The adult entertainment industry may be a hot and controversial topic, however, it is definitely not illegal to operate a business that sells adult services and products.
The bad news is that most banks treat the adult industry like breaking the law. Because of its large volume of card-not-present transactions, high chargeback rates, and the potential that such businesses can be a fake front for illegal activities, most financial institutions classify them as high-risk businesses and refuse to approve their merchant account applications that allow them to take payments via credit cards.
But with the adult entertainment becoming a booming industry, not accepting and processing credit card transactions is a big no-no.
Challenging as it can be, obtaining an adult merchant account is not impossible. This is because there are merchant account providers that specialize in any high-risk merchant accounts. These 6 steps can help increase your chances of acquiring an adult merchant account for your business.
- Pay Attention To Your Credit
First and foremost, you need to settle outstanding liens or balances. Then make sure that at least one of the major credit reporting agencies knows that you have cleaned up your credit. In just a few months, your credit reports will be updated and that your rating will definitely improve.
- Save, Save, Save
Do not be surprised if merchant account providers require you to set up a reserve account first. A reserve account serves as a shield against chargebacks and prevents any future losses as well as other unexpected financial issues.
This should provide you security and the more that you can save, the more serious and trustworthy you look to a provider.
- Don’t Be surprised To Pay More
All businesses that fall under the high-risk category need to be prepared to pay higher processing fees. Just think of it as the cost of doing a high-risk business. And that what you’re gaining is totally worth it.
Remember, this is a cashless society. And having the option of taking debit or credit card payment ensures that you have enough cash flow and revenue.
- Acquire Documents in Order
Like any other application process, you’ll have to provide required valid documents when applying for an adult merchant account. You will have to provide a government-issued ID such as a driver’s license, a pre-printed voided check or a bank letter, a Social Security Number or an Employer Identification Number and at least 3 months of your most recent bank statements.
If applicable, you can also provide a copy of your 3 months most recent processing statements. Also, make sure to prepare any additional requirements that you provide may ask. Gather these items and have them ready in order to have streamlined processing.
- Honesty and Be Ready To Explain
In case you have a previous merchant account shut you down or filed for bankruptcy, then you will need to provide a good reason for it. Although neither of these can automatically disqualify you for your adult merchant account application, it definitely increases your risk.
However, when explaining, you need to be truthful. Be honest about your average ticket amounts, and projected processing volumes. You do not want to sound too conservative or exaggerated. Anything that doesn’t match what you estimated will be a red flag. This will increase the risk of your application being denied or funds frozen without prior notice.
Customers and shareholders may shy away from an adult business due to their reputation. However, they need to be focused on the potential profits it provides.
The adult entertainment industry is usually the more lucrative one. And when your business is doing well, so is your merchant account provider. Show them you’re legit and that you are a responsible business that just happens to be in the adult entertainment industry.
Types of Accepted Adult Businesses
Although the adult entertainment industry is changing, here are the types of the businesses that are usually accepted by providers of high-risk merchant accounts:
- Adult bookstores
- Adult toys and novelties
- Escort services
- Adult massage businesses
- Adult content membership websites
- Online dating services
- Strip clubs
- Online adult clothing and lingerie shops
In case, your business is not included above, then you need to discuss it with your provider at the start of the application process.
And as long as you can provide a reliable and thorough explanation of your business model, the merchant account provider can explain it to an underwriter in a sensible manner so you can acquire an adult merchant account.
The faster you get approved for your adult merchant account, the sooner you can start to increase your profits and establish a good business.
So, are you ready to acquire an adult merchant account? Still, don’t know the risks and challenges that you may face?
Consider contacting iPayTotal. We are highly specialized in helping high-risk merchants, like those that are in the adult entertainment industry. We offer an online application that is easy and simple and will be there to guide you through the entire process!