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The issue is that the banks all move in lock step, undermining the basic principle of the free market. If one bank decides it doesn’t want to deal with porn, f
by ashtonkem 5y ago
The issue is that the banks all move in lock step, undermining the basic principle of the free market.
If one bank decides it doesn’t want to deal with porn, fine. But when all the banks decide that, that’s very very bad. The cumulative effect is a chilling of protected speech in a way that congress could never legally get away with.
- SantalBlush 5y agoThis doesn't undermine the basic principle of the free market, people are just now learning about unintended consequences of the free market.
- 542458 5y agoThere are lots of payment processors who will deal with explicit content. They tend to be fairly expensive though - partially justified since apparently chargebacks are outlandishly common. For example, CCBill will process essentially anything that isn’t illegal, albeit with 6% fees for “risky” industries and 10-15% fees for “adult” industries. https://ccbill.com/pricing https://ccbill.com/pricing (As an aside, one sort of neat thing about CCBill is apparently they’ll never kill your account without warning, unlike PayPal & co)
- evgen 5y agoThis is the dirty little secret that everyone clutching their pearls over the OnlyFans 'scandal' won't talk about. There are plenty of providers who will deal with porn, but porn customers are shit customers who no one wants -- the fraud and chargeback rate is incredibly high so the cost of processing payments is equally high. The advantage that crypto brings to porn payments is not the pretend anonymity, it is that there are no chargebacks so you do not need to deal with fraud prevention.
- rattray 5y agoOnlyFans claimed it was the banks, not the payment processors, who were the problem. Specifically, BNY Mellon, acting in an intermediary role between OnlyFans' banks and creators' banks, allegedly blocked all payouts to creators.
- A4ET8a8uTh0 5y agoI believe it. For a smaller company, it will take one analyst stumbling over something problematic that may trigger an investigation ( think SAR ). If the issue is bad enough and customer does not have clout to back it, bank might derisk. The problem is.. it is not exactly standardized as each bank does their own thing thanks to BSA rules.
- ashtonkem 5y agoAnd it’s not exactly out of the realm of possibility that some analyst somewhere just really dislikes pornography. It’s not like there isn’t a robust anti-porn movement purposefully using “think of the children” as cover.
- imtringued 5y agoThat just means that chargebacks cannot be offered as part of payment processing.
- throwaways885 5y agoAnd what happens when real fraud does occur?
- dzhiurgis 5y agoHow is there any fraud these days with 3d secure, etc?
- ckdarby 5y agoSometimes merchants will turn off 3d secure because of the approval drop with 3ds. This is one of the main reasons why 3dsv2 was introduced to elimate the friction. Even with 3dsv1 the liability doesn't always shift to the issuing bank. For example, I believe it is Mastercard NA(Might be Visa NA) that doesn't allow any 3ds liability shift for high risk merchants. Source: Worked at payment processor in high risk processing +$1B in volume
- dzhiurgis 5y agoWhat’s the difference between the two systems?
- hakfoo 5y agoThe big deals are: 1. It tries to gather more data points about the customer environment (i. e. browser and screen details). I think the goal is to provide more signals that the bank can use to decide low/high risk transactions. This likely feeds into... 2. Some transactions can be passed through in a "frictionless" manner. Instead of getting the "please log into your bank this is not phishing trust us" interstitial, it requires no interaction. If most of the time, customers are sitting int eh 'frictionless" universe, then they won't hit too many situations that encourage cart abandonment.
- bjowen 5y agoEven with 3DS challenges, people are persuaded out of their one-time passcodes by phishing, using an increasingly elaborate series of text-message and voice-call based deceptions. I hate the term, but search for “smishing” and there’s a bunch of material explaining the exploits. Depending on the region, only a small fraction of payments are enrolled in the framework to do that validation / challenge anyway, it’s been expensive to adopt and a lot of card acceptors are still nervous about abandoned carts and lost revenue. Aaaand that’s not to mention good old fashioned stolen cards, counterfeiting and at the other end, full-scale identity takeovers. Many security features are still bypassable by using the legacy system that should have been supplanted by now. It is a constantly-evolving (and frustrating) field.
- ckdarby 5y agoThis isn't the case across the entire industry. There is a large portion of customers who keep their CB ratios below the requirements of Visa & MCs. Hell, plenty of the customers in the industry could get it even lower but that runs the risk of leaving money on the table by turning away a potential customer that doesn't do a chargeback. There are some customers in the industry who run silly numbers like +10% and do "Mid burning" with different banks. The highest CBs tended to be the "online dating space" or "find X nearby hookup" kind of sites. If you've got any other questions feel free to ask. Source: Worked at payment processor in high risk processing +$1B in volume
- e9 5y agowhat is "mid burning" in this context? what do you expect % of charge backs to be for something like onlyfans? if you were to start a company in this field what would you use as a payment processor?
- ckdarby 5y agoMid burning is when a company will have many shell companies and just open up at many acquirers and knowingly will breach their chargeback ratio with the expectation that eventually their acquirer will shut them down but they don't care because they'll move onto another acquirer. This goes on until Visa/Mastercard blacklists them at the card level but these merchants don't care because everything is shells corps and structured that it looks like it has no ties to the parent corp. I expect the CB ratio to be 0.7% if they're aggressive with not leaving money on the table and refund anything that looks like it'll give them bad press. If they're they're trying to keep it as low as possible I've seen the ability to operate at 0.3%. CCBill & Epoch when I want to shift high risk liability. Rocketgate for everything else. Getting the processor is the easy part, finding an acquirer and getting a mid is much harder. I have no advice on how to find an acquirer/getting a mid for high risk it is very much networking and knowing people club.
- vidarh 5y agoNot that simple. The payment processors have to follow edicts by the payment networks. I've been in meetings where we had warnings passed on from payment networks about consequences if we failed to address a chargeback problem where our processor kept apologising because there was nothing they could do. You also need to deal with various combinations of acquiring (bank the merchant account linked to the specific payment network is with) and issuing banks (bank of the individual card owners)
- tacocataco 5y agoWhat else do they move in lock step on? Isn't that collusion? Just another reason to smash these banks into a million pieces.
- JadeNB 5y ago> If one bank decides it doesn’t want to deal with porn, fine. But when all the banks decide that, that’s very very bad. I think that's not quite what happened here. It's not that, literally, all the banks decided this; it's that the banks are so huge that, when one or a few of the mega-banks make the decision, it's effectively the same as if they all did. Ultra-consolidation is the real problem.
- FranksTV 5y agoI mean, if it's really a great market that's underserved, then you should launch a payment processor that serves the market. People think this is about morality, but it's a lot more about the cost of operating in that market. I bet that there are way more claims of fraud, money laundering investigations, subpoenas and other overhead that the banks don't want to deal with. Like teenagers stealing credit cards to pay camgirls is probably pretty common. And there are likely a lot of prostitution investigations. The real problem is that sex work isn't treated like normal work, which just creates freedom for criminals to take advantage of vulnerable people. If it was licensed and regulated, then it would be easier to tell the crooks, and victims of human trafficking from the people who are legitimate, voluntary workers. Then the economics might make sense for banks to keep serving these customers.
- the_gipsy 5y ago> if it's really a great market that's underserved, then you should launch a payment processor that serves the market. A credit card for porn… good luck.
- harles 5y agoI’m pretty sure the majority of consumers don’t want to be associated with such a thing - almost certainly tied to SSN and part of any credit report.
- fragmede 5y agoPayment processor for porn, not a credit card. That is, the part you put your credit card into. Some already exist, but they charge a high premium due to increased risk, but they still only exist because the banks continue to allow them to.
- croes 5y agoA payment processor is useless without the possibility to pay with a credit card. And that means you depend on Visa, Mastercard and Amex.
- 5y ago
- einpoklum 5y ago> If one bank decides it doesn’t want to deal with porn, fine. Not necessarily. Banks have a government license to create money (ok, depends on what kind of bank, but let's put that aside), and provide services many individuals and organizations rely on. That already means that even if you're a staunch capitalist, you should still support some sort of set of constraints and norms, regulation, of their activities. So it's not clear that a bank should be able to refuse service to legally-operating organizations. Plus, if one bank can do this, then why not any other bank?
- refurb 5y agoThis is not unique to banking in the least. It’s pretty typical for most industries to follow a company that does something the others want but don’t want to be the first one to do. Price increases are a great example. One company will take an increase and most follow. And how is this chilling of protected speech? The constitution guarantees free speech, not payment for speech. There is nothing stop these workers from sharing their content/speech.
- BurningFrog 5y agoThe banks are all regulated "in lockstep" by the same same regulator (FDIC), which can and does tell banks which industries to not serve. Anyone discussing this needs to be aware of "Operation Chokepoint".
- A4ET8a8uTh0 5y agoThis. In the conferences I attend, I can see a regular push towards very invasive review of every transaction. Last time I heard it I think I can paraphrase it as 'we can see SKUs, why are we not stopping transaction there and then?'.
- tzs 5y ago> The issue is that the banks all move in lock step, undermining the basic principle of the free market. The banks all doing the same thing is exactly what you would expect in a free market. They are all in the same market (credit card processing) and all have the same information on the risks and costs and revenue in that market for handling various types of transactions. All of them that make rational decisions supported by the data they have should come to the same conclusions and take the same actions. What you'd expect in a free market is for specialized banks to appear that would deal with porn and other high risk customers that the more general purpose banks all conclude that they don't want to deal with. That's what has happened, as has been mentioned in other comments.
- inkblotuniverse 5y agoOperation chokepoint
- chmod600 5y agoAgreed, but why do they move in lockstep? Is it a conspiracy among elite banks (or whatever other businesses)? Or is it a rational response to their political vulnerability? Or something else?
- Clewza313 5y agoIt's a rational response to the extreme social, political, financial and potentially criminal risks associated with profiting off content that may be identified as child pornography or sexual assault. The Traci Lords case is a good illustration of this. One day everything is order, the next somebody realizes she used a fake ID and bam, everybody involved is suddenly manufacturing/profiting off/in possession of child pornography. Add in the massively lowered bar for OnlyFans/PornHub, where anybody with a phone can now DIY, and it's a legal minefield.
- LordDragonfang 5y agoNobody makes these kinds of arguments about why payment processors are afraid of Ebay selling potentially stolen goods or Amazon selling (lots of) potentially counterfeit merchandise. Or rather, they don't have to, because payment processors are perfectly willing to turn a blind eye to those kinds of crime. And before you say it's about risk to children, the global market is perfectly willing to do business with companies that continually have child slavery scandals. Yes, there are legal risks involved, but at the end of the day, the main reason why sex work gets hit so much harder than any other type of legal enterprise is because the people in charge see nothing to be gained by standing up for sex workers.
- kingkawn 5y agoI have yet to see any principles at play in this free market.
- mountainb 5y agoThe banks are not a free market. The banks are expressly controlled by multiple federal regulatory agencies and the Federal Reserve itself. They're supposed to move in lock step by design. If they didn't, it'd be a 'Free Banking' system, which it isn't.
- deleted 5y ago[deleted]
- campl3r 5y agothat's because banking isn't a free market at all, it's tightly regulated.