This problem has existed forever. As long as I can remember. The main company that seems to be able to process credit cards for porn is CCBill. They seem to have no real competition other than small fringe services. As soon as those services get big enough it raises flags and they get shut down. How and why CCBill are able to do it while others aren’t I don’t know.
You can sell snake oil on Shopify all day long but sell a JPG with that shows female nipples and it raises flags.
Does anyone know WHY this actually is? I know it’s related to Title 18, Section 2257 somehow, but I don’t understand exactly how, nor why CCBill seems to operate without issue. Can somone with inside knowledge explain?
Porn has come such a long way in the last 10 years. Maybe I’m just more progressive than I realize, but I see stuff like X-Art as actual art and I wish there was something like iTunes for porn.
If someone can explain to be what the legal roadblock is for porn billing and how one might be able to get around it, I’d be the first investor and founder. Seriously. There is so much great pornography out there now I feel like you could actually change the way people think about it and maybe even clean up the industry. It doesn’t have to be a dirty thing you bury under 10 cryptic folders.
My biggest challenge of that time was reliable billing. That said, it wasn't quite as bad as you make it out to be. When you have a long history of low chargebacks you can make some deals, and even then there were a few options. We always had a few processors integrated at any one time because 1) any processor could pull the plug on us with minimal notice and 2) these organizations tended to be technologically inept and their platforms were not reliable.
Some payments we processed through our own merchant account. We tried to get more merchant accounts and were unsuccessful. It's difficult because (IIRC) banks only allow a certain percentage of their total volume to be "high risk" and porn is in that bucket no matter how low your chargeback rate is and how long you've been established. It's something you could probably arbitrage profitably if you were a bank, but by the time you get to be a big enough bank you are bound into the stodgy culture of banking ("ewww porn").
That ship has sailed however; there's not much money in porn anymore. The tube sites have killed the content business; this is a shrinking industry. I agree, the content is better than it ever has been before, and you can get it free... uploaded to tube sites by the very producers themselves, hoping to get exposure.
> That ship has sailed; there’s not much money in porn anymore
That’s interesting, and would be the very reason small creators would move to a patreon backed model. The logic is similar to how youtube and podcast creators diversify to patreon as the platform revenue can’t be counted on.
Also the impact of Patreon’s policy goes beyond porn, to take an extreme example, educational content involving sex in any graphic way would also get banned.
I wonder what happens next. Would moving to direct peer to peer payment with a one to one link between the creator and the “customer” be a workaround ? Then when volumes get big enough there would be ashakedown again ?
While content sites are not doing well, live cams have nowadays quite a high turnover. However all you said regarding merchants and banks is still an issue, payment processors get quite a large chunk of the pie. I’d also add Epoch to the dominant billers besides CCBill.
Hopefully the crypto world will mature in the upcoming years and people will use it for payments. That would help customers stay anonymous and there will be no charge-backs. Sure, we will miss recurring payments but still a win imo.
Source: I’m the CTO of a mid-sized live cam platform.
1) Porn (crypto, gambling, etc.) transactions are significantly riskier than other transactions.
2) CC processing involves a long chain of intermediaries.
3) At every step of the chain there's strong pressure upstream for better rates, and strong pressure downstream to ensure the blended payment stream is safer.
So, eventually, someone in the chain gets told "sure, we can give you better rates, but only if you can improve the risk profile of your payment stream". And then they crunch the numbers, and decide it's worth it, knowing they'll lose some volume but hoping they can make it up with better margins. And then the people who churn find one of the remaining partners who hasn't adopted strict policies, and this repeats until all the "dodgy" payments are going through a high-fee chain that can't possibly afford to change their policies, and everyone else is going through a low-fee chain.
If you check CCBill, their "Blue" package that allows adult content runs 10.8% to 14.5%, with a $1,000 yearly "high risk registration fee". And even their normal plan (which doesn't allow adult content) seems to be 5.9% + $0.55 per transaction? Braintree is 2.9% + $0.30; Stripe is the same.
You can see why, eg, Stripe would be happy to leave CCBill to have a virtual monopily on adult transactions: There's not that many of them, they're so risky you'll need to charge absurdly high rates just to cover your costs, and just touching them at all will potentially taint your other transactions in the eyes of your upstream partners, driving up your rates. Conversely, you can see why CCBill will never kick the adult payments off their platform; it's the only thing they have to offer.
Disruptive startups work best when they can start with a niche and then grow from there, but the logic of the financial system makes that very difficult.
Why aren't debit card transactions handled separately and differently from credit card transactions? Since they come from a guaranteed fund source, I would think they would make possible a special "no chargebacks permitted" transaction type? I see no way to get people to stop doing chargebacks after they've come down off their sexual arousal inhibition lowering short of widespread social education of a sort nearly guaranteed not to happen, so it'll have to be some solution that simply makes it so people CAN'T unspend the money.
I used to work for a payment processor. Our upstream bank would not allow us to handle any adult content at all. The justification used is that adult content is too risky because of chargeback rates.
Apparently the chargeback rates on adult content is really high. Anecdotally, it makes sense. You buy the nude pics, your husband sees the charge on your card, "I was hacked" boom, chargeback. You buy the nude pics, do the nasty alone in your room, have some regrets once the pressure to do the nasty is gone, try to get a refund, get refused, boom chargeback.
I'm not sure that quite holds up in our post-Pornhub world, where everyone is openly admitting to using porn these days. But banks are conservative (in all the ways) and slow to change.
That's not the real reason (source: used to work in adult).
High chargebacks in high-risk industries are related to three things:
1) The goods are digital and delivered immediately. This means that if I just got a hold of a 100 stolen CC numbers and want to test whether or not they're legit before moving on to physical goods, I'm going to test them out at one such service - which shoots up the CB/refund rate.
2) This also creates a secondary market for illicitly opened accounts / access, which is easy money (and anything else you can imagine down the lane on piracy etc.)
3) Because the margins are so low due to high marketing costs + competition, many sites (especially in the past) would sign the user up to endless recurring billing schemes which are nigh impossible (or costly) to cancel, also driving up the chargeback rate.
I always thought this as payment processors optimizing their bussiness model till it's overfitted to "non-porn".
I never worked in porn but I did work with payment and clearance systems from carrier companies a long time ago, think billing customers for SMS messages to specific numbers and then getting clearance for the carrier for the money. The risk of fraud or any kind of weird issue is stupidly higher for porn. Either simple "customer doesn't have the money" fraud or "the police knocks on your door because you got money from X customer" fraud. So maybe you need more people or better systems to deal with it while still being profitable. CCBill charges are huge when compared to other credit card processors.
It's easy to reduce costs and complexity until the easiest solution to keep or improve current margins is don't do porn.
Yeah, it may well be chargebacks, not legal or moral concerns.
I live in New Orleans, which has an unusual concentration of strip clubs. I've heard people who work in them complain that to use a credit card, they require you to let them photograph your ID, make an impression or photo of your card, and have you sign a carbon copied form.
This gives some customers cold enough feet that they head out, but the reason is that people will run up a serious tab with lap dances, champagne and whatever else and then strenuously deny they ever set foot in such an establishment. I'm sure porn has the same problem.
It's pretty gross as far as I'm concerned. There's no legitimate moral distinction between falsely saying you never signed up for (random porn service) and Netflix, or saying you never got a lap dance and saying you never went to the ballet, and people acting differently causes legal businesses with avid customers real harm.
CCBill has a “relationship” with First Data which is a very large payment processor and an acquiring bank.
They are also willing to eat the fines that come with supporting merchants with more than 1% chargeback.
The reason why there aren’t many more of them isn’t morality it’s just very hard to maintain profits in this environment.
Patreon will have to pay fines if they have high chargeback rates and those fines are intentionally huge so for them it’s a none-brainer they need to reduce chargeback rates and their adult content creators are likely one of the biggest offenders and even if they are not they are an easy sacrifice to the PCI gods.
Porn buyers preserve their relationships with spouses who notice the charges by denying knowledge of them. Porn transactions are thus exceptionally likely to be treated as fraud, whether or not they actually are. That’s the folk tale, anyway.
Adult content usually sees large volumes of chargebacks. This is because when people are aroused, their inhibitions markedly decline. Because modern people do not see themselves as fundamentally sexual beings, when the arousal has passed they feel regret, shame, or that the person who made the charge "wasn't them" or similar, so they feel no moral reluctance to refuse to pay for the content they enjoyed. It's not really something that can be fixed, the human element of it anyway. What can and should be fixed are payment processors. They are very lightly regulated taxing bodies whose policies are not decided by elected representatives, yet control the majority of our economy. If payment processors wanted to actively override the decisions of the Federal Reserve and set national monetary policy they could do it tomorrow.
It's really pretty absurd how a handful of companies who do nothing but shuffle numbers from one place to another not only charge steep fees for the service, but also manage to charge a percentage of the transaction - as if transferring a bigger number down a wire cost more! In the past there was some sense in that there were liabilities involved, but most all of that has been eliminated and only the fees remain.
I have not tried to do what you describe, but this is my best take:
The problem isn't really the law most of the time: It's how companies are hooked up to the financial system.
The Stripes and Paypals of the world aren't really connected to all the credit card networks directly: There's layers underneath, and one of them is banks that act as intermediaries. These kind of companies start with one bank (say, Wells Fargo), and might expand to more as they want to expand to other parts of the world. Eventually, they might have dozens of banking partners that are part of the transaction processing. Even though this online processors are carrying most of the fraud risk, they still have to adhere to what their baking partners will accept, and pretty much every bank out there will tell them things that they can't sponsor past what is legal, and that almost always includes pornography, drug paraphernalia, medicines and sex toys. The bank will come knocking to their door, and they'll have to say no. This is not just down to banks disliking the businesses for image reasons, but also has to do with risk: The number of stolen credit cards used in those sites, and the amount of disputes on the charges for other reasons is pretty high compared to other lines of business.
Therefore, what you need is to form all your banking relationships with entities that have no problem with you processing cards for porn sites. So you have to find banks that will deal with this companies at all, and then convince them that your fraud protection is good enough, and your pockets deep enough, to take the risk.
It isn't about seeing x-rated stuff as art, but rather about the ability to be open about sex. Traditional-minded people are rarely as open about it in my experience.
I'm female. I watch porn. So does my spouse. There is no secret there. If either of us were going to a strip club for whatever reason or visited a prostitute somewhere legal, we can simply tell each other about it knowing the other won't be angry. We can openly discuss folks we are attracted to. We understand that finding others attractive is normal human behavior, and would rather not lie about it.
On the other hand, I've known plenty of women that get angry about men watching porn. I have known plenty of men that won't admit to their wife - this person they claim to trust - that they watch porn or have visited a strip club. There are others that actively protest against porn for whatever reason. In general, you find more "porn is morally wrong!" arguements in conservative environments.
I am about to go put myself at risk right now with a casual partner. I believe in a another simulation where porn did not exist I’d be snuggled up and listening to some snores of my beautiful wife and newborn. But it exists and grows.
And maybe of interest: When the EU brought out GDPR, so many people complained about the injustice of one group of governments bringing their laws to the world. For the rest of the world, this is nothing new: The dominance of the US finance sector means that any US law is automatically international law. Visa follows US laws, nobody can exist without taking Visa payments, so everybody follows Visa rules, which means you follow US rules.
In the end, what is allowed is the intersection of behavior that's not penalized in any state of the world.
>In the end, what is allowed is the intersection of behavior that's not penalized in any state of the world.
That is hardly true. We do not follow the rules of Saudi Arabia and Iran. What happens is that the laws of the US and the intersection of local laws are what needs to be followed.
The US is aghast that the EU is a large enough market to actually impact the rules of the global internet, and the laws are different enough that they will hurt the major US players. Now all of a sudden people are seeing why applying national laws to pure cyberspace is a bad idea.
I'm moving into using tor because it feels more like the internet I knew from 1998-2006, slow-ish, unreliable, unpolished, anonymous, ephemeral and private, with all the warts there to see. In short a new network that takes A Declaration of the Independence of Cyberspace seriously.
This isn't true anymore. I just logged on to check, and they support payment by:
* Bitcoin
* Bank Transfer (from select countries [0])
* Major brand gift cards
* Checks/Cash through the mail
* Prepaid Paysafecard
* Przlewy24 (Something available to people with a bank account in Poland)
* Interac e-Transfer (Something available to people with a bank account in Canada)
[0] US, European (with a SEPA supporting bank), Australia, New Zealand, Dutch (with iDEAL supporting bank), Austria (with EPS supporting bank), Germany (with giropay supporting bank)
And yet I'm constantly told that European banks make it trivial to transfer money without middlemen like visa. So why not just submit payment that way?
They do. If I have someone's bank details I can transfer for free, instantly. (OK it sometimes takes a few minutes at weekends). There's two issues with ever using that for online payment:
1. There is no mechanism to obtain a refund for a mistake - eg I mistype the account number, someone else gets the money. Banks won't reverse but ask the payee to refund. If they still exist and are willing to cooperate. This is the route used for many, many scams like Microsoft calling because they noticed a fault with your Windows.
2. There is no protection under the Consumer Credit Act to obtain refund in the event the company goes bust or the product is defective and they won't refund. Credit cards have to provide that.
I use it with friends in preference to any other method, especially Paypal though.
I did that a few times (buying bitcoin) and got my bank account suspended. I was told the other party was suspected of perpetrating fraud, and if I wanted to complete the transaction I'd need to do it in person in a branch.
Getting your bank account suspended is much more painful than a credit card.
As a result, I'm not very interested in executing transactions with random entities out of my bank account.
Because we already do, in some places – e.g. Amazon.de takes wire transfers, so does PayPal in Germany, and so do many/most German online shops.
And even for offline payments, we have in Germany an entirely separate card system based on that.
But you know, network effects and all. Internationally, it’s incredibly hard to buy anything online without a CC. So Germans who order lots online still often have a CC.
Payment for adult content is where Ethereum and similar cryptocurrencies would solve a real problem. Of course tokens (like SpankChain) are not really needed for a solution, one could use ETH directly. The anonymity of transactions could be problematic though...
> ... what is allowed is the intersection of behavior that's not penalized in any state of the world.
In a weird way, I think China does this right.
Winnie the Pooh is no longer allowed in China [1]. So they turn it off at the firewall. This is better than say, trying to force all the other companies in the world to comply with some stupid law that China makes up.
While I disagree with China on their use of the firewall to block speech, it's a far better way to do it than to sue Disney to prevent Winnie the Pooh products from coming over into China.
Look at what China is doing to airlines -- "Say Taiwan is a part of China or we won't let you operate here."
They have essentially the same policy as everyone else -- we'll force you to follow our laws, and if we can't we'll shut you out. Blocking the Winnie the Pooh content is no different. If China made up a large part of the audience of those sites, they would "have to" change.
Ditto GDPR -- you can just ignore it and block Europe if you want, they're not forcing you to do anything.
Until they can't and become bullies like with Taiwan.
I'm actually pretty appalled how easily people point to one or two benefits to the way China handles something while completely ignoring the concessions as evidence of them "doing it right". Never mind these short term benefits are coming at the cost of policies that are an affront to liberty and the modern concept of democracy.
So, I'm going to offer a counter opinion; I do not believe China does this "right". Dumb lawsuits are dumb, but I'm not willing to throw the baby out with the bath water.
I'll be 'that guy'. This is the number one use case for a cryptocurrency in my opinion - a decentralized microtransaction system.
This isn't the first time Patreon has faced these issues and services like PayPal are notorious for closing your account then giving you the finger.
I don't want to give my credit card info to 30 different sites or services or creators I want to support. I don't want a bunch of small recurring charges from different places on my credit card. And most of all, I don't want a service to arbitrarily be able to decide (or have others force their hand as in this case) what I am and am not allowed to support.
I don't think the technology or people are remotely near ready for mainstream adoption yet but it is still the most compelling use case I've seen.
Unfortunately cryptocurrencies like bitcoin are a little ill-suited for automatic recurring payments because one of crypto's big selling points is that the crypto is stored on your computer, not in some bank or other computer, so it can't be easily automatically be taken from you. Of course maybe someone could develop a special type of crypto-currency or wallet system which allows for coin to be stored privately while also able to specify automatic transfers without any action by the user (nor the requirement to keep your computer online).
This sort of thing is, actually, a reasonable use case for things like Ethereum's smart contracts. If there were a standard interface by which revocable "direct debits" could be created against users' wallets, this would be solved.
Except that it needs more thinking about than that, because of questions like "what data source does everything use to agree that 1 month has passed since the last transaction", or "can I revoke a direct debit within a certain time period after the money's left my wallet" combined with "how do I get notified when money leaves my wallet".
There's also the question of whether the ability to just register a monthly standing order with various common clients would be good enough, rather than needing to pull money.
A lot of this is a UX exercise rather than a technical one, to be honest.
In this case, "ill-suited for automatic recurring payments" is arguably a feature and not a bug. The porn industry has a history of shady, abusive practices in this area (though to be fair, these days publications like the New York Times are apparently catching up).
> Of course maybe someone could develop a special type of crypto-currency or wallet system which allows for coin to be stored privately while also able to specify automatic transfers without any action by the user (nor the requirement to keep your computer online).
Correct me if I'm wrong, but that is not how cryptocurrencies work. The crypto is not stored on your computer. it shouldn't be so hard to set up a revokable recurrent payment with something like ERC-20.
This is a mostly solved problem. (The subscribee needs to gracefully handle missed or delayed payments, but that's true anywhere. Lack of chargebacks is only a problem if you have really bad wallet security, in which case you have bigger problems. Etc.)
Mechanism aside, it does seem that Patreon etc need new payment processors. I had thought of using Patreon, but there's no way to get paid anonymously. And even if I could manage something ~anonymous with PayPal, I've read too many horror stories to ever trust them.
I use VPS from several providers that accept Bitcoin etc. And I can maintain a cash balance to recover recurring charges. That's OK, for providers that I use routinely.
So as you say, it'd be cool to have third-party payment processors, which are privacy-friendly and content-agnostic. But it's a nontrivial problem. I suppose that it could pay via direct transfer, with site/service/creator-specific accounts to protect against theft, and funding from Bitcoin etc. However, I suspect that only banks can do direct transfers, and starting banks is itself nontrivial.
Censorship resistant money is a nice use case. The lightning network will create microtransactions, I imagine devices negotiating for bandwidth and paying few satoshis for the privilege. Its too bad there is such an energy requirement built into the system, that's my I'm keeping my eye on Chia.
The short version: PayPal blames the credit card companies, the credit card companies have nothing to do with it, and looking at court cases seems to indicate that regulations once required financial institutions to consider "reputational risk" but those were ruled unconstitutional a few years ago.
It seems like everyone is sleepwalking into censorship based on entrenched business practices rather than actually making reasoned decisions.
I find this worrying, and for the usual reasons. People would often want to make a living by making money from their craft, but it turns out it's not so simple as finding "the market", one needs a whole load of boilerplate for it too. One such piece of boilerplate is Patreon, and Patreon's boilerplate is payment processors. So it's strange that whenever this topic comes up, people speak of it as if it's just a little issue, when it's not.
Often this idea that "it's their business, so it's their rules" is trotted out, which while of course being technically correct works to shut down any kind of critique of the state of affairs. People rightly or wrongly, depend on such platforms for their livelihood, and it's a shame that, as eurg wrote, nothing happens because it's a niche problem. It doesn't affect the "good guys", because we value their craft more than other crafts.
But it comes down to this - I realise that if I ever wanted to monetise my own artistry, I'd have to use Patreon, and the limitation of what I can post (be that adult content, even the more "disgusting" kinds involving incest or bestiality as they mention) means that my creative output is limited. As such, what I can spend my time on is not only restricted by "the market", but also by Patreon, also by Visa, also by PayPal, also by Mastercard etc. I become self-censored, chilling effects.
I can assure you with full confidence that there's practically no limitation on "disgusting material" that you can sell online, as long as it's legal (which bestiality isn't).
In fact, the farther you push the boundaries, the better chance you will have at making money, assuming there still is an audience for it. There's a platform for almost anything.
Patreon just isn't the place for it and it never was. Patreon isn't even on the radar.
That's not to say you will never run into issues with payment, but your ultimate problem isn't going to be the platforms, it's finding customers.
>People would often want to make a living by making money from their craft, [...] People rightly or wrongly, depend on such platforms for their livelihood [..] I become self-censored, chilling effects.
oh please, stop making it sound like one artisanal widget maker's livlihood is being destroyed by The System. the truth is that they're producing and selling adult content, which (among other things) is riskier to transact than artisnal beads. the "mainstream" payment processors simply do not want to deal with the hassle, pure and simple. as other commenters have mentioned, there are payment processors that cater to such "high risk" businesses, but they don't come cheap.
Unfortunately you are simply repeating the line I set out to criticise:
>It doesn't affect the "good guys", because we value their craft more than other crafts.
I am not only wanting to criticise the individual payment processors, because I understand the risk of doing business with such things. I want to criticise the whole system in which people must rely upon several centralised services in order to get by with their craft. The fact that such things are difficult to fund is the crux of the issue here, and the point is that it's a sad state of affairs to be in that the alternative options are scarce and expensive/difficult to procure.
But the point is still lost. I will reiterate: people would much rather use their knowledge and skill for a craft than to work a minimum-wage job or even in between jobs; peoples' livelihoods are at stake, and it's disappointing to see a comment along the lines of "just use another service" or justifying the situation as simply being the way the world works. The point is that the world shouldn't work that way, and as soon as we realise that, the sooner we can put pressure in the relevant places to change it. The mere suggestion of alternatives (either in the crowdfunding platform or the payment platform) does nothing to help the people who, even if they could afford to move, would suffer a massive loss in audience and revenue.
I know what everybody's thinking: visa/mastercard is playing world morality police. But most of the major payment processors have banned certain types of products from being used on their platform[1], some of which obstinately lacks a "moral" reasoning (see: virtual game currency). My guess is that those types of businesses attract a high fraud/chargeback rate, which makes them more expensive to process. It's a risk/benefit trade off, nothing more.
In fact, high risk is just another way in which VISA and MC will squeeze merchants, it doesn't matter to VISA because they pass all of the risk to the merchant anyway.
Can someone explain to me why people and companies even use credit cards? Why not bank transfers? Why credit cards are often in exclusions to other payment methods?
I wanted to support 3blue1brown on Patreon and I can't because I need to have a credit card. Even PayPal requires a credit card.
If I want to have a server on AWS or Google Cloud I need to have a credit card.
Why not prepay trough bank transfer? It's some American thing that is just imposed on Europeans because why not or there are some valid reasons why companies try to force credit cards on me?
As I see it, if I send someone money it's up to me and that person, eventually to a court, to resolve any issues. Why bank can't be a neutral third-party?
To me it seems like a beneficial deal to companies. If they got the money then it's up to them to return them or not, so they are in beneficial, safe position.
Currently I try to somehow go around need for credit cards with virtual credit cards that are prepaid, but it seems like they are banned quite often... E.g. I haven't found a way to do prepaid for Google Cloud, so I can't use it.
Credit cards offer a lot of benefits and cash back (essentially a discount).for bank transfer to compete they’d need to offer the consumer similar fiscounts in lieu of the benefits and cashback.
Some cards can offer 3-5% of the transaction back, on top of a slew of benefits including extended warranty, 90 day accidental damage or theft reimbursement, price protection (a refund if the price changes), return protection (a refund if the store doesn’t accept a return).
Yes, that would explain why customers may want to use, so companies may offer them as an option, but why companies don't offer bank transfers? In Europe we do most of the day to day payments with bank transfers and companies seems to be OK with that.
Readit News
You can sell snake oil on Shopify all day long but sell a JPG with that shows female nipples and it raises flags.
Does anyone know WHY this actually is? I know it’s related to Title 18, Section 2257 somehow, but I don’t understand exactly how, nor why CCBill seems to operate without issue. Can somone with inside knowledge explain?
Porn has come such a long way in the last 10 years. Maybe I’m just more progressive than I realize, but I see stuff like X-Art as actual art and I wish there was something like iTunes for porn.
If someone can explain to be what the legal roadblock is for porn billing and how one might be able to get around it, I’d be the first investor and founder. Seriously. There is so much great pornography out there now I feel like you could actually change the way people think about it and maybe even clean up the industry. It doesn’t have to be a dirty thing you bury under 10 cryptic folders.
My biggest challenge of that time was reliable billing. That said, it wasn't quite as bad as you make it out to be. When you have a long history of low chargebacks you can make some deals, and even then there were a few options. We always had a few processors integrated at any one time because 1) any processor could pull the plug on us with minimal notice and 2) these organizations tended to be technologically inept and their platforms were not reliable.
Some payments we processed through our own merchant account. We tried to get more merchant accounts and were unsuccessful. It's difficult because (IIRC) banks only allow a certain percentage of their total volume to be "high risk" and porn is in that bucket no matter how low your chargeback rate is and how long you've been established. It's something you could probably arbitrage profitably if you were a bank, but by the time you get to be a big enough bank you are bound into the stodgy culture of banking ("ewww porn").
That ship has sailed however; there's not much money in porn anymore. The tube sites have killed the content business; this is a shrinking industry. I agree, the content is better than it ever has been before, and you can get it free... uploaded to tube sites by the very producers themselves, hoping to get exposure.
> That ship has sailed; there’s not much money in porn anymore
That’s interesting, and would be the very reason small creators would move to a patreon backed model. The logic is similar to how youtube and podcast creators diversify to patreon as the platform revenue can’t be counted on.
Also the impact of Patreon’s policy goes beyond porn, to take an extreme example, educational content involving sex in any graphic way would also get banned.
I wonder what happens next. Would moving to direct peer to peer payment with a one to one link between the creator and the “customer” be a workaround ? Then when volumes get big enough there would be ashakedown again ?
Hopefully the crypto world will mature in the upcoming years and people will use it for payments. That would help customers stay anonymous and there will be no charge-backs. Sure, we will miss recurring payments but still a win imo.
Source: I’m the CTO of a mid-sized live cam platform.
Then why is so much porn still being made if there's so little money in it today?
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1) Porn (crypto, gambling, etc.) transactions are significantly riskier than other transactions.
2) CC processing involves a long chain of intermediaries.
3) At every step of the chain there's strong pressure upstream for better rates, and strong pressure downstream to ensure the blended payment stream is safer.
So, eventually, someone in the chain gets told "sure, we can give you better rates, but only if you can improve the risk profile of your payment stream". And then they crunch the numbers, and decide it's worth it, knowing they'll lose some volume but hoping they can make it up with better margins. And then the people who churn find one of the remaining partners who hasn't adopted strict policies, and this repeats until all the "dodgy" payments are going through a high-fee chain that can't possibly afford to change their policies, and everyone else is going through a low-fee chain.
If you check CCBill, their "Blue" package that allows adult content runs 10.8% to 14.5%, with a $1,000 yearly "high risk registration fee". And even their normal plan (which doesn't allow adult content) seems to be 5.9% + $0.55 per transaction? Braintree is 2.9% + $0.30; Stripe is the same.
You can see why, eg, Stripe would be happy to leave CCBill to have a virtual monopily on adult transactions: There's not that many of them, they're so risky you'll need to charge absurdly high rates just to cover your costs, and just touching them at all will potentially taint your other transactions in the eyes of your upstream partners, driving up your rates. Conversely, you can see why CCBill will never kick the adult payments off their platform; it's the only thing they have to offer.
Disruptive startups work best when they can start with a niche and then grow from there, but the logic of the financial system makes that very difficult.
I genuinely wonder how true this is. Does anyone know of any stats/data that have been released about it?
Some of my friends in the biz solely got interested in btc because of this.
We have still only a few customers using them though, so it's not a success yet.
But for those who thing crypto is a solution in search for a problem: there it is.
Apparently the chargeback rates on adult content is really high. Anecdotally, it makes sense. You buy the nude pics, your husband sees the charge on your card, "I was hacked" boom, chargeback. You buy the nude pics, do the nasty alone in your room, have some regrets once the pressure to do the nasty is gone, try to get a refund, get refused, boom chargeback.
I'm not sure that quite holds up in our post-Pornhub world, where everyone is openly admitting to using porn these days. But banks are conservative (in all the ways) and slow to change.
High chargebacks in high-risk industries are related to three things:
1) The goods are digital and delivered immediately. This means that if I just got a hold of a 100 stolen CC numbers and want to test whether or not they're legit before moving on to physical goods, I'm going to test them out at one such service - which shoots up the CB/refund rate.
2) This also creates a secondary market for illicitly opened accounts / access, which is easy money (and anything else you can imagine down the lane on piracy etc.)
3) Because the margins are so low due to high marketing costs + competition, many sites (especially in the past) would sign the user up to endless recurring billing schemes which are nigh impossible (or costly) to cancel, also driving up the chargeback rate.
I never worked in porn but I did work with payment and clearance systems from carrier companies a long time ago, think billing customers for SMS messages to specific numbers and then getting clearance for the carrier for the money. The risk of fraud or any kind of weird issue is stupidly higher for porn. Either simple "customer doesn't have the money" fraud or "the police knocks on your door because you got money from X customer" fraud. So maybe you need more people or better systems to deal with it while still being profitable. CCBill charges are huge when compared to other credit card processors.
It's easy to reduce costs and complexity until the easiest solution to keep or improve current margins is don't do porn.
I live in New Orleans, which has an unusual concentration of strip clubs. I've heard people who work in them complain that to use a credit card, they require you to let them photograph your ID, make an impression or photo of your card, and have you sign a carbon copied form.
This gives some customers cold enough feet that they head out, but the reason is that people will run up a serious tab with lap dances, champagne and whatever else and then strenuously deny they ever set foot in such an establishment. I'm sure porn has the same problem.
It's pretty gross as far as I'm concerned. There's no legitimate moral distinction between falsely saying you never signed up for (random porn service) and Netflix, or saying you never got a lap dance and saying you never went to the ballet, and people acting differently causes legal businesses with avid customers real harm.
They are also willing to eat the fines that come with supporting merchants with more than 1% chargeback.
The reason why there aren’t many more of them isn’t morality it’s just very hard to maintain profits in this environment. Patreon will have to pay fines if they have high chargeback rates and those fines are intentionally huge so for them it’s a none-brainer they need to reduce chargeback rates and their adult content creators are likely one of the biggest offenders and even if they are not they are an easy sacrifice to the PCI gods.
It's really pretty absurd how a handful of companies who do nothing but shuffle numbers from one place to another not only charge steep fees for the service, but also manage to charge a percentage of the transaction - as if transferring a bigger number down a wire cost more! In the past there was some sense in that there were liabilities involved, but most all of that has been eliminated and only the fees remain.
The problem isn't really the law most of the time: It's how companies are hooked up to the financial system.
The Stripes and Paypals of the world aren't really connected to all the credit card networks directly: There's layers underneath, and one of them is banks that act as intermediaries. These kind of companies start with one bank (say, Wells Fargo), and might expand to more as they want to expand to other parts of the world. Eventually, they might have dozens of banking partners that are part of the transaction processing. Even though this online processors are carrying most of the fraud risk, they still have to adhere to what their baking partners will accept, and pretty much every bank out there will tell them things that they can't sponsor past what is legal, and that almost always includes pornography, drug paraphernalia, medicines and sex toys. The bank will come knocking to their door, and they'll have to say no. This is not just down to banks disliking the businesses for image reasons, but also has to do with risk: The number of stolen credit cards used in those sites, and the amount of disputes on the charges for other reasons is pretty high compared to other lines of business.
Therefore, what you need is to form all your banking relationships with entities that have no problem with you processing cards for porn sites. So you have to find banks that will deal with this companies at all, and then convince them that your fraud protection is good enough, and your pockets deep enough, to take the risk.
PayPal, Stripe and the rest are their own https://en.m.wikipedia.org/wiki/Acquiring_bank which means they can process the payment themselves.
[1] https://paymentcloudinc.com
You can go to a museum and see highly lauded art with nipples in it. But put a picture of that painting online and you're a pornographer.
It's the "custodian of record" you MAY see at the beginning of a FakeTaxi or Hospital.
You're the only other person I've seen use this phrase.
If you're serious about working on this, contact me.
I'm female. I watch porn. So does my spouse. There is no secret there. If either of us were going to a strip club for whatever reason or visited a prostitute somewhere legal, we can simply tell each other about it knowing the other won't be angry. We can openly discuss folks we are attracted to. We understand that finding others attractive is normal human behavior, and would rather not lie about it.
On the other hand, I've known plenty of women that get angry about men watching porn. I have known plenty of men that won't admit to their wife - this person they claim to trust - that they watch porn or have visited a strip club. There are others that actively protest against porn for whatever reason. In general, you find more "porn is morally wrong!" arguements in conservative environments.
Some time ago it was fetlife: https://www.eff.org/deeplinks/2017/03/payment-processors-are...
And maybe of interest: When the EU brought out GDPR, so many people complained about the injustice of one group of governments bringing their laws to the world. For the rest of the world, this is nothing new: The dominance of the US finance sector means that any US law is automatically international law. Visa follows US laws, nobody can exist without taking Visa payments, so everybody follows Visa rules, which means you follow US rules.
In the end, what is allowed is the intersection of behavior that's not penalized in any state of the world.
That is hardly true. We do not follow the rules of Saudi Arabia and Iran. What happens is that the laws of the US and the intersection of local laws are what needs to be followed.
The US is aghast that the EU is a large enough market to actually impact the rules of the global internet, and the laws are different enough that they will hurt the major US players. Now all of a sudden people are seeing why applying national laws to pure cyberspace is a bad idea.
I'm moving into using tor because it feels more like the internet I knew from 1998-2006, slow-ish, unreliable, unpolished, anonymous, ephemeral and private, with all the warts there to see. In short a new network that takes A Declaration of the Independence of Cyberspace seriously.
They tried accepting BTC. Noone used it, even while they were struggling with Visa. They pulled the support citing lack of use.
* Bitcoin * Bank Transfer (from select countries [0]) * Major brand gift cards * Checks/Cash through the mail * Prepaid Paysafecard * Przlewy24 (Something available to people with a bank account in Poland) * Interac e-Transfer (Something available to people with a bank account in Canada)
[0] US, European (with a SEPA supporting bank), Australia, New Zealand, Dutch (with iDEAL supporting bank), Austria (with EPS supporting bank), Germany (with giropay supporting bank)
No idea about the usage though.
1. There is no mechanism to obtain a refund for a mistake - eg I mistype the account number, someone else gets the money. Banks won't reverse but ask the payee to refund. If they still exist and are willing to cooperate. This is the route used for many, many scams like Microsoft calling because they noticed a fault with your Windows.
2. There is no protection under the Consumer Credit Act to obtain refund in the event the company goes bust or the product is defective and they won't refund. Credit cards have to provide that.
I use it with friends in preference to any other method, especially Paypal though.
Getting your bank account suspended is much more painful than a credit card.
As a result, I'm not very interested in executing transactions with random entities out of my bank account.
And even for offline payments, we have in Germany an entirely separate card system based on that.
But you know, network effects and all. Internationally, it’s incredibly hard to buy anything online without a CC. So Germans who order lots online still often have a CC.
-high speed -prevents this nonsense
In a weird way, I think China does this right.
Winnie the Pooh is no longer allowed in China [1]. So they turn it off at the firewall. This is better than say, trying to force all the other companies in the world to comply with some stupid law that China makes up.
While I disagree with China on their use of the firewall to block speech, it's a far better way to do it than to sue Disney to prevent Winnie the Pooh products from coming over into China.
[1] https://www.bbc.com/news/blogs-china-blog-40627855
They have essentially the same policy as everyone else -- we'll force you to follow our laws, and if we can't we'll shut you out. Blocking the Winnie the Pooh content is no different. If China made up a large part of the audience of those sites, they would "have to" change.
Ditto GDPR -- you can just ignore it and block Europe if you want, they're not forcing you to do anything.
I'm actually pretty appalled how easily people point to one or two benefits to the way China handles something while completely ignoring the concessions as evidence of them "doing it right". Never mind these short term benefits are coming at the cost of policies that are an affront to liberty and the modern concept of democracy.
So, I'm going to offer a counter opinion; I do not believe China does this "right". Dumb lawsuits are dumb, but I'm not willing to throw the baby out with the bath water.
This isn't the first time Patreon has faced these issues and services like PayPal are notorious for closing your account then giving you the finger.
I don't want to give my credit card info to 30 different sites or services or creators I want to support. I don't want a bunch of small recurring charges from different places on my credit card. And most of all, I don't want a service to arbitrarily be able to decide (or have others force their hand as in this case) what I am and am not allowed to support.
I don't think the technology or people are remotely near ready for mainstream adoption yet but it is still the most compelling use case I've seen.
Except that it needs more thinking about than that, because of questions like "what data source does everything use to agree that 1 month has passed since the last transaction", or "can I revoke a direct debit within a certain time period after the money's left my wallet" combined with "how do I get notified when money leaves my wallet".
There's also the question of whether the ability to just register a monthly standing order with various common clients would be good enough, rather than needing to pull money.
A lot of this is a UX exercise rather than a technical one, to be honest.
pre-signed, time-locked transactions?
Correct me if I'm wrong, but that is not how cryptocurrencies work. The crypto is not stored on your computer. it shouldn't be so hard to set up a revokable recurrent payment with something like ERC-20.
https://request.network/
https://linux.die.net/man/5/crontab
This is a mostly solved problem. (The subscribee needs to gracefully handle missed or delayed payments, but that's true anywhere. Lack of chargebacks is only a problem if you have really bad wallet security, in which case you have bigger problems. Etc.)
I use VPS from several providers that accept Bitcoin etc. And I can maintain a cash balance to recover recurring charges. That's OK, for providers that I use routinely.
So as you say, it'd be cool to have third-party payment processors, which are privacy-friendly and content-agnostic. But it's a nontrivial problem. I suppose that it could pay via direct transfer, with site/service/creator-specific accounts to protect against theft, and funding from Bitcoin etc. However, I suspect that only banks can do direct transfers, and starting banks is itself nontrivial.
The short version: PayPal blames the credit card companies, the credit card companies have nothing to do with it, and looking at court cases seems to indicate that regulations once required financial institutions to consider "reputational risk" but those were ruled unconstitutional a few years ago.
It seems like everyone is sleepwalking into censorship based on entrenched business practices rather than actually making reasoned decisions.
Often this idea that "it's their business, so it's their rules" is trotted out, which while of course being technically correct works to shut down any kind of critique of the state of affairs. People rightly or wrongly, depend on such platforms for their livelihood, and it's a shame that, as eurg wrote, nothing happens because it's a niche problem. It doesn't affect the "good guys", because we value their craft more than other crafts.
But it comes down to this - I realise that if I ever wanted to monetise my own artistry, I'd have to use Patreon, and the limitation of what I can post (be that adult content, even the more "disgusting" kinds involving incest or bestiality as they mention) means that my creative output is limited. As such, what I can spend my time on is not only restricted by "the market", but also by Patreon, also by Visa, also by PayPal, also by Mastercard etc. I become self-censored, chilling effects.
In fact, the farther you push the boundaries, the better chance you will have at making money, assuming there still is an audience for it. There's a platform for almost anything.
Patreon just isn't the place for it and it never was. Patreon isn't even on the radar.
That's not to say you will never run into issues with payment, but your ultimate problem isn't going to be the platforms, it's finding customers.
oh please, stop making it sound like one artisanal widget maker's livlihood is being destroyed by The System. the truth is that they're producing and selling adult content, which (among other things) is riskier to transact than artisnal beads. the "mainstream" payment processors simply do not want to deal with the hassle, pure and simple. as other commenters have mentioned, there are payment processors that cater to such "high risk" businesses, but they don't come cheap.
>It doesn't affect the "good guys", because we value their craft more than other crafts.
I am not only wanting to criticise the individual payment processors, because I understand the risk of doing business with such things. I want to criticise the whole system in which people must rely upon several centralised services in order to get by with their craft. The fact that such things are difficult to fund is the crux of the issue here, and the point is that it's a sad state of affairs to be in that the alternative options are scarce and expensive/difficult to procure.
But the point is still lost. I will reiterate: people would much rather use their knowledge and skill for a craft than to work a minimum-wage job or even in between jobs; peoples' livelihoods are at stake, and it's disappointing to see a comment along the lines of "just use another service" or justifying the situation as simply being the way the world works. The point is that the world shouldn't work that way, and as soon as we realise that, the sooner we can put pressure in the relevant places to change it. The mere suggestion of alternatives (either in the crowdfunding platform or the payment platform) does nothing to help the people who, even if they could afford to move, would suffer a massive loss in audience and revenue.
[1] https://stripe.com/gb/prohibited-businesses
https://www.paypal.com/gb/webapps/mpp/ua/acceptableuse-full
https://docs.adyen.com/legal/adyen-restricted-prohibited-lis...
In fact, high risk is just another way in which VISA and MC will squeeze merchants, it doesn't matter to VISA because they pass all of the risk to the merchant anyway.
I wanted to support 3blue1brown on Patreon and I can't because I need to have a credit card. Even PayPal requires a credit card.
If I want to have a server on AWS or Google Cloud I need to have a credit card.
Why not prepay trough bank transfer? It's some American thing that is just imposed on Europeans because why not or there are some valid reasons why companies try to force credit cards on me?
As I see it, if I send someone money it's up to me and that person, eventually to a court, to resolve any issues. Why bank can't be a neutral third-party?
To me it seems like a beneficial deal to companies. If they got the money then it's up to them to return them or not, so they are in beneficial, safe position.
Currently I try to somehow go around need for credit cards with virtual credit cards that are prepaid, but it seems like they are banned quite often... E.g. I haven't found a way to do prepaid for Google Cloud, so I can't use it.
Some cards can offer 3-5% of the transaction back, on top of a slew of benefits including extended warranty, 90 day accidental damage or theft reimbursement, price protection (a refund if the price changes), return protection (a refund if the store doesn’t accept a return).