If you are running a business in the adult industry, whether it’s an adult entertainment website, online gaming platform, or selling adult products, you already know you're classified as "high-risk" by payment processors. This means finding and managing an Adult Merchant Account can be a bit tricky. High fees, strict regulations, and the risk of account termination are just some of the challenges you'll face. But fear not! With the right knowledge and preparation, you can avoid the common pitfalls and keep your business running smoothly. In this blog, we'll dive into the 7 common pitfalls with Adult Merchant Accounts and show you how to avoid them. So without any further delay, let’s get started.
1. Choosing the Wrong Payment Processor:
One of the most common mistakes businesses make is partnering with the wrong payment processor. Not all payment processors have experience handling Adult Merchant Accounts or understanding the intricacies of the adult industry. Many general processors will reject your application or shut down your account once they discover the nature of your business.
How to Avoid It: Work with payment processors who specialize in high-risk industries, particularly the adult sector. They understand the nature of your business and are less likely to suspend your account. WebPays is one such payment processor that offers specialized services for high-risk industries, including adult businesses.
2. High Transaction Fees:
Because adult businesses are considered high risk, payment processors often charge higher transaction fees compared to standard merchant accounts. These fees can eat into your profit margin, especially as your business grows and transactions increase.
How to Avoid It: Do your research and compare fees across different Adult Merchant Account providers. While high fees are inevitable, some providers are more transparent and competitive than others. Negotiate the rates where possible and consider providers like WebPays, which offer competitive pricing while catering to the specific needs of high-risk industries.
3. Unpredictable Account Holds and Freezes:
One of the most frustrating pitfalls with Adult Merchant Accounts is the possibility of having your funds held or your account frozen without warning. Because processors view adult businesses as high risk, any suspicious activity (even legitimate) could trigger an account review or freeze, which can severely disrupt cash flow.
How to Avoid It: Choose a payment processor that provides transparency and regular communication. It’s also important to follow the best practices for managing your account: keeping chargeback rates low, ensuring transparent transactions, and promptly addressing any inquiries from your payment processor. WebPays offers excellent customer support and can help you mitigate risks that lead to account holds.
4. Excessive Chargebacks:
Adult businesses often see higher-than-average chargeback rates due to customer dissatisfaction or disputes. This is especially common with subscription-based models where users might forget they’ve signed up for recurring payments. High chargeback rates can result in penalties, higher fees, or even account termination.
How to Avoid It: Implement a clear and transparent billing system. Make sure your customers know exactly what they’re being charged for and provide an easy-to-use cancellation process for subscription-based services. Using fraud prevention tools can also help you minimize chargebacks. Partner with a Adult Merchant Account provider like WebPays that can offer these tools and strategies to manage chargebacks effectively.
5. Lack of Fraud Protection:
Adult businesses are often targeted by fraudsters due to their high-risk nature. Without robust fraud protection in place, your business could be exposed to fraudulent transactions, chargebacks, and even legal troubles.
How to Avoid It: Work with a payment processor that offers advanced fraud protection features, such as 3D Secure, Address Verification Systems (AVS), and real-time transaction monitoring. WebPays provides tailored fraud prevention tools specifically designed for high-risk industries like adult businesses. By keeping fraud under control, you can reduce your exposure to risk and minimize chargebacks.
6. Compliance Issues:
The adult industry is subject to a host of legal and compliance regulations that vary by country and region. These regulations are continuously evolving, and failure to comply can result in hefty fines, legal action, or the shutdown of your business. Many adult merchants overlook these complexities when setting up their Adult Merchant Account.
How to Avoid It: Ensure that you stay updated on the latest compliance requirements for your industry and region. Work with a merchant account provider like WebPays that understands these regulations and can offer guidance on how to remain compliant. Make sure you are upfront about your business's nature when applying for an account to avoid any issues down the line.
7. Difficulty Scaling Your Business:
Adult businesses face unique challenges when trying to scale. As you grow, you may need to process more transactions or expand to new countries. Many payment processors are unable to handle this growth due to their limitations in processing high-risk transactions or lack of support in multiple currencies.
How to Avoid It: Look for an Adult Merchant Account provider that offers scalability, global payment solutions, and multi-currency support. WebPays allows businesses to scale by providing secure international payment processing options, ensuring you can grow without hitting limitations or bottlenecks with your payment processor.
Conclusion
In conclusion, managing an Adult Merchant Account comes with its unique set of challenges, from high fees and regulatory hurdles to the risk of account freezes and fraud. However, by understanding these common pitfalls and choosing the right payment processor, you can navigate these issues effectively. With WebPays, you gain access to specialized services designed to tackle these challenges head-on, providing you with the support and tools needed to keep your business running smoothly. Partner with WebPays today to avoid these pitfalls and focus on growing your business while staying secure and compliant.
