This illustrates an issue that I’ve noticed for a while (separate from the discussion about porn websites)- we can either have truly free markets everywhere or we can have strong regulation everywhere, but trying to mix both causes conflicts. In a free market, Pornhub could just use a different payment processor. But because of the strict regulation in the financial market, there are very few payment options, and Visa and Mastercard can abuse their oligopoly. To fix this, we can either lower the bar to entry in the financial markets, which would mean that Visa and Mastercard couldn’t be gatekeepers to payments. Or we could force stronger regulations on the financial market and force them to do business with everyone unless given an offer by the government to stop, and probably cap their rates so they can’t abuse their oligopoly with pricing schemes either.
What’s funny is that most people would disagree with one of my proposed solutions and agree with the other, depending on who the affected parties are. Blocking payments to a porn website? A lot of people applaud this on a moral stance. Refusing to make a cake for a gay couple? A lot of those same people condemn this action. But they are very similar actions once you take away the emotional pleas.
I guess what I’m trying to get at is that we can’t have one solution on day one and then switch to another solution on day two. Trying a mix is how we created these problems. I could expand but I think I’ll leave it here before I get to political.
Edit: I guess I should acknowledge that a fully regulated market is inefficient and slow, and that’s part of the reason communism/socialism ended in the collapse of the USSR. A fully deregulated financial market would probably mean some shady payment processors would pop up and take advantage of people. But what we have right now allows a small group of unelected people to make decisions for us by taking advantage of the situation they’ve lobbied for. I guess you have to decide whether you like this status quo or if you want to try an alternative.
Well the first option is physically impossible, no ‘truly free’ markets can ever exist anywhere, anytime. You can have markets that are almost ‘free’ but never actually ‘truly free’. There are a couple of reasons why though the most fundamental would be entropy generation.
There are always frictional losses for even the smallest of transactions, and if all participants have to accommodate for these losses ahead of time, or pay the penalty if not (eventually), then there is in effect path dependency to any possible market behaviour. Really, a global maxima solution of ‘truly free’ anything is unobtainable in the real world. (And even if it was achieved by happenstance, how could we tell it’s the global maxima?)
I imagine the actual trade off wouldn’t be the simple one dimensional spectrum either, since the problem space is obviously multi-dimensional, the ideal solution would almost certainly require multi-dimensional optimization.
They're either a natural monopoly and this a utility, and they can't refuse service to any legal customer OR they're a monopoly in what should be a competitive market and need to be broken up.
They literally aren’t a monopoly. It’s two different companies with nearly equal penetration. If one decides not to do business with you, customers can just use their other card. If your business model involves a wink and a nod to overlook human trafficking and child porn, too bad.
They're close to a monopoly, more precisely an oligopoly where choice is basically an illusion and newcomers have almost no chance of gaining significant market share.
This is not the result of regulation but of trust and reputation. Firms and consumers don't want to do business with companies that look like they're triviliasing child abuse. The payment processors are not compelled by regulation here.
Even in a 'free market' you're not free from the consequences of your actions, and you're not unaccountable. And furthermore, just because two actions are motivated by ethical judgements, doesn't mean they're equivalent. Being a homophobic cake vendor isn't the same as trying to stop the funding of child porn.
The EFF article seems to suffer from the same misconception, accusing Visa and Mastercard of 'censorship' and asks where they got the authority to 'regulate speech'.
In free societies there is another freedom, namely freedom of association, which these firms exercise when they decide not to do business with Pornhub, which nobody ought to compell them to. Also as a sidenote, declaring pornsite payments freedom of speech is a strange reframing of the concept
My point was that freedom of association doesn’t work if you’re the only game in town. In an ideal situation, Visa and MC would decide that their reputation was at risk, cut off PornHub, and then PornHub would switch to a competing payment network. But because of the high bar to entry (regulations which Visa and MC lobbied for after they gained their dominant position), it is almost impossible to start a new credit card company today. All the startups like Stripe and Privacy sit on a different layer from Visa and MC. Cards from your bank are just Visa and MC with different artwork. Nobody has created a new credit card company in decades.
We can let Visa and MC have their freedom of association or we can let them have their protected position in the market, but we can’t have both. It’s not working. But because this case is all “somebody think of the children” then people are letting them get away with it.
What about the other instances that the EFF linked to where a porn site wasn’t doing anything illegal? Are you going to have any options when it’s your (healthy and legal, but maybe niche) kink under attack? What about when it’s not even porn, but Visa and MC decide that Discord is used to enable piracy, and cuts off payments? Are you going to support these actions when a popular chat app with many legitimate users is the one affected?
I do support regardless of the product in question and I don't think the fact that Visa and Mastercard are huge is the primary issue here. There could be 10 payment facilitators rather than two, when the NYT breaks a major abuse scandal about a platform such as Pornhub they would all jump ship.
You see this all the time with these industries, there are countless of advertisers, but almost all of them avoid the porn industry, because nobody wants to be associated with it. It's not a market power issue, that's only tangential in this case.
People don't want to be commercially associated with scandal plagued porn sites, any business would lose most customers or suppliers if it acted like this, and I think that's fine. IF you think the American people are too harsh on porn sites then you gotta take it up with them.
It's comparable to say, Google throwing Alex Jones of YouTube. Yes, Google is huge, but that's not the reason they're doing it, it's because they're anticipating public backlash which is bad for their business. If there were 10 youtubes, 8-9 of them would have thrown him off too. It's way too simplistic to say that a large company is exercising undue market power every time it makes a decision about who to do business with. That's only true if the size is the actual motivation for that decision, not if they're just responding to consumers.
Ultimately they have control. Your payment may go through an intermediate website, but if you give them a credit card number, it was likely a Visa or MasterCard. It’s possible that a person can pay with one of the less prevalent options, but Visa and MasterCard holds a lot of power. If they want to sanction a porn website, they just cut the intermediate processors of from their network, and they’re pretty much guaranteed to fold.
I suppose companies like Epoch are alternative payment processors, but in the wake of this decision by Visa and MasterCard, my understanding is that you cannot use cards with those logos with any payment processor. Is that incorrect?
Visa and Mastercard aren't payment processors at all. They're card issuers. The only other major card issuer in the US is AMEX, and they don't generally do business with adult sites at all.
Future news: Visa and MasterCard no longer processing donations to the EFF.
I think that this drama is good for everyone except for payment processors. PornHub is forced to self-police more, payment processors are spotlighted for having too much power, and crypto-currencies show their value.
I think the drama has virtually no effect on payment processors nor should it. Unless they are choosing not to do business with someone based upon them being a member of a protected class, they should be free to choose whether or not to engage in business with another entity. If anything this incident highlights that there is now an alternative to the traditional payment processors, cryptocurrency, so the power of the payment processors has actually diminished over time without any government interference.
Who comes out of this poorly in my eyes is the EFF which has spent the last 2-3 years wandering so far from their original path that I have stopped what used to be a regular recurring donation to them.
I would agree, except if there is any business in america with near monopolist power, it would be visa, amex, mastercard.
I disagree with people arguing that companies like Cloudflare should not be allowed to choose their customers. Because there are countless other similar services that can for the most part, do what Cloudflare does.
But the 3 big payment processors are an oligopoly and you effectively cannot do business without them. Crypto is a joke when it comes to relative adoption. There are no other options if you plan to run a business today.
Gladly this is changing too. I have a webshop in switzerland and only like 10-20% pay with credit card or paypal. This is getting less every year.
We have instant payments without heavy fees for both parts as swiss exclusive solution (twint) and online banking (normal eu transactions) are easier than ever with modern banking apps.
The main reason to have a credit card around here is using foreign online services. I know many people that simply never got one, because no need.
Well we have access to prepaid/throwaway credit cards that dont need deep verficiation below 10k/year. Most people i know use these for travelling, however booking in Europe or asia usually has a pay in cash option and the cc is only for verfication. And renting cars is kinda unusual if you travel europe or asia.
How does that work? Is it like an ACH transfer between bank accounts? And what about fraud, are customers able to charge back? If those customers get their account stolen, who eats the loss?
Yes just like that. Takes between a working day and a few hours depending on the bank policy.
There basically is no fraud. At least i never was involved in a case. European banking is well protected with different tan systems. As well as insuries usually including bank fraud afaik.
Edit:// The only fraud issues i have are with credit cards.
If Facebook, Google, and Twitter decide you can’t use their platforms to reach your audience, you’re S.O.L. If you can’t take cards, you can at least take cash or check. And pornhub could set up a site selling bitcoin then add a pointer to their premium payment page referring folks to Bob’s Bitcoin Emporium.
Any company that isn't at PH's scale wouldn't be able to survive getting banned from card payments. Taking cash/check isn't possible on the web and Bitcoin poses the kind of barrier to entry that will surely lose you at least half of your customers.
Imagine being a rather large consumer electronics web store. You're doing very well, with a good brand loyalty and major part of the market and pride yourself on fast delivery times. Suddenly, your credit card processor drops you because you sold an electronic sex toy that one time and that's against Jesus or whatever. Now the only way to get paid is through bank transfers (takes up to 2 days to go through, fees, pain in the ass) or cash at delivery (huge fee, need to withdraw cash in advance). There are 3 other stores in your market that never made that fatal mistake - who do you think will still buy from you? You're left with only a handful of business customers. Once you downsize because 80% of your revenue is gone, they leave too. F
Its really hard to imagine a website that takes cash or cheque. I suppose its possible.
At this point pornhub is big enough, that fb, google and twitter all banning it might honestly be less of a threat to them than their payment processors pulling support.
Convincing users to type a dns name into the address bar of a very famous website seems easier than convincing the users to mail a cheque (esp. Internationally where people dont use cheques) or pay bitcoin
You assume that Visa and MasterCard will just stop there. What if they go after businesses willing to do business with you? They see that blocking you from monetization doesn't work, so they block companies that sell you services from monetization if they continue to sell to you. Or they'll accuse you of money laundering when you switch to bitcoin.
>If Facebook, Google, and Twitter decide you can’t use their platforms to reach your audience, you’re S.O.L. If you can’t take cards, you can at least take cash or check.
The fact that "less convenient way that put off 80% of customers" exists is no excuse for payment processors not being neutral.
How long will people be able to keep buying Bitcoin though? There's a lot of hoops already. For instance, Cash App (at least recently) required you to upload a photo ID in order to enable transfers. They make it easy to invest in, but hard to use as a currency.
I can imagine the US, at least, moving towards a future where Bitcoin is allowed as a financial instrument, but transferring to a wallet you control requires background checks and waiting periods like firearms. Either due to pressure from governments, credit card processors, or both.
>they should be free to choose whether or not to engage in business with another entity
So, if the puritans and the advertisers in the US are against e.g. BDSM or feet fetisism, or whatever, people all around the world should just bend over and take it (pun intended) because the two monopolies in payment processing decided to make businesses offering them unviable?
Fuck this (pun intended). Payment processing should be like ISPs: neutral. If something is illegal, they sure can take it out. Anything else, it's not their place, and it's even less the advertisers place to exert undue influence.
Payment neutrality is just as important, and as required as net neutrality.
EFF have indeed diverged from their original mission, which was fundamentally techno-libertarian.
The EFF's changes are an excellent demonstrations of Conquest's Second Law of Politics, "any organization not explicitly and constitutionally right-wing will sooner or later become left-wing".
Not sure what point EFF are trying to make here. They seem to be suggesting that Visa and Mastercard should provide payment services to anyone who wants them, regardless of whether their activities are legal or not. The card processors didn't withdraw their services because of some puritanical dislike of porn but in response to credible accusations that Pornhub was distributing child and non-consensual porn.
I think their point is that Visa and Mastercard are acting as judge, jury, and executioner. If Pornhub is doing something illegal, there's a process for dealing with that, full of judges, juries, and.... well... executioners.
Until PornHub is found guilty by that system, then Visa and Mastercard withdrew their services because of a dislike of the service provided.
If Visa and MC waited until PornHub was actually found guilty, they'd be right there next to them in the docket. Facilitating payment for illegal activities is itself a crime, and our laws require that payment processors exercise judgement in who they will work with.
First, there's a huge difference between child pornography and other illegal activities. It will be prosecuted much more aggressively, and rightly so. It is illegal to create, distribute, or possess.
The basic rule is, these social media sites have to make a reasonable effort to keep that stuff off their sites. Based on the NYTimes report, Pornhub was absolutely not doing that. Visa and MC's lawyers would have given them no choice but to stop working with Pornhub.
Who defines what constitutes "reasonable effort"? How would you even know without having them go through a legal process like a court? Is it just up to any angry journalist to make this determination?
I personally wouldn't use PornHub, as I have a negative impression of their moderation standards. Being exposed to child porn could put me at serious legal risk, if I were to inadvertently view the wrong thing. But, that is a simple risk calculation on my part. And I am already surprised so many people would put themselves at risk, of using a website which lets anyone to submit content.
A reasonable course of action could have been to temporarily suspend payment processing until PornHub took appropriate corrective action (which they now have), and restoring payments afterward.
That’s a fair point. I presume though that there are some legal risks to Visa and MC if they were subsequently found to have been enabling illegal activity.
If Visa/Mastercard and Pornhub were German companies they could be sued for facilitating <insert criminal action>.
There are investigative articles showing how journalists have directly contacted Pornhub/similar sites because of that and they didn't take down videos in question.
That said, if Pornhub thinks they have a right to get payment processing from Visa/Mastercard, they should probably sue them. Judicature and executive are really fundamentally different from Visa/Mastercard. For instance they don't have any means to force Pornhub to any action apart looking for better customers. I don't see any ambiguity there.
Card networks have the same rights to choose who they associate with as YouTube and Twitter do. The fact that both companies have chosen to not do business with a company profiting from human trafficking and pedophilia seems a lot less objectionable than YouTube demonetizing and banning people because of their political views.
"Yes, your honor, I was knowingly buying stolen merchandise from these thieves, but my reasoning was that there is a system to punish thieves and that system had not punished them, ergo, I am completely innocent."
The incumbent payment processors are not utilities.
Now, arguably, there should be a fallback payment system with utility-like requirements for universal service that can be cutoff only with due process (certainly, that's needed on the consumer side of banking to deal with the problem of the unbanked, but there's arguably good cause of it on the merchant side of financial exchange as well.) For one thing, an explicit guarantee would make it harder for government officers from using informal pressure on private payment processors as a means to punish targets while evading due process, which it has historically done quite often, with the deniability that it is a free decision.
If you spot your neighbor through the window manufacturing methamphetamine, and you have been selling them the precursor chemicals, would you stop selling those to them, or say to yourself "punishment is for a court to decide".
If a person or firm has a reasonable belief that a business partner is committing crimes or even just behaving unethically, I would say they have an obligation to curb the activity or end the business relationship.
This idea that only the courts should limit or punish crimes pops up here once in a while and I've always found it bizarre.
If child porn was not a crime would you be ok with Visa and MasterCard doing something then? Is it in your view that should they only not do something because it's a crime?
> This idea that only the courts should limit or punish crimes pops up here once in a while and I've always found it bizarre.
Isn't that the entire point of a court? to have a monopoly on punishing crimes so that people aren't unfairly punished on the basis of gossip or false allegation and so that society doesn't sink into a cycle of vengence where one group punishes the other group for their punishment, and so forth.
That said, punishing a crime is different from refusing to do business with someone because you don't like them. I think the objection is that payment processors are an oligopoly which gives them too much power to behave arbitrarily. If you live in a city and one grocery store doesn't do business with you, that's fine go somewhere else. If there is only one grocery store, then that's akin to starving someone and it should require the evidentiary standard of wrong doing a court would have.
Then isn't the issue actually that payment processors should be more regulated?
The courts do have a monopoly on certain types of punishment, like prison. Other, informal types, such as declining to do business with somebody, are available to individuals and companies. I don't see that as a contradictory or undesirable situation.
If we had a law on the books that PornHub must verify the identities of all the people uploaded in their videos, you might have a point about them knowingly abetting a crime. But, there isn't such a law, as far as I know. And Visa / Mastercard shouldn't be in the business of writing their own "laws".
We do have a law on the books saying porn distributors must do due diligence w.r.t. verifying that the people featured in their material are of age. One of the reasons why is because Traci Lords lied about her age to the production company, and actually appeared underage in all her movies but one. It got the company in a shitton of trouble and the Feds made them remove her tapes from circulation and destroy any extant copies, lest they be slapped with child porn charges.
> having something to do with child porn, not due to legal liability
I am sorry but how are you not understanding that this is one and the same?????
If it were proven in a court of law that
- your associate’s business knowingly trafficked in child pornography
- you had reason to believe they were complicit in child pornography
- you continued working with that business anyway
then that exposes you to severe criminal liability, the kind that sends you to jail even if you’re a Vice President at VISA. And it should! Child pornography is a heinous crime that goes unpunished far too often. “Gee officer, I’m just a humble MasterCard corporate lawyer, how was I supposed to know?” is a ridiculous excuse.
If the water/power company thinks that you are committing a heinous crime are they obligated to shut off your power and water? The same question regarding phone providers, ISPs, grocery stores etc.
Payment processors are pretty near a utility at this point. Without access to them it's very hard to do a lot of things in the modern world. They certainly seem more essential than phone and internet service.
I don’t think that word is as “key” as you are saying it is! It is profoundly irresponsible to presume ignorance and wait for there to be hard evidence. There is hard evidence that PornHub has repeatedly allowed underage pornography on their website despite significant public criticism, and hard evidence that PornHub (and therefore VISA and MasterCard) profited from its distribution. Moral and legal propriety compels action without giving PornHub executives a benefit of the doubt they do not deserve.
It is also not like these issues are new. Pornhub has been criticized for allowing underage pornography since at least 2009, when footage of men raping a 14-year-old girl was uploaded to the site and not removed for 6 months, despite the videos racking up hundreds of thousands of views and the girl’s family repeatedly pleading with PornHub to remove the video. This has been a known problem with PornHub for over a decade. Even if the executives are just profoundly ignorant and bad at their jobs, that is not a good enough excuse in a court of law.
> That's like saying we should boycott the telephone company because a child molester made a phone call.
It is really more like saying that we should boycott the phone company because the child molester ran a nationwide criminal conspiracy around sexual assault using a premium phone service, and the phone company did nothing despite the problem being repeatedly brought to their attention. In which case: yes, boycott the damn phone company and demand a criminal investigation of its executives.
A big part of the problem is people completely trivializing the issue. The EFF doesn’t even mention child exploitation! Pretending this is just about censoring legal pornography, or blowing small instances out of proportion, is completely dishonest and morally despicable.
Its not only about legal. I have like 3 nearly done projects that are waiting for a change in this sector because right now i can't charge anything.
For example anything related to prositituion. Perfectly legal here and any neighboor countries. Yet the only payment processors available basically refuse to work with startups (i.e. companies that not already charge 100000+ via credit card)
I may be missing something, but right now these few grandfathered sites that exist have the full monopoloy just because nobody else can realistically charge for the service.
Their stated reasons for withdrawing payment processing services don't exist anymore (due to changes made by PornHub), so why aren't they reinstating service?
Youtube and Facebook get away with it because they're not primarily porn sites; they're social networking and the vast majority of users use it for normal non-porn purposes. Moreover, while they had vast quantities of porn, they're also huge sites and most of their users don't use the site for porn.
PornHub is just porn. And they've been on notice for years that CP and non-consensual videos are being uploaded to their system yet don't very little to stop it. They claim that they have filters and other systems in place to stop illegal uploads, but those systems are so useless that PH claimed they had 0 illegal porn on their website, when that was demonstrably false prior to them removing all unverified user-uploaded content.
Personally, I think it's a problem that a social networking or video sharing site that isn't a porn site has vastly more child and other non-consensual porn than slips by at the world’s largest dedicated porn network of sites.
The only reason I can see for not be concerned more about the former than the latter is that the concern about CP/non-consent is feigned and the real concern is about legitimate porn, with the CP/non-consent as merely convenient pretext.
Which is also consistent with those concerns becoming more shrill when the porn site takes drastic action to deal with the problem which removes the pretext.
> There is a lot more porn on Youtube and Facebook
Seems unlikely. I presume you have a source for that assertion. And anyway, as I said, Visa and Mastercard acted in response to allegations of illegal content not just the fact that there was porn
> leftist activists and extortionists who make lots of noises in the "respected" media outlets
Facebook's own internal reviews identified more items of child abuse content that made their way onto Facebook in the last 3 years than PornHub had total items at its peak, by about 5 times.
PornHub isn't under attack because of child porn, or non-consensual porn, it's under attack by people who think porn is inherently bad, and who have found that they don't need to convince people to agree with them as long as they can make it seem like their targets are particular venues for content that is uncontroversially bad, which inevitably involves distortion and ignoring mainstream venues that are much more significant channels for the problem they want to pretend to be fighting.
Only because of multiple lawsuits and investigations. In 2013 the Obama DOJ kicked ofF Operation Choke Point to deny banking services to businesses that sold guns and ammo as well as a fair number of other types of business.
Lol no you can’t! I mean except for fast food but it is ridiculous to compare that to a gun (or sexual exploitation).
If visa/MasterCard learned that you were using their card to buy drugs and guns for children, they would terminate your account and contact social services.
Being based in EU and having nothing in common with US, my only option for debit and credit cards are VISA and MasterCard. I'm really tired that they trade my transaction data. I don't think they offer cashback in any of the EU countries - it would make the consumers think why they're receiving money for conducting transactions.
I think this is very close to what they're planning to do.
Maybe they'll do something with crypto, but more likely they'll give people some in-house currency (PornBucks) that are spendable on the Mindgeek network. Maybe the big 2 processors would be okay with that again (they seem to still have hope), but it'd also be perfectly doable through wire transfers. Heck, if they have the ambition they could expand from there.
Wouldn't that just move the problem from dealing with visa and mastercard to dealing with the banking sector?
Isn't it challenging for, amongst others, adult entertainers, the legal marijuana industry and bitcoin/crypto currency businesses to maintain stable banking relationships?
You would need to be a merchant bank (ODFI) to control ACH payment access, and the US govt. doesn't normally grant banking charters any more, as all the YC batches have learned the hard way. So you'd have to buy an existing bank.
But Visa and Mastercard still wouldn't process cc payments.
Prostitution payment processing being blocked everywhere because of american ethics is just one example. Even a shop for sex toys has a hard time finding a payment processor these days.
I think this article misses the real issue. The issue is that for the entire existence of Pornhub it has been breaking laws and acting totally unethically and this has been an enormously successful strategy. It is nuts that Visa and Mastercard are stepping in and preventing PH from doing illegal things- they shouldn't have to, the CEO should be in jail for the way that company has behaved. Instead we've got this economic system where monetizing content theft, revenge porn and pedofilia has been hugely beneficial. No company has been able to exist in that industry and make a decent profit legally because of the existence of PH. That's where we should be asking questions, not Visa getting cold feet about being complicit in those crimes.
Technically, one can still buy cryptocurrency using a Visa/MC card and then use that to pay for PornHub.
They've made it more inconvenient certainly but I don't see why card companies should be forced to directly do business with anyone.
> If PornHub doesn’t like it, they can simply start their own credit card processing company.
1) Except Federal regulations make it extremely difficult, if not actually impossible, to "simply" do this.
2) If they did, imagine the thinkpieces on Medium, Aeon, Engadget, etc. about how PornHub is setting up a financial darknet for child molesters and the alt-right. There would then be increasing pressure on banks to cut them off. What good is a payment processor, Mr. Anderson... if you are unable to open a bank account?
> If that’s not hate speech, I don’t know what is, and it should be shut down, permanently.
Except mere hate speech is still legal in the USA; CSEM is not. Howler detected; is this a parody post?
It's funny how the majority of people on hacker news were ignoring and laughing about cancel culture and the more right-wing sites getting deplatformed from other payment processors before.
> ...accused the website of hosting sexual videos of underage and nonconsenting women...
So, it sounds like credit card companies' main goal is to not support exploitation of underage and non-consenting women.
Pornhub is removing all of their unverified videos because that's the only way both parties can be satisfied that what remains is consenting & legal-age.
What’s funny is that most people would disagree with one of my proposed solutions and agree with the other, depending on who the affected parties are. Blocking payments to a porn website? A lot of people applaud this on a moral stance. Refusing to make a cake for a gay couple? A lot of those same people condemn this action. But they are very similar actions once you take away the emotional pleas.
I guess what I’m trying to get at is that we can’t have one solution on day one and then switch to another solution on day two. Trying a mix is how we created these problems. I could expand but I think I’ll leave it here before I get to political.
Edit: I guess I should acknowledge that a fully regulated market is inefficient and slow, and that’s part of the reason communism/socialism ended in the collapse of the USSR. A fully deregulated financial market would probably mean some shady payment processors would pop up and take advantage of people. But what we have right now allows a small group of unelected people to make decisions for us by taking advantage of the situation they’ve lobbied for. I guess you have to decide whether you like this status quo or if you want to try an alternative.