Why Adult businesses are considered High-Risk?
- Many jurisdictions have strict laws regarding the sale and distribution of adult materials, making it difficult for payment processors and financial institutions to operate in this space.
High Likelihood of Chargebacks:
- Customers may feel embarrassed or ashamed about their purchases and seek to reverse the transaction.
- Merchants may also experience fraudulent chargebacks.
Potential for Fraud:
- The nature of the products and services being sold makes adult businesses more susceptible to fraud.
- Anonymity of online transactions makes it easier for fraudsters to use stolen credit card information to make purchases.
Apart from the legal, chargeback, and fraud risks, adult businesses that sell pornographic content online are also considered high-risk merchants due to the following reputational risks:
Social Stigma: Pornography is a contentious issue in many societies and cultures, and its association with adult businesses can result in a negative perception of the merchant. This could harm the merchant’s reputation and potentially drive away customers who are uncomfortable with the nature of the products or services being sold.
Brand Risk: Adult businesses that sell pornographic content online also face significant brand risk. If a customer is dissatisfied with the quality of the product or service, or if they encounter issues with the merchant’s website or payment process, they may leave negative feedback or reviews online. This could damage the merchant’s brand and potentially harm future business opportunities.