators face a peculiar financial dilemma. Privacy and convenience that provide big attractions for web-based patronage also facilitate credit card fraud and friendly chargebacks by legitimate card holders. Outright fraud is quite easy to commit, as physical cards are not present at the time of purchase. This, of course, precludes identity verification to prove the simultaneous presence or prior knowledge of actual card holders.
Gambling and adult websites are popular targets for friendly fraudsters because the actual receipt of digital merchandise is extremely hard for e-merchants to prove.
A 2013 report by LexisNexis revealed an average loss of $2.79 USD for every $1 USD lost via credit card chargebacks.
Because business customers are paid before acquiring banks actually receive funds from end buyers’ credit card issuers, deposits are effectively loans and carry identical risks as all other cash advances.
Primary card processor concerns
A major complication is that some e-commerce is especially fertile fodder for illicit financial exchange. Virtual casinos, for example, are widely viewed as money laundering venues. Besides that, gambling itself is illegal in most U.S. jurisdictions. In 2004, both Google and Yahoo! deleted gambling sites from search databases after the Department of Justice announced its official interpretation of the Federal Wire Act to prohibit aiding and abetting any type of wagering.
Most mainstream account servicers routinely reject all adult websites due to the controversial nature of featured content and the difficult enforcement of age-related legal restrictions. The underlying rationale is to avoid reputation damage by popular perceptions of disreputable, immoral business associations. Not to mention extreme exposure to criminal prosecution as unwitting but legally culpable accomplices to child pornography distribution!
Valid high-risk virtual merchant accounts
Fortunately, a silver lining exists in otherwise cloudy skies to line riskier enterprises with gold. Hesitation and fear have spawned a new breed known as high-risk merchant account services that boldly go where competitors dare not even tread or touch with ten million-mile poles.
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