The reason the banks, and through the banks OnlyFans, attack sex is because they are accountable, and don't wish to take risks unless they are very profitable risks.
The real danger of platforms and banks is how happy they are to censor for the government, or simply the loudest, richest mouth, in order to keep the profit flowing. If you want to fix it, you put in legal protections for people to do business, rather than this informal and/or ad hoc regulation through the shifting influence and agendas of arbitrary special interest groups.
> The financial and tech industries’ prudishness is unfortunately increasingly reflected in government policy, typically under the guise of protecting children and other vulnerable communities.
This is the Guardian getting causation extremely wrong.
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.
There 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.
This 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.
I 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.
And 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.
This 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
what 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?
Mid 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.
Sometimes 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
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.
Even 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.
Yeah but why would anyone bother with with all the hassle and some porn. Other than few people for the lulz, I can’t imagine this being serious problem (when 3ds works)
Not 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)
I 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.
So far every option has a usability problem that's been solved by companies with the same KYC requirements as credit card processors. This will remain the case as long as people also want to transact in fiat currency, and that will be true as long as it's how people pay the bills and buy food.
Any crypto-only platform that solves the problem of everyone needing a copy of the ledger and gains meaningful adoption will face the same legal, PR, and regulatory pressures as anything else in the same place.
A government program has to abide by First Amendment protections. Most restrictions payment processors and banks put in probably wouldn't survive a civil rights lawsuit.
But without a central authority how would everyone agree on what's the truth? How would you avoid double-spends, protect against Sybil attacks and basically prevent people from creating money out of nothing? If someone could solve that it would be truly revolutionary. /s
Bank transfers are still a thing, aren't they? And payment processors built around those? I can't recall when was the last time I paid on-line using my card.
On that note, the whole reliance on cards for on-line feels like a stupid hack that got way out of control. A card is just a physical access token for the account - it shouldn't be reused on-line like this. You should be able to generate per-payment tokens on demand instead. The whole mental model around online payments is bonkers - it's just taking the meatspace model and adding "but with computers!" to it, where it's the meatspace practices that are a kludge that digital doesn't need.
This partly exists. But could of course be much simpler to use:
1) some banks/fintech offer virtual cards. For example, whenever I need to pay with credit card at a site that seems to be using some homegrown system I create a new virtual card in transferwise and destroy it right after.
2) I've seen banks offer virtual cards with CVC codes that change every 24h hours.
Re 1), virtual cards are useful if you can get them (banks that I use stubbornly refuse to provide them; same story with subaccounts). But it feels like doubling-down on the bad mental model.
Cards make sense in meatspace, not on-line. Virtual cards are stretching the analogy already. Short-lived virtual cards are pushing it to the limits. What users need is the ability to generate single-use payment authorization tokens. Talking about "cards" carries too much irrelevant meatspace baggage; we've already worked out different, better-fitting abstractions for digital use.
FYI Google Pay actually creates a new "credit card", i.e. a single-use token for every payment, something along those lines would probably be great if more widely adopted.
I agree with the other post that keeping meatspace terminology isn't bad. Offering a "Single use credit card" would be an easily understandable feature.
You talk about "users" as if the majority of people are tech-literate. They are not. Imagine explaining to your parents what a "single use digital token" is. Now imagine explaining "it's a card that you only use for this".
Outdated/meat-space abstractions are useful for both driving adoption and getting laypeople to understand intuitively what you mean. And beyond that, most of us encounter dozens of them a day without blinking. Think about that the next time you check your electronic mail on your general-purpose computing device you call a "phone".
That being said, there are several initiatives that can hopefully challenge the visa/mc hegemony:
https://payid.com.au/ is gaining wide adoption in Australia. It seems like Australia has abandoned their homegrown payment rails (EFTPOS) in recent years and all bank cards are actually visa/mc. But maybe with PayId on phones this will change again.
eftpos has been quiet while doing quite a lot of innovation (eg - [0]). ATMs and any CHQ/SAV transaction still run on their rails, and there’s a lot of iceberg below what you see in terms of branding at point of sale and plastic cards.
I suspect the big limits on payments migration is that many people live on credit.
Someone else mentioned the future promise of FedNow. I'd expect that would be "any legal use is permissible" for legal reasons, but it can only replace debit payments at best.
If you had a lender who worked atop FedNow, you'd reintroduce the problem of having a private party who is not legally obliged to serve all possible customers.
Payment 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.
You can simply offer a product that operates under the necessary constraints. There is no need to offer conventional payment processing if the conveniences it offers are so unsustainable as you say.
This. 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?'.
> 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.
The 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.
> 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.
Agreed, 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?
It'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.
Nobody 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.
This 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.
> 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?
"The reason the banks, and through the banks OnlyFans, attack sex is because they are accountable"
I think it is about charge backs. Visa and mastercard hate charge backs. Porn has a very high charge back rate and these cost card companies so much they will often just cancel the merchant agreement. With a charge back there is human customer service involved, customer denials, fraud and complicated dispute resolution. This is why the processors that specialize in porn (ccbill) charge up to %15 per transaction. I don't think the processors wanted to go after onlyfans - they just would rather not deal with the drama. However, like onlyfans discovered, if you offer to pay a %15 per transaction fee - processors will work with you. Processors do not have morals - they are just trying to make money. They don't mind handling transactions for gun sales, tobacco, strip clubs or pyramid schemes.
This is the Guardian getting causation extremely wrong.
I don't think causation runs one way. The financial industry & "Government" aren't clearly delineated. You can see this all the time in "compliance." Banks will commonly cite "compliance," essentially blaming the regulator for various policies. If you ask the regulator itself, they'll generally consider a lot of that stuff bank policy.
The way in which banking regulation works in practice creates a ton of ambiguities like this. "Compliance" is basically the area between regulation and internal policy. One firm will adopt a policy, which has all sorts of compliance implications. Another will copy them. The regulator grows to expect it, and it develops from there.
I’d guess billions of dollars flow through pornhub, they’re the 10th most visited website in the world. They apparently have still had incredible difficulty getting anyone to process payments for them.
Pornhub launched in 2007 according to Wikipedia. Mindgeek (Pornhub's owner) had a reported $460 mm in revenue in 2015. (https://www.luxtimes.lu/en/luxembourg/mindgeek-porn-empire-r...) Pornhub is privately owned, so how much of that $460 mm is Pornhub vs other properties is unknown, but Pornhub having made a billion dollars over its 14 years doesn't really seem that far fetched.
Digging a bit more, I don’t think so. The company that owns PornHub does about half a billion dollars per year in revenue: https://en.m.wikipedia.org/wiki/MindGeek
That includes revenue from other brands too, but I believe PornHub is their top brand, and likely accounts for a good portion of that. Also, how much money flows through PornHub that doesn’t count as revenue? I don’t know much about their business model, but say if a content creator generates $100 in total revenue on PH, and $40 goes to PH while $60 goes to the content creator, I’d guess that’s $100 in payments processed, but only $40 in MindGeek revenue?
Based on that, I’d estimate the volume of $$ flowing through PH at somewhere around $100,000,000-$1,000,000,000 annually. Even on the low end of that, around a billion should have flowed through them so far, over the lifetime of the site. And I think multiple billions is quite possible.
My knowledge is a little old (I was the CTO of a major porn site in the mid-2000s) but I would be willing to bet that most of Pornhub's income comes from affiliate fees, advertising, and other B2B transactions. These are not card transactions and do not go through payment processors.
I don't think it's getting causation wrong, it's just confusing 'accountable to [in its opinion] the wrong entities' with 'unaccountable'.
The banks are accountable to their boards which are accountable to their shareholders, which (the ones that matter) are increasingly .. I hate to use the word but 'woke' activists - nudging companies in the 'right' direction either from a moral standpoint or from a perceived moral standpoint of customers/public at large.
Progressively (as in a simple progression over time, not the political sense) investing in/lending to/providing the current account for, defence/tobacco/oil/sex are becoming bad looks, to the big voteholders even if not in general.
The bank prudery is a response to the government's willingness to hold banks accountable for turning a blind eye to money going to illicit purposes.
Yes, both PornHub and OnlyFans haven't been careful enough with screening their material but we normally don't hold hosts responsible for perfect policing of user content--except when sex is involved.
If people really want to fix this, they'll go back to creating independent web sites... Social media lures people in, takes a significant part of real money generated from creators, and then slowly tightens rules to protect it's own interests and profit while forsaking creators and that includes gradual suppression of promotional equality for creators.
The whole scheme to make creators pay to run ads is a failed ideology if creator content is the very thing that platforms depend on to succeed.
This is why I always edit/record to files I can re-use/re-distribute rather than using native record options on platform-specific apps.
It's amazing how pwople dont see the fundamental tension between "western values" like individual freedoms and unbridled capitalism "values" (i.e. profit). Those motivations are sometimes pulling in opposite directions. Which will win? Which should win?
Since the Obama administration's Operation Chokepoint, banks are loath to process transactions from certain industries, including porn, cannabis, and guns -- lest they incur greater regulatory scrutiny. This scrutiny comes whether the transactions are legal or not.
> The reason the banks, and through the banks OnlyFans, attack sex is because they are accountable, and don't wish to take risks unless they are very profitable risks.
One is the higher incidence of chargebacks. You don't have to ask if something is naughty -- just look for the chargebacks and it'll tell you. What happens is someone charges a thing, their partner sees it on the CC statement and asks about it, the first person is ashamed to admit it so they act shocked and insist it MUST be fraud because THEY would never charge something like that, and to keep up appearances, they call the bank and have the charge reversed. And platforms have to build in large margins to cover for it, or screw creators out of their payouts, or sometimes both and keep the difference.
(Which is why something irreversible, like cryptocurrency, keeps getting talked about. It wouldn't solve the shame problem, but it would eliminate chargebacks, and creators would just get paid. It just brings a bunch of other problems.)
The second is extremely vocal pressure from some fringe religious groups, who will pump the bellows of the CSAM-PR-disaster furnace for anyone who allows a nipple on their platform. You don't know the groups' names, but you've seen the hit pieces they put in the press. Look up "Exodus Cry" for one.
While there is no law on the books that says banks can't do business with OnlyFans, there are laws ( BSA comes to mind ) that in effect create incentives for banks to 'derisk' problematic customers. Some get branded high risk based on internal and industry standards.
This is the reason. Sex work is a crime so banks can’t offer banking services and sex work-adjacent businesses (like strip clubs) tend to be high-cash businesses so they’re considered high risk for money laundering. This means the entirety of adult entertainment gets bucketed as “high risk” even though technology has, in theory, significantly changed the actual money laundering risk presented by these businesses.
Also, the type of people who are typically sitting in the meetings who would have to sign off on changes to these long-held banking “truisisms” haven’t given it a second’s thought and they really don’t care to re-examine their beliefs anyway.
If there's a chargeback, someone has to cough up the X dollars that the cardholder spent and return it them. That typically isn't the bank. But it also requires Y dollars of overhead to work on the issue until it's resolved.
The cardholder calls their bank (the issuing bank) on the phone, and right away the bank has spent money answering the call.
After the bank tells the merchant that a chargeback is happening, the merchant can dispute the chargeback (make their case that it was a legit purchase), which the bank has to adjudicate.
Credit card processing is a high-volume, low-margin business. The bank's cut is roughly 2-3% of the purchase. For a $10 purchase on OnlyFans, the bank is only making like 20 to 30 cents off that transaction. If a chargeback happens, the required manual work will cost them many times that. So, in order for it to be profitable, banks need chargebacks to be rare. If they're frequent, it's less profitable or even unprofitable.
"The reason the banks, and through the banks OnlyFans, attack sex is because they are accountable, and don't wish to take risks"
Where exactly are the banks at risk or accountable?
Are we talking about fraud, or potential criminal investigation because of underaged girls forced to do onlyfans by mafia (I can imagine that) and money transfer via their bank?
You can't sell dildos with most credit card providers and PayPal. That has nothing to do with risk, I am allowed to resell cheap China stuff with a much higher return rate than the average dildo shop
I mean, ‘the Patriarchy’ is the old chestnut explanation for most societal ills. Any evidence that it was corrupt old white men? The banks are bowing to external pressure and I am not convinced those voices are the ones necessarily representative of ‘the Patriarchy.’
The policies around payment processing for the adult industry do not stem from puritanical values. It’s a business decision around the astronomically high chargeback rates for credit card purchases of this content.
It doesn't stop with the fact they worship "God, the father", either. It's also evident in the fact that they (hard-line conservative christians of all stripes; evangelical, catholic and others) are working to take away women's autonomy -in the form of sex work, in the form of reproductive choice and I doubt very much if they view female education and employment very favorably as well.
They're not pearl clutching church goers enforcing their morality on everyone. They're concerned about real objective harm like revenge porn, videos of sexual assault, leaked videos, child porn, and so on.
No, they're concerned about "real objective harm" to their business—like the fundamentalist/evangelical Protestant churches in the US collectively deciding to target them (in various ways) because said churches think they're the arbiters of an absolute morality that decrees that taking pleasure in sex is a sin.
The things you mention are 100% policeable separate from porn production in general.
>The things you mention are 100% policeable separate from porn production in general.
Yes, and that's what banks are asking porn producers to do. To implement policies and procedures to ensure that those types of videos aren't on their site.
> If that were true they wouldnt be investing in Facebook.
It's easier to stir up outrage against porn—sexual prudishness has a long history—than against Facebook—the ability so globally to overshare, and the (inevitably delayed) realization of its consequences, is only in the very beginning of forming.
Yes, I know that. But the point I was responding to was that the banks and cc companies are worried about liability, but Fb is a larger hub for child exploitation and general social instability than all of the tube sites combined.
If you want to fix it, you put in legal protections for people to do business, rather than this informal and/or ad hoc regulation through the shifting influence and agendas of arbitrary special interest groups.
The answer to regulation gone wild is not more regulation, it is to remove regulatory power. You can’t dig your way out of a hole.
I have to ask. Who is going to hold banks responsible for their role as just a payment gateway and not the actual people involved or the service?
This is like saying banks are responsible for a drug mafia using a laundromat for "money washing" by using sales proceeds of a laundromat depositing into the said bank and sending it away.
Oh. Like the time deutchbank was fined a billion dollars and nothing happened?
So they are really imposing their idea of "should" be allowed or not. Democracy is passe.
The real danger of platforms and banks is how happy they are to censor for the government, or simply the loudest, richest mouth, in order to keep the profit flowing. If you want to fix it, you put in legal protections for people to do business, rather than this informal and/or ad hoc regulation through the shifting influence and agendas of arbitrary special interest groups.
> The financial and tech industries’ prudishness is unfortunately increasingly reflected in government policy, typically under the guise of protecting children and other vulnerable communities.
This is the Guardian getting causation extremely wrong.