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I believe the logic is: 1) Porn (crypto, gambling, etc.) transactions are significantly riskier than other transactions. 2) CC processing involves a long chai
by Lazare 8y ago
I believe the logic is:
1) Porn (crypto, gambling, etc.) transactions are significantly riskier than other transactions.
2) CC processing involves a long chain of intermediaries.
3) At every step of the chain there's strong pressure upstream for better rates, and strong pressure downstream to ensure the blended payment stream is safer.
So, eventually, someone in the chain gets told "sure, we can give you better rates, but only if you can improve the risk profile of your payment stream". And then they crunch the numbers, and decide it's worth it, knowing they'll lose some volume but hoping they can make it up with better margins. And then the people who churn find one of the remaining partners who hasn't adopted strict policies, and this repeats until all the "dodgy" payments are going through a high-fee chain that can't possibly afford to change their policies, and everyone else is going through a low-fee chain.
If you check CCBill, their "Blue" package that allows adult content runs 10.8% to 14.5%, with a $1,000 yearly "high risk registration fee". And even their normal plan (which doesn't allow adult content) seems to be 5.9% + $0.55 per transaction? Braintree is 2.9% + $0.30; Stripe is the same.
You can see why, eg, Stripe would be happy to leave CCBill to have a virtual monopily on adult transactions: There's not that many of them, they're so risky you'll need to charge absurdly high rates just to cover your costs, and just touching them at all will potentially taint your other transactions in the eyes of your upstream partners, driving up your rates. Conversely, you can see why CCBill will never kick the adult payments off their platform; it's the only thing they have to offer.
Disruptive startups work best when they can start with a niche and then grow from there, but the logic of the financial system makes that very difficult.
- girvo 8y ago> adult transactions: There's not that many of them I genuinely wonder how true this is. Does anyone know of any stats/data that have been released about it?
- lallysingh 8y agoEven for people who but lots of it, what percentage of their monthly transaction count will it be?
- Paul-ish 8y agoIt's obvious why, nobody will process them. /s
- manicdee 8y agoWell I certainly don't pay for porn. And the times my other half sees odd payments on my credit card, she's on the phone claiming chargebacks lickety-split because nobody she knows would pay for porn. So I have no data to provide on this matter. None at all.
- goldenkey 8y ago"My husband would never pay for porn when he has me! Grabs phone to file a chargeback for JOLLYGIRLZ PLC" "Honey..about that..uh..well..I..ummm.. porn is disgusting!! Thank you dear!"
- bostik 8y ago> Well I certainly don't pay for porn. Quoting from a Finnish crime story: "People are willing to pay a lot of money for good porn." "Could be. Too bad nobody's ever seen such a thing."
- pfisch 8y agoI seriously doubt this is true. Porn makes up like 20-30% of traffic and searches on the internet. Even if only 10% of users are paying it would still be a very high number of transactions.
- dgellow 8y ago10% sounds impossibly high to be honest. I would expect something around 0.1%, but I cannot easily find data :(
- elorant 8y ago10% of users is unlikely high. Porn has one of the lowest conversion in the online world. It's less than 0,05%. I knew a guy once who ran one of the infamous thumbnails sites and he was struggling keeping afloat although the traffic his site was getting was big.
- Lazare 8y agoI'm not aware of concrete stats, but anecdotally the porn industry suffers from extremely low margins caused by, among other things, incredibly pervasive content theft, horrifically low conversion rates, high rates of fraud, high rates of chargebacks, a lot of amateur producers happy to give their content away for free, etc. Porn consumption is pretty common, but "nobody pays for porn" is a punchline for a reason.
- Romanulus 8y agoFor everything else, there's Bitcoin.
- sametmax 8y agoCrypto currencies is a solution to this problem and not just in porn. Some of my friends in the biz solely got interested in btc because of this. We have still only a few customers using them though, so it's not a success yet. But for those who thing crypto is a solution in search for a problem: there it is.
- simias 8y agoCryptocurrencies "solve" the issue by not supporting chargeback. It's not like chargeback is intrinsically tied to Visa and friends, they just realized that overall it was beneficial if the buyer felt more comfortable buying things because they have the peace of mind of being able to chargeback later if they feel they've been scammed. I often hear lack of chargeback being touted as a feature for cryptocurrencies but it's more like the lack of a feature. It's obviously beneficial if you're in the shoes of the seller but if it's so great then why does chargeback exist in the first place? Put yourselves in the shoes of a porn buyer, would you really put your billing info on bigtitties.ru if you knew that if they steal your money you have no recourse whatsoever? Also there's now a transaction on an immutable public ledger that might trivially show anybody who cares to look for it that you're buying incest porn online?
- woah 8y agoHow is bigtitties.ru going to steal your money if you only send them payment as you consume the content? Chargebacks are very useful for the shipment of physical goods, but not relevant here.
- otakucode 8y agoWhy aren't debit card transactions handled separately and differently from credit card transactions? Since they come from a guaranteed fund source, I would think they would make possible a special "no chargebacks permitted" transaction type? I see no way to get people to stop doing chargebacks after they've come down off their sexual arousal inhibition lowering short of widespread social education of a sort nearly guaranteed not to happen, so it'll have to be some solution that simply makes it so people CAN'T unspend the money.