3 Cash-Saving Tips For Adult Merchant Account Owners

Do you have an adult merchant account?  

Yes, you!

As someone doing business and taking credit cards in the adult industry, I'm sure you've heard just about everything in the book - and, I'm also sure a lot of it's negative crap, too.  Adult industries and adult merchant account owners in particular get the short end of the stick in today's wonderfully ambivalent, ambiguously sexualized-but-wait-not-really world we're a part of.  When it comes to adult credit card processing, it's a freaking jungle out there.  What are you to do?

This post is here to help address common problems adult merchant account owners or would-be-owners have with getting decent, competitive costs on their credit card processing.  It's a little more difficult to do than it is for run-of-the-mill businesses, but it's attainable.  Read on!

How to get decent rates on your adult merchant account

Take notes, 'cause this might be on the final.

Suggestion 1: Take control of your chargebacks by obtaining extra information

One of the chief reasons an adult merchant account is considered part of a high risk business is because of the chargebacks you'll often incur.  Chargebacks occur when customers (claim they) aren't satisfied with your products or, more often, when they don't remember ordering them, so they file a dispute with their credit card provider looking to get their money back for the product they ordered from you.  Winning a chargeback battle can be difficult if you don't provide adequate information about the credit card and transaction itself, so you should be absolutely sure to:

• Make sure your customer gives you the CVV code from the back of his credit card.  This is just another piece of information that helps verify the card wasn't being used fraudulently.
• Make sure the customer gives you his billing address.  You'd want this for the same reason you'd want a CVV code.
• For retail adult stores, invest in EMV technology.  EMV isn't mandated yet, and, certainly not everyone uses EMV credit cards yet, but, when the time comes, EMV will reduce fraud pretty significantly because EMV credit cards are inherently harder to replicate.  An EMV-enabled terminal costs you $200 or so.  It's a great investment.

Supplying the extra detail and using EMV card readers won't help you win every chargeback, but it will help you win more than you're winning now.  And, fewer chargebacks mean lower costs for you because your processor doesn't need that extra insurance against your would-be fraudulent transactions.  Everybody wins.

Don't let this happen to your poor customers.

Suggestion 1a (or 2): For retailers, give your business an innocuous-sounding name so your customers (or their significant others) don't freak out at their monthly statement

This may seem silly, but it can help reduce chargebacks as well.  You may not be able to control what products of yours your customer chooses to bring home, but you can control how your business is presented on his credit card statement.  Regardless of the actual name of your establishment, which I recommend you keep so as not to turn away legitimate business, you can choose to you have your adult novelty business show up differently on someone's credit card billing statement.  Using the name of a bookstore or referencing the name of the street address of the business are both tactics you can use.  Be a little creative!

Why isn't this you yet?

Suggestion 3: For wholesalers and manufacturers, use a processing method that can obtain the best base costs on business-type credit cards

Some business owners aren't aware that business cards have a few different set acceptance costs based on how much extra information is provided along with each transaction - that is, the more information you provide, the less you have to pay.  And, of the business owners who do know about these lower costs, not everyone knows if their gateway will accept the information, or even how to do it.  Here's what I suggest:

• If you don't use a virtual gateway for credit card processing (i.e. you're still keying cards into your black box terminal), start there.
• If you do use a virtual gateway, ask your processor if you're getting the lowest costs for business-type credit cards.  They may be able to help you.
• If you know you're getting some discounts from card qualifications, ask your processor what steps you can take to get all the business-type cards you take to qualify correctly.  They may be able to help with that, too.
• If your processor is unable to help you, it may be time to choose another credit card processor.

This is another solution that isn't the entire package but will help lower your costs somewhat.  Again, this is only pertinent to wholesalers, distributors, and manufacturers.

I know it's a little harder than usual to get decent credit card processing as someone who wants an adult merchant account, but, it can be done.  Cost savings are part of the battle, and, by at least utilizing point 1, you'll be doing both yourself and your processor a huge favor, because without the chargebacks, your risk level drops significantly.

Happy trails,

Jeremy

How your gain can mean another (business)man's loss

Are all credit cards created equal?

He's about to find out.

I’m sure this happens to you pretty often.  You walk into your favorite restaurant, and you’re about to pay at the counter but you just realize you forgot cash, so you slip out your credit card, and the cashier looks at your uncomfortably, gesturing to the placard next to the register.  Cards only accepted for orders over $15.  Well, you think to yourself, guess I am trying the lava cake after all.  Your stomach thanks you for this in its own subtle way for the rest of the night as you toss and turn.  Why did this have to happen?

Obviously, credit cards are wonderful for consumers—that’s why we love to use them so much—and, because they’re in such high demand, card issuers, banks, and processors can charge companies to accept them for payment.  But, sometimes you’ll see companies go a step further than not accepting your card if you purchase under a certain dollar amount from them.  Sometimes they’ll surcharge you (which is only legal in a few states), or they’ll tell you you can only use a debit card.  Or, you can use anything but a debit card.  Or, you can’t use your American Express card.  What gives?

Three costs?  More like three hundred

The fact is that every credit card in existence has a separate cost associated with it.  Those costs are set by Visa, MasterCard, American Express, and Discover, and there are over 300 distinct card types in total.  The reason there are 300 separate costs, and not just three or four like people sometimes think, is because each of those cards is used by a different person, whether an everyday consumer or a business, and each card carries a different rewards plan with it.  The bottom line: when a business accepts your credit card, they are financing your rewards points.  Kinda cool, or kinda nasty, depending on how you look at it.

So, what’s the deal with all those different signs you see in restaurants or retail shops?  Apparently, not everyone is on the same page when considering how they’re being charged to accept cards.  Maybe you’re a business owner yourself, poised to take something away from this (and, I’d be honored if you did).  Let’s go over the three most common signs I see:

Ø  Cards only accepted for orders over $5/$10/$20

o       This one is logical from a businessperson’s perspective—but illegal in some cases.  Credit cards carry an interchange charge, which is a percentage of the total volume of the transaction, plus a markup, another percentage of the total volume, plus a flat per-transaction fee.  Interchange and markup are unavoidable, but that per-transaction fee looks smaller and smaller comparatively as your transaction amount grows, so business owners try to spurn you into buying more.

Ø  Only debit cards accepted

o       You’ll see this one at certain ARCO gas stations.  Their gas is generally cheaper than average, and the reason for that has everything to do with their card acceptance policy.  Debit cards carry an infinitesimally small interchange charge to businesses—only 0.05%, so even with a profit margin and per-transaction fee, business owners generally pay much, much less to accept those cards than other kinds of cards.  By only accepting debit cards, certain ARCO stations can charge less for their gasoline.  Kinda cool.  (And, really cool when you find one that does accept credit cards because the price tends to be the same!)

Ø  No American Express accepted

o       Why bag on American Express?  Well, there is a reason.  American Express uses a different pricing system than Visa and MasterCard in order to finance their customer rewards programs, which tend to be very…cushy.  They’re a viable option in spite of their high cost to accept because consumers demand they be accepted or they take their business elsewhere, simply put.  So, how much do businesses pay to accept an AMEX card?  Well, businesses that sell to other businesses can get away with paying 2.89% plus $0.15 per transaction, but some retail businesses pay as much as 3.50%.  Relatively speaking, that's pretty high.

An eye for an eye...or not

To answer the question from this entry’s title, no, not all cards are created equal(ly).  Your gain as a consumer participating in a credit card rewards program (or simply using a debit card, which usually carries no rewards, simply for the sake of convenience) definitely does mean another man’s loss in one respect.  However, because of the nature of things, businesses who don’t accept credit cards, or only accept debit cards, or don’t accept American Express, all turn away a little of their potential business.  And, businesses that don’t discriminate against card carriers end up paying a little more each month.  But, they gain customer appreciation and net revenue they would not have realized without taking those credit card payments.  Until someone thinks of a better way, that’s just the way it works.  But, don't despair, business owners!  You might be paying a little more than you would have every month, but your net gain in attracting customers who demand to use their rewards cards overshadows that small monetary loss.

Hope this helped,

Jeremy