Issues that Face an Adult Novelty Shop Startup

Jun 11, 2015

Running into problems as an entrepreneur seems to go along with the territory.  Starting a business has its own set of problems, but the industry you are starting out in may involve a whole new level of issues to deal with. For those trying to start an adult novelty shop, the problems may seem never ending.

Adult novelty shops have seen a huge boost in sales, thanks to the internet. The ability to purchase such products online has offered consumers convenience, the ability to compare and discreetness. In turn, these advantages have offered businesses customer satisfaction and repeat business. Despite the fact that consumers are enjoying this more discreet way to shop for products from the convenience of their home, businesses struggle to find anyone interested in investing.

The biggest reason for the lack of investors is due to religious beliefs and morals. In some situations, businesses have been rejected by institutional investors because of their fear of how their Catholic partners would feel about it. In addition, it is common for these businesses’ product ads to be dropped last minute from magazines and job listings to be disallowed by open job boards.

The general feeling is that there is a lot of money tied to people with certain, strong religious and cultural beliefs – beliefs that often clump sex and porn together; this association continues to shape the perception of both entrepreneurs and investors, and not for the better. It has led to many investors backing out at the last minute, along with the difficulty of securing services from traditional lending sources.

Traditional lending sources typically categorize adult businesses as “high risk”, making it extremely difficult to secure payment processing solutions. Despite this, starting an adult novelty shop remains one of the most sought after markets for startups. Alternative lending sources have stepped in to bridge this gap by offering adult merchant accounts.

The adult industry is not only plagued by the categorization of high risk, but it also deals with high chargeback and dispute rates. Providers that specialize in offering this industry merchant accounts can help startups open an account for a variety of adult websites: adult novelties, dating, adult toys and adult content.

Between this sector being labeled high risk and the issue of religion and morality, the adult industry definitely has its obstacles. The fact that credit card companies often mistake these businesses as sex service doesn’t help either. Thankfully, alternative lending providers and their adult merchant accounts have at least eased some of these issues that stand in the way for adult novelty startups.

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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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