It has become standard operating procedure for players in the online adult industry to be sucker-punched and pick-pocketed when their online processor suddenly goes out of business. That is why it has become imperative for any business, which is revenue-reliant on “downloadable” goods and services, as is common in the “high-risk” markets, such as adult entertainment and gaming, to be educated on the critical issues related to merchant banking and online processing laws, regulations and limitations. Selecting a solid and reputable processing company is important and can make you feel protected in some respects. However, this can create a false sense of security if your processor suffers an unexpected mishap, causing financial ripple effects throughout its organization. When the ripple hits your doorstep, will you be prepared to take the appropriate actions to protect your business? Do you know the dangers you are facing when you elect to venture into adult online entertainment? Do you know the laws that govern your online transaction processing activities, as well as your rights under those laws? If not, you should…and we can help! Our new MCC 5967 handbook is available now, to help you survive and succeed in this difficult environment.You most likely know the “basics” regarding online processing. To accept major credit cards and online checks, a Merchant Account is required. It is also essential that you enlist a stable processing company that has expertise at detecting and blocking fraudulent transactions. The penalties and fines associated with high levels of fraud, excessive chargebacks and failure to follow certain banking regulations are among the deadliest and most costly dangers faced by online adult purveyors.
Whether from lack of knowledge, a failure to heed warnings sent by banks and processors, or an irrational disregard for bank rules and regulations, offending businesses can be assessed fines up to $500,000, while having their bank accounts frozen. Offenses include “miscoding” of transactions, which often occurs when misleading information about the category of business is provided to the bank. The aggregation of funds and accounts is forbidden by MasterCard, but is done quite frequently, resulting in processors being reprimanded, fined and/or put out of business. Uneducated, uninformed and unprepared Webmasters often fall victim to high-risk “agents”, who represent themselves as professional brokers, mediators or business consultants…but frequently are in it for the “quick hit”, running off with as much money as they can grab from any party they have access to. For many old-timers, who have been unable to keep pace with the rapidly changing transaction processing environment, failures are a virtual certainty. For the pragmatist, who seeks long-term success and is willing to get educated and follow the rules, success is at hand. The big challenge for most Webmasters is locating the proper resources, identifying the most critical documentation and then finding the TIME to read, absorb and translate the massive volumes of legal mumbo-jumbo in front of them. This is why many Webmasters have come to rely on their processing companies to protect them from fraud and chargebacks, hoping to minimize their risks and stay within the guidelines of the regulatory organizations.
One of the major challenges for both merchants and their processors is that the Card Association rules are modified frequently and the actual Rule Book is not commonly made available to them. Often, the Rule Book is provided to the acquiring banks, which are directly linked with Visa and MasterCard. However, it does not make it any farther “upstream”. Adult processors and merchants are often kept “in the dark” as it relates to the evolving rules and regulations in the banking industry. As a result, few processors or merchants are capable of staying abreast of all the particularities. Some violations are considered minor, generating warnings, but no financial penalties. However, other violations are considered severe and when discovered can result in massive retroactive fines and penalties, capable of dealing a financial death blow to the merchant and/or the related processor.
A common example of such a severe violation is when a merchant’s transactions are miscoded by the processor. The processor may have no idea that a rule such as “MCC 5967 even exists, since the rules and regulations were originally intended for the acquirers and did not relate to Merchants. However, with the advent of the Internet and e-commerce, the rules of the game have changed. As a result Merchants must get educated and prepared for the challenges presented when they elect to sell membership-based adult services over the Internet. When merchants in high-risk categories are armed with knowledge and preparation, with a full understanding of their rights and responsibilities, they are better positioned to reach their full potential and create stable, long-term profitability.
With the new handbook released by Standardpay, a major EU-based worldwide processing company, you can take a giant step forward in learning about your rights and responsibilities. You’ll get insight into the rules and regulations governing adult processing, as well as the fines and fees imposed when you and/or your processor breaks the rules. Our MCC 5967 handbook will show you the positive and negative elements of high-risk, online transaction processing. It is our pleasure to share this valuable resource with you. Please be our guest and read it here:
