For no other reason than that the adult entertainment sector is plagued by higher-than-average rates of chargebacks, fraud, and reputational issues. Simply put, banks and processors do not want to be associated with companies that market items that are frowned upon in our culture. In this instance, adult entertainment and all of its subcategories.

The truth is that banks and credit card processors feel that a firm is too risky and have solid grounds to reject them for a merchant account if they uncover even one reason to classify any sort of business in a high-risk category.

In the case of the adult entertainment industry, many businesses have a number of red flags that place them in the high-risk category, making the banks feel more than justified in turning them down for their desperately needed merchant accounts.

Escort services, streaming films, online dating services, sex toys, and many more things are some of the categories that fall under adult entertainment. Your best bet is to look for a provider who is knowledgeable about both high-risk industries and, if possible, the adult entertainment sector. A high-risk, adult merchant account is required.

1. Fraud – Online businesses experience fraud considerably more frequently than traditional brick-and-mortar retailers. This is because hiding behind a screen makes it much simpler to do so. Additionally, consumers may want to avoid providing their personal information while utilizing products and services related to adult content out of concern that it may appear on their statement.
   
   The use of stolen credit card data is the fraud kind that occurs most frequently in the adult entertainment sector. But adult businesses deal with other kinds of fraud as well.
   Fraud can be hidden in some cases, such as when the same card is used for several purchases in a short period of time. Maintaining the viability of your organization requires using best practices for preventing credit card and eCommerce fraud.
2. Chargebacks – In essence, a chargeback is the refund of funds after a customer disputes a charge on their credit card statement. Chargebacks in the adult sector might also happen out of embarrassment, even if some customers might not have really used their cards to access your services.
   
   A customer claims it was an approved charge to their bank since they do not want a record of their use of adult services. Some even use this deception strategy so they can have their cake and eat it too. After using the good or service, the buyer requests a refund and challenges the payment.
   
   Due to the setting of the adult merchant services account, additional chargebacks happen. Numerous adult enterprises appear under different names on bank statements. While doing this is a wonderful thing for businesses involved in the adult industry, there could be some problems, like customer confusion. Fortunately, you can protect your account from chargebacks on your website naturally.

   This scenario also occurs in a lot of adult industry subscription-based firms. People who fail to stop recurring payments try to get some of their money back by filing a chargeback. One easy strategy used to prevent this chargeback scenario is to remind clients of upcoming recurring payments.

3. Reputation – Banks typically impose rigorous terms of service standards and rely on antiquated notions of certain business categories. If the business’s industry is not something you feel confident discussing with your family over dinner, it most likely presents a reputational risk to the bank. There is no chance of adult enterprises adhering to these guidelines.

   The only chance for businesses in the adult entertainment sector is to locate a bank and a credit card processing business that will work with them.

4. Applicable Laws – There are certain rules that solely apply to companies in the adult entertainment sector. For instance, 18 U.S.C. 2257, also known as simply 2257, mandates that you keep records of every performer’s government-issued photo identification along with age verification on your websites and in-store. [1] Other regulations can forbid the buying of adult toys outright in other states.

These regulations restrict your clientele, which, in the view of prospective payment processors, restricts your capacity to market to a big, diverse customer base.