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Your assertion regarding adult CNP risk is incorrect, they do in fact have much higher levels of fraud and chargebacks. The card networks came down on this cate

Your assertion regarding adult CNP risk is incorrect, they do in fact have much higher levels of fraud and chargebacks. The card networks came down on this category because of chargebacks, not because porn is bad. I would also point out Adult CNP is far from the only category to get this treatment, but they are one of the only high risk categories that have four major banks more than happy to take their business. Travel sites, dating sites, and other high risk CNP merchants don’t have the same benefit. The techniques described in this article are exactly why issuers block transactions. Merchants are trying to force transactions that are likely to be charged back by engaging in increasingly elaborate, and likely illegal, schemes. If you’re operating a legitimate adult CNP site, there are plenty of options available to you and the adult-focused processors will hold your hand through rejecting sketchy charges even if it means lower up front revenues. I have seen bad actors open up fake porn sites to obtain processing for their illegal activities because adult processing for legitimate sites is that available. Edit:typos

turnitoff 8y ago
Exactly this. Adult and high risk in general are an absolute quagmire, and all actors are trying to "outcompete" with one another, making the situation worse and worse. Risk from transactions: stolen credit cards get default checked on adult sites (digital good delivery instantly verifies if the card is still useable). Bad faith merchants. This goes from outright scams to the still widely used practice of "card banging", when they tack on added services or hit you with a huge fee after your free trial ends (which is not presented to the customer). Affiliates screwing sites, sites screwing affiliates. Billing support building more and more barriers for customers to get a hold of them or to cancel subscriptions. And then let's not even get into the industry's backbone, content producers...
phyzome 8y ago
Does CNP mean https://en.wikipedia.org/wiki/Card_not_present_transaction https://en.wikipedia.org/wiki/Card_not_present_transaction ?
- Bluestrike2 8y ago
  Yes.
stickfigure 8y ago
This analysis is still missing something essential. "Adult merchants are more likely to have chargebacks" is akin to saying "Blacks are more likely to commit violent crimes". In terms of overall statistics, it's factually true, but there's still something reprehensible about judging individuals this way. When I was at kink.com (10 years ago), our chargeback rate was tiny - lower than most online businesses, and nowhere near yellow flag territory. Yet despite our long history of good citizenship, we were still lumped into the high-risk category. Visa rules only allow banks to process a certain percentage of their volume as "high-risk", so getting merchant accounts which could handle our payment volume was a major challenge. We have the tools to judge individuals and businesses by actions, not as members of arbitrary groups. Sure some businesses may deserve some initial extra scrutiny, but at some point your history should speak for itself.
- moneylaundering 8y ago
  I think your complaint is fair regarding being lumped in despite a history of good citizenship, and I agree and add that the card networks were definitely a bit thoughtless during the adult crackdown in 2002. They have since offloaded most of this risk management process to specialty processors that do take good citizenship into account, rare as it is in Adult CNP. All high-risk means now is a couple thousand dollar startup fee and quicker turnaround through chargeback/fraud remediation programs. Also, banks aren’t limited by anyone to a certain percentage of high risk merchant accounts currently, I am not sure if they had that limitation 10 years ago. There are certain banks, that I have interviewed extensively for my cases, that almost exclusively process cards for high-risk accounts.
- forapurpose 8y ago
  African-Americans and the discrimination against them are not at all comparable to to pornographers and their problems getting payments processed. These are entirely different things with very different causes and with consequences that are orders of magnitude apart.
  - asobalife 8y ago
    African American here. The comparison is actually pretty apt. Deliberate, systemic economic barriers put up against those seeking to do legitimate business due to blanket group policy (see banks like Wells Fargo who are STILL doing redlining and race-based credit rationing today) actually encourages illegal activity for people trying to make a living. And lets not forget the sex workers who are creating the content sold by porn sites. Law after law pushed by both conservatives and "progressives" that criminalize even their responsible activities, make it difficult for them to bank, and making them even more vulnerable to bad actors. The consequences are actually more or less the same - sex workers have much higher rates of mental health issues, victimization to violence, and lower life expectancy. Pretty much the same types of problems faced by (esp low income) black Americans. For largely the same structural economic reasons.
oliwarner 8y ago
> they do in fact have much higher levels of fraud and chargebacks Sorry, but [citation needed]. I don't agree with your assertion. I've seen horrible chargeback rates in apps and non-adult VoD. As high as 4.something percent at one point for one developer. The problem: kids. The lack of control over the payment process was killing him. And that's the thing, it's not 1999 any more. You can improve chargeback rates by collecting more data, forcing 3DS, forcing AVS, SMS verification, doing statement charge verification (old school), fingerprinting every authenticated transaction. If my business and my processor's continued business depends on it, I can get beyond reasonable doubt and prove it's you making a transaction. That means a lot more drop-off (AVS alone can be 5%) but chargebacks past that are either your fault or stupidly simple to refute with evidence. But many processors are still just unwilling. The only way things become more reasonable is that we stop forcing otherwise legitimate adult content sites into the arms of companies that coast along on decades-old tech, making the good actors pay to offset the bad actors' actions. Until then, when we can have mainstream processors allay risk fairly, putting a spur-of-the-moment sub-$1 micro-transaction through isn't viable and that's where porn's going to explode.

turnitoff 8y ago

Exactly this. Adult and high risk in general are an absolute quagmire, and all actors are trying to "outcompete" with one another, making the situation worse and worse. Risk from transactions: stolen credit cards get default checked on adult sites (digital good delivery instantly verifies if the card is still useable). Bad faith merchants. This goes from outright scams to the still widely used practice of "card banging", when they tack on added services or hit you with a huge fee after your free trial ends (which is not presented to the customer). Affiliates screwing sites, sites screwing affiliates. Billing support building more and more barriers for customers to get a hold of them or to cancel subscriptions. And then let's not even get into the industry's backbone, content producers...

phyzome 8y ago

Does CNP mean https://en.wikipedia.org/wiki/Card_not_present_transaction https://en.wikipedia.org/wiki/Card_not_present_transaction ?

Bluestrike2 8y ago
Yes.

stickfigure 8y ago

This analysis is still missing something essential. "Adult merchants are more likely to have chargebacks" is akin to saying "Blacks are more likely to commit violent crimes". In terms of overall statistics, it's factually true, but there's still something reprehensible about judging individuals this way. When I was at kink.com (10 years ago), our chargeback rate was tiny - lower than most online businesses, and nowhere near yellow flag territory. Yet despite our long history of good citizenship, we were still lumped into the high-risk category. Visa rules only allow banks to process a certain percentage of their volume as "high-risk", so getting merchant accounts which could handle our payment volume was a major challenge. We have the tools to judge individuals and businesses by actions, not as members of arbitrary groups. Sure some businesses may deserve some initial extra scrutiny, but at some point your history should speak for itself.

moneylaundering 8y ago
I think your complaint is fair regarding being lumped in despite a history of good citizenship, and I agree and add that the card networks were definitely a bit thoughtless during the adult crackdown in 2002. They have since offloaded most of this risk management process to specialty processors that do take good citizenship into account, rare as it is in Adult CNP. All high-risk means now is a couple thousand dollar startup fee and quicker turnaround through chargeback/fraud remediation programs. Also, banks aren’t limited by anyone to a certain percentage of high risk merchant accounts currently, I am not sure if they had that limitation 10 years ago. There are certain banks, that I have interviewed extensively for my cases, that almost exclusively process cards for high-risk accounts.
forapurpose 8y ago
African-Americans and the discrimination against them are not at all comparable to to pornographers and their problems getting payments processed. These are entirely different things with very different causes and with consequences that are orders of magnitude apart.
- asobalife 8y ago
  African American here. The comparison is actually pretty apt. Deliberate, systemic economic barriers put up against those seeking to do legitimate business due to blanket group policy (see banks like Wells Fargo who are STILL doing redlining and race-based credit rationing today) actually encourages illegal activity for people trying to make a living. And lets not forget the sex workers who are creating the content sold by porn sites. Law after law pushed by both conservatives and "progressives" that criminalize even their responsible activities, make it difficult for them to bank, and making them even more vulnerable to bad actors. The consequences are actually more or less the same - sex workers have much higher rates of mental health issues, victimization to violence, and lower life expectancy. Pretty much the same types of problems faced by (esp low income) black Americans. For largely the same structural economic reasons.

oliwarner 8y ago

> they do in fact have much higher levels of fraud and chargebacks Sorry, but [citation needed]. I don't agree with your assertion. I've seen horrible chargeback rates in apps and non-adult VoD. As high as 4.something percent at one point for one developer. The problem: kids. The lack of control over the payment process was killing him. And that's the thing, it's not 1999 any more. You can improve chargeback rates by collecting more data, forcing 3DS, forcing AVS, SMS verification, doing statement charge verification (old school), fingerprinting every authenticated transaction. If my business and my processor's continued business depends on it, I can get beyond reasonable doubt and prove it's you making a transaction. That means a lot more drop-off (AVS alone can be 5%) but chargebacks past that are either your fault or stupidly simple to refute with evidence. But many processors are still just unwilling. The only way things become more reasonable is that we stop forcing otherwise legitimate adult content sites into the arms of companies that coast along on decades-old tech, making the good actors pay to offset the bad actors' actions. Until then, when we can have mainstream processors allay risk fairly, putting a spur-of-the-moment sub-$1 micro-transaction through isn't viable and that's where porn's going to explode.