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Comment by ryandrake | Hacker News Reader

I'd love to understand the business benefit to PayPal of censoring its customers, particularly when the content they are trying to censor is not "criticism of PayPal." Has PayPal actually measured some negative effect on its bottom line when people who use their service talk about sex?

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Disclaimer: I'm a PP employee.

While it's complex (and I don't fully understand it all myself), the simple answer is risk management / fraud. Adult content tends to be extremely risky from a fraud and legal compliance perspective and companies like PayPal (and Stripe, and Google Checkout, among others) choose not to do business in this arena because the risk / reward model just doesn't justify it.

Specifically, subscriptions to sites that offer digital adult content are not allowed per ToS:

https://www.paypal.com/us/selfhelp/article/faq569

Netflix certainly offers "digital adult content" in shows like Easy, movies like Below Her Mouth, but PayPal accepts their business. You can buy content on Amazon with PayPal, which sells a TON of out and out porn.

Is it maybe more fair to say that small sites that offer adult content are not allowed?

Likely it's those selling predominantly adult content. Amazon's offerings are not predominantly adult in nature. Nor are Netflix's. Presumably, if there's a higher occurrence of fraud with those merchants whose wares are predominantly adult in nature, processors consider these types of business more risky. However, they (processors) already have a tool at their disposal to combat fraud: the rate that's charged to the merchant for taking payments. My understanding is that riskier businesses tend to pay a higher rate for their card processing as kind of an insurance against (inevitable?) fraud. And then it would be my opinion that an account shouldn't get terminated except due to actual (excessive?) fraud.

> And then it would be my opinion that an account shouldn't get terminated except due to actual (excessive?) fraud.

Except VISA won't tolerant a fraud rate that requires 300% fees to cover costs.

From what I've read about this elsewhere, sites offering mainly or predominantly (what some may take as) pornographic content are much more likely to have credit card charges disputed and refunded. Husband buys porn, wife notices the charge, husbands denies it was him and demands refund. Minor buys porn with parent's account, gets caught, denies he did it, parent disputes charge. The payment processor ends up eating the disputed charges, to the point where it is no longer profitable to do business with the sites.

People are much less likely to deny that they opened a Netflix subscription.

FWIW My understanding is that (non-educational, etc) sexual content tends to have a much higher chargeback / dispute / resolution cost. It's always about the dollars and cents I guess.

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