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I’m a Canadian developer who has worked with a few different adult websites and I’ve noticed that over the past decade the credit card companies have imposed restrictions on allowed adult content above and beyond what is legal in the USA. Several major websites have been impacted by this policy; having to remove content or communities from their sites in order to keep their merchant accounts.
This got me thinking that since ACH doesn’t have the same restrictions that the credit card companies enforce (beyond what’s legal as far as I can tell), why not create a provider like the original PayPal when it was bank account-only and handle direct bank-to-bank transcations? You can set up the payment system to be two factor (e.g. login + verification code over SMS or email) and make it way more secure than Credit Cards currently are and I’m sure you must be able do some sort of pre-auth check (like my debit card does at the gas station and you can do with Credit Cards) to ensure funds are available to avoid ACH returns.
I’ve been trying to research this but have no contacts in the financial industry and am unfamiliar with the terminology to even know what questions to ask.
A system like this would have to be set up to allow direct payments between two bank accounts (seller and buyer), as well as handle situations where the site owner takes a cut of the transaction.
Is this idea even feasible from your perspective? Would it require some massive amounts of capital or underwriting to do this? Is so, what sort of money are we talking about if most transactions would be in the $100USD or less (typically much less) range?
Thank you so much for your time.
Greetings!
As you, probably, know, adult websites and adult content sales belong to the category of the so-called “high-risk” industries and merchant category codes (MCC). If an entity that you partner with (acquirer, payment facilitator, payment services provider, or any other) supports your target MCC codes, then you can get underwritten by this entity and accept electronic payments for your products and services.
I do not know the policy of the clearing houses (ACH in the USA, or Interac in Canada) towards high-risk industries, however, they might be reluctant to support such type of business, because, they involve lots of compulsive purchases made by insolvent customers (resulting in chargebacks and refunds to be managed), as well as high level of both consumer and merchant fraud.
An ACH payment gets funded almost instantly, but if further background verification (which takes up to several months) indicates that some issues, described above, are taking place, then some entity has to take financial liability for them. So, this might present another problem.
