If you have an adult gateway then you’ve seen a jump in sales for your live cam, chat, dating and other websites for the 18-and-over crowd. We recently blogged about the spike in online sex toy and sex doll purchases. Overall demand from the adult entertainment industry has reached a fever pitch. Porn has never been so popular, thanks to so many people still spending most of their time at home. Cam, adult dating and porn-friendly social media apps are all providing an entertainment fix. Especially for those whose usual distractions have come to a sharp halt (such as sports).

As a former executive in the early years at Mansef (now known as PornHub and Brazzers), I helped build a payment processing platform from scratch for all the adult properties under the banner. So, as a leading authority in payments for porn, dating personals and similar adult categories, I have a unique perspective on accepting credit cards online.

If you’re not worried about the effect rising fraudulent purchases and chargebacks have on your high-risk payments, then you should be. With those spikes in sales, there are increasing reports of chargebacks, fraud and refunds. Consumers are starting to feel the economic pinch of the pandemic. As a merchant within the adult entertainment industry, you need to find ways to protect new and future sales. This guide will show you how and what it takes to scale carefully as we move out of the lockdown.

The impact of self-isolation on the adult entertainment industry

Adult content is continuing to grow. Even the world’s most popular porn site PornHub has added an average of 14 million new visitors per day. That represents an increase of 11.6% in the space of a month. PornHub is by far the biggest player in the industry. So you can imagine how fast smaller adult content platforms are growing.

The surge is due to a couple of factors. Firstly, single people that use sites or dating apps to hook up can no longer do so. Also, patrons that frequent strip clubs can no longer visit or are scared to be in public places. Secondly, those separated from their sexual partners have no outlet. For this reason, many individuals have turned to porn and cam sites in particular. Individuals are using these to feel connected to a real-life performer for increased arousal.

On the other side of the coin, those without traditional sex work have turned to online platforms to earn money. The membership platform OnlyFans has become particularly popular. The site announced that subscriptions were up 50% in April. The downloadable app allows adult performers to upload explicit content to their subscribers. Those who work in the traditional adult entertainment industry have turned to it in droves. The site sees about 200,000 new users every 24 hours. Alternative online platforms have reported similar increases.

Even as North America and Europe open back up again, merchants can take advantage of customers’ apprehension. Even after relaxed social distancing measures, new sexual gratification habits are set to continue. Cam sites, in particular, are well-positioned. They can provide as close to the real thing as possible. Virtual reality (VR) technology also continues to come down in price. Presenting an opportunity to make adult dating sites and sex cam services even more immersive.

Adult entertainment customers feel the effects of the pandemic

Unemployment levels are at record highs. For the adult entertainment industry, that nudges up risk and fraud in what is already considered a high-risk vertical. Reports are already coming in from leading players such as OnlyFans about the mounting level of chargebacks. The issue is that once customers receive what they were looking for, buyer’s remorse sets in as bills for essentials start piling up. Many issue chargebacks for no other reason other than guilt. While many others will seek less damaging refunds that will still hurt your bottom line.

As an adult entertainment, cam or dating merchant, you’ve got to protect your merchant account and payment processing capabilities. While many industry reports are still being collated, instances of online fraud grew by 400% in March alone. Expect an even higher figure upon the release of April and May’s numbers. And it’s not just friendly fraud motivated by buyer’s remorse. Fraudsters view increased sales as an opportunity to blend in with legitimate customers. There’s already been an increase in card testing attacks and account takeover fraud.

Anti-fraud tools are a must for an adult gateway

Bearing the above in mind, implement better protection as your sales continue to increase. Predictive machine learning solutions can prevent fraudulent transactions and chargebacks. For example, combining 3D-secure routing (3DS)with leading anti-fraud vendors such as Teradata, can reduce false positives by as much as 80%. Many leading anti-fraud vendors work with banks directly. Thus, it’s worth approaching your acquirer to see if they can help you to add this layer of protection to your payment processing.

When it comes to chargebacks, use industry-leading solutions such as Ethoca and Verifi. They reduce chargeback fraud instances by facilitating an information flow between all parties. Preventing a chargeback from happening unnecessarily. If chargebacks have become part of your daily routine, also consider hiring a chargeback management specialist. Finally, it’s a good idea to limit purchase values or force an additional verification after certain spend amounts. For example, every $150 in cam minutes can then have a pop up asking the customer to verify his identity to buy more.

Do you operate a live chat or cam site? Are you worried about your adult gateway? If so, take a look at our ultimate guide to payment processing for cam sites to assess your options!

Diversify products to lower risks linked to an adult gateway

Another way to fight back against friendly fraud and chargebacks is to diversify products or services offered. For example, you may offer high-ticket private live performances. Can you diversify to sell several low-priced pre-recorded videos as well? Not only will this lower the risk of buyer’s remorse, but you’ll also build up payment processing history. This will help to protect your adult cam merchant account and keep your acquirers onside.

Another idea is to expand your services. If you operate a cam site, explore expanding to adult dating. Customers are still going to be wary of engaging in physical sex acts with strangers. Therefore, now is the perfect time to launch a remote adult virtual dating service.

Physical products are another area you could expand into. As mentioned, sex toys and sex dolls sales have boomed. With international supply chains returning to some sort of normality, this is the perfect time to strike. However, be careful of offering bundles that include a free sex toy. Many customers will try to issue a chargeback once they have viewed the content and received their product. For shipping, don’t forget to introduce strict delivery policies and verify addresses to prevent fraud. Give your customers shipping timeframes and keep in touch regularly to advise of any delays.

Along with the demand for toys, some amateur couples are experimenting with amateur porn production. With job insecurity so high at the moment, people are tempted. This trend should come as no surprise. The figures that some amateur models are making on online platforms dwarf their normal salary.

Enhance booming adult entertainment sales by protecting your merchant account

A sales boom is a positive step for any merchant. But, the current internet usage explosion is leading to a similar increase in fraud and chargebacks. Therefore, as sales increase, come up with a strategy to safeguard your payment processing. After all, higher traffic and sales is not advantageous if it results in a terminated adult gateway.

Diversifying your product offering is a start. But, implement better anti-fraud and anti-chargeback defenses too. Also, limiting transaction amounts can protect you from incurring the wrath of acquirers for a big-ticket chargeback.

Here at DirectPayNet, we have over a decade of experience in helping high-risk merchants in the adult industry.

Email us now to reach our team and discuss fraud prevention and payment channel diversification.