It sounds like they got hit by people who were unaware of what FetLife is following due diligence in processing card transactions. As far as I can discern, it's just a social network with a darker focus, which led to an overreaction from a card network.
Why haven't you embraced Bitcoin to get away from the restrictions of the banks / credit card companies? - @Eibon
Answer:
We used to accept bitcoins through Coinbase. They dropped us a year ago because we are a kinky site. No joke.
If a Bitcoin site wants to accept credit cards, then they have to adhere to rules set forth by the credit card companies.
Yes, there are other options, and we are going to look into them, but options like Bitcoin are a nice to have and not currently a viable replacement for being able to accept credit and debit cards on FetLife, no matter how much one might want to believe otherwise.
When we offered Bitcoin as an option, it was responsible for less than 0.1% of our daily transactions.
There are also other options such as various OTC trading desks or Gemini's daily auctions. And finally, there are several other full-service payment processors that they could try besides Coinbase.
Coinbase was a really bad pick for them. It's almost certainly the single least likely option to be able to support fringe businesses, due to their close relationship with banks and credit card companies.
Of course, attempting to do so would likely get you investigated, because it looks illegal.
Same goes with bitcoin - if you can find a server company that accepts your bitcoin - you're under no obligation to only buy things using dollars, assuming you are properly reporting your transactions.
(Disclaimer: IANAL)
In particular, I think Verotel does Bitcoin processing for adult merchants.
They're not going to bother going after this kind of thing, they'd lose money over it. It doesn't make sense from a financial perspective.
So it looks like any use of a cryptocurrency has to be completely decoupled from the credit card world.
Step two: Get in power
Step three: Make refusing credit transactions to patrons on grounds of "morality" illegal.
> Get in power
Almost impossible in a FPTP voting system
This is really one of those issues that cuts across party (in the US 2 party system) lines. We've seen the crackdown on gun shops, marijuana merchants, and adult industry companies. I don't think I've heard questions asked my the big media to candidates about their feelings toward these type of laws.
I might not like some of these businesses, but every legal business should be able to get paid. I am not comfortable with a politician's beliefs affecting the banking of a legal business.
Normally, I would like the market to handle this but as the article points out, this is not really a free market. "The banks maintain a shared list that contains all merchant account closings." makes sense from a fraud point of view, but it is a process without appeal. Second, banks have a history of legislation requiring fairness of lending. It is probably time to look at the credit card companies with the same eye.
The issue with firearms sales seems to be at the payment processor level, not the credit card issuers. The big names (e.g., Authorize.net) categorize firearms sales as "highly regulated industries" - even though they really aren't.
There are payment processors out there that specifically work with FFLs (Federal Firearms Licensees, a/k/a gun stores), but they charge a couple of percent higher transaction fees, and they just seem a little skeezy. A lot of them also service the adult industry.
edit: I got this mixed up with F-List, which is similar in function with a narrower focus.