We have all heard the saying “Cash is King”… however In today’s digital world the ability to obtain online banking services has become central to ensuring business survival. Many of the payment processors like Paypal and Mastercard are restricting businesses within the sexual wellness and pleasure industries. In this Video Sexologist & Internet Marketer Steven Smith will ask about the banking and business challenges businesses face in the pleasure industry and how PleazeMe is providing a business hub that looks to solve these challenges with technology, advocacy & collaboration.
Why are banks and processors so reluctant to serve this industry?
There are 3 main reasons. The first is illegal activity risk and the second is high chargeback risk and the third is reputational risk. Let’s start with the first. Most banks are FDIC insured which means they have strict money laundering policies that they have to adhere to in order to remain federally insured. This means there can be no illegal activity being processed through their banks and they have a fiduciary responsibility to make sure that they are only doing business with legal entities doing legal business. As soon as CSAM material is being consumed or Non-Consentual Sex Crimes are being committed utilizing a service that people are paying for it endangers their banks business and creates financial risk. Financial institutions are forced to navigate a labyrinth of anti-money laundering laws. For instance, under the Bank Secrecy Act (“BSA”), financial institutions are subject to various record-keeping and reporting requirements, and must file a Suspicious Activity Report (“SAR”) to the Financial Crimes Enforcement Network (“FinCEN”) whenever there is a suspected case of money laundering, fraud or use of funds stemming from illegal activities – like a CSAM, Sex Trafficking or Prostitution. The regulations under the BSA, CSA and other federal statutes also subject financial institutions to enforcement actions and severe civil monetary fines. This means more time/money spent on a businesses account management or risk of endangering their status.
The second is chargebacks. This is strictly a money conversation. Chargebacks cost the bank time and money and make your account undesirable as a client. They are in the business to make money and if processing chargebacks makes them lose money by having you as a customer they will not have it.
The third is the old adage that they don’t want to be associated with nudity/sex. I find this argument fascinating as I have yet to hear one person I know say, “I will not have a BOA or Chase account because of who they do business with XYZ company.” I mean really. Do we as consumers know who these banks’ customers are, I think not. So I feel that the real issue is the risk/added work associated with the “potential” illegal activity vs the financial reward of how lucrative your account is with them. Case and point, there are more children sex trafficked on FB than any other platform based on a recent study of online trafficking yet I am pretty sure that banks have no problem doing business with FB. If you are a smaller business and especially a start up the answer is usually your business is not worth the financial risk.
How does this impact a business in this sector?
In short, higher fees, less choices and in many cases the freezing or closing of accounts without reason. Which puts the business temporarily out of business until they find alternatives and if you are building your technology and transacting online in a technical debt to recode new providers. We all saw what recently happened with Only Fans and AVN Stars as they got a lot of press. The truth is this happens more that we care to admit and it is critical to find banking partners that understand and support your business.
We are following all the laws and regulations and working with the best and brightest in the industry to solve these issues through relationships with solvent providers who serve our industry and through technology and future digital currency options for payments. As we evolve we will continue to fight for fair and equitable treatment for lawful businesses in our industry.
Mastercard’s New Rules – We are ready to comply with these as we designed the platform to address the Fosta/Sesta changes to Section 230 and to ensure that the platform complies with regulations and internet safety standards.
Not a Channel Yet? Apply to become a Channel here!
Read more in this series:
- Pleasure Brands & Content Creators Are Losing Profitability & Control (Video)
- Marketing and Advertising Restrictions For Sexual Wellness & Pleasure Brands (Video)
- Internet Data & Privacy Is Changing in 2022 (Video)
- Sexual Wellness Has Business & Social Impact (Video)
- Adult Pleasure Industry Regulations, Restrictions & Compliance (Video)
Have you checked out PleazeMe.com? It is a social media platform where adults can be adults. We created the 7 Worlds of PleazeMe so that every person would have a place to privately explore their sexuality with like-minded people.
We believe in love, sexuality, and the power of inclusion. People of all shapes and sizes, colors and ethnicities, genders and sexualities are valuable and deserve to feel included. Everyone should have a safe place they can go to connect, discover and express themselves without fear of being judged, censored or discriminated against.
*This article may include affiliate links. This means we may make a commission when you purchase through the link, at no additional cost to you. All profits are put back into the platform to create more fun features and make it grow! We need YOUR help to continue our sex-positive mission! Thank you for supporting PleazeMe! You can find other ways to support PleazeMe at https://thedigitalsexualrevolution.com.