educational

A Processing Alternative?

There seems to be a disturbing trend lately of payment processors dropping adult processing. With the loss of PayPal, it's now getting even tougher for small shops to find a way to sell adult merchandise without getting their own merchant account, with all of the trappings that implies…

While VISA/MC aren't saying NO adult sites (unlike AMEX), it's becoming apparent that having a merchant account and self-processing transactions is very likely the only viable way for webmasters to process credit cards for future tangible sales.

For small operations - which used to be called "mom and pop", but which are much more likely these days to be a couple and their camera - the challenges can be large. For those with credit problems, they may be insurmountable.

Some folks on the XBiz boards have discussed the concept of creating something "by webmasters for webmasters." Let me suggest one possibility:

A New Idea
A small group of webmasters/mistresses could create a corporation, and then that corporation could obtain a merchant account and handle processing for the group. Like creating your very own "PayPal!"

The books would have to open to all members at all times (probably in a secure online area) so that members of the corporation could ensure they were being properly paid. The officers should be elected annually by popular vote, and all members should be able to vote on all issues that would impact their businesses personally.

There would be a possibility of double taxation, as the corporation would be taxed on the monies it received (as per its incorporating country's rules) and then the individual members would owe tax (as per their individual country's rules) on the distributions that they receive. However, this is just a fact of life for corporations, and it's better than nothing, and the impact can be varied upon the countries involved.

However, this could be mitigated by creating a Delaware or Nevada corporation, which would be subject to less taxation. I personally prefer Nevada (no income tax) corporations, because they also have great additional privacy protections for members. A "physical presence" in Nevada can be arranged relatively easily, as there are attorneys and other companies that will act as an agent for service of process and an official "headquarters", no matter where the individual members might reside.

There should be stringent rules for members to run their sites so as to avoid chargebacks. In addition, it might be best to have two merchant accounts - one for non-tangible subscription sites and another for tangibles like videotape sales - as the banks regard those types of transactions differently, risk-wise.

Some Challenges Ahead
As other people have noted, challenges include:

• Scammers seeking to use the group's account because they've burned out their own

• Program development

• Accounting to the group for each penny in and each penny out

• Customer Services including help desk and problem resolution

• Preferably a per-webmaster fee of $100 or less

On the other hand, benefits would include:

• Legal protection for the individual webmaster

• "Member" sites could allow sites from countries with little or no credit processing options

• Pooled resources allowing access to processing services and more that individuals would have difficulty reaching

• Pooled resources could get better deals on content purchases, hosting, advertising purchases, specialized scripting purchases, sponsor deals, you name it!

• Pooled resources allowing access to legal services (on a per country basis) at a reduced rate

• The corporation could obtain health benefit insurances or other insurances for the members (on a per country basis)

There are ways to meet the challenges noted above, such as strict requirements regarding chargeback rates, hiring outside services to perform the accounting and payment services, etc. If you can think of other challenges or options, please post them using the link below so that we can discuss them.

If you're a small operation, or part of one, and you think that maybe such a joining of webmasters under one umbrella might be useful to you, then consider this type of set-up and let me know your concerns. This is just an idea, but I think it might have some real merit. Let's dissect it carefully and determine the real potentials possible. Your input will be appreciated.

Copyright © 2025 Adnet Media. All Rights Reserved. XBIZ is a trademark of Adnet Media.
Reproduction in whole or in part in any form or medium without express written permission is prohibited.

More Articles

profile

WIA Profile: Lexi Morin

Lexi Morin’s journey into the adult industry began with a Craigslist ad and a leap of faith. In 2011, fresh-faced and ambitious, she was scrolling through job ads on Craigslist when she stumbled upon a listing for an assistant makeup artist.

Women In Adult ·
profile

Still Rocking: The Hun Celebrates 30 Years in the Game

In the ever-changing landscape of adult entertainment, The Hun’s Yellow Pages stands out for its endurance. As one of the internet’s original fixtures, literally nearly as old as the web itself, The Hun has functioned as a living archive for online adult content, quietly maintaining its relevance with an interface that feels more nostalgic than flashy.

Jackie Backman ·
opinion

Digital Desires: AI's Emerging Role in Adult Entertainment

The adult industry has always been ahead of the curve when it comes to embracing new technology. From the early days of dial-up internet and grainy video clips to today’s polished social media platforms and streaming services, our industry has never been afraid to innovate. But now, artificial intelligence (AI) is shaking things up in ways that are exciting but also daunting.

Steve Lightspeed ·
opinion

More Than Money: Why Donating Time Matters for Nonprofits

The adult industry faces constant legal battles, societal stigma and workplace challenges. Fortunately, a number of nonprofit organizations work tirelessly to protect the rights and well-being of adult performers, producers and industry workers. When folks in the industry think about supporting these groups, donating money is naturally the first solution that comes to mind.

Corey D. Silverstein ·
opinion

Consent Guardrails: How to Protect Your Content Platform

The adult industry takes a strong and definite stance against the creation or publication of nonconsensual materials. Adult industry creators, producers, processors, banks and hosts all share a vested interest in ensuring that the recording and publication of sexually explicit content is supported by informed consent.

Lawrence G. Walters ·
opinion

Payment Systems: Facilitator vs. Gateway Explained

Understanding and selecting the right payment platform can be confusing for anyone. Recently, Segpay launched its payment gateway. Since then, we’ve received numerous questions about the difference between a payment facilitator and a payment gateway. Most merchants want to know which type of platform best meets their business needs.

Cathy Beardsley ·
opinion

Reinventing Intimacy: A Look at AI's Implications for Adult Platforms

The adult industry has long revolved around delivering pleasure and entertainment, but now it’s moving into new territory: intimacy, connection and emotional fulfillment. And AI companions are at the forefront of that shift.

Daniel Keating ·
profile

WIA: Sara Edwards on Evolving Clip Culture and Creator Empowerment

Though she works behind the scenes, Sara Edwards has had a front-row seat to the evolution of adult content creation. Having been immersed in the sector since 1995, she has a unique perspective on the industry.

Jackie Backman ·
profile

Segpay Marks 20 Years of High-Risk Triumphs

Payment processors are behind-the-scenes players in the world of ecommerce, yet their role is critical. Ensuring secure, seamless transactions while navigating a rapidly changing regulatory landscape requires both technological expertise and business acumen.

Jackie Backman ·
opinion

The SCREEN Test: How to Prepare for Federal Age Verification

For those who are counting, there are now 20 enacted state laws in the United States requiring age verification for viewing online adult content, plus numerous proposed laws in the works. This ongoing barrage has been exhausting for many in the adult industry — and it may be about to escalate in the form of a potential new AV law, this time at the federal level.

Corey D. Silverstein ·
Show More