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Comment by ckdarby | Hacker News Reader

With all the PR a major bank that deals with high risk would have stepped in. There is too much volume and processing to turn a blind eye from this deal.

It should be noted that the cams see a lot lower chargebacks than subscriptions because of the shady tactics a lot of subscription adult sites use. Example would be not noticing a "$1 trial" addon being offered that recurs at like $44.95/month.

The rest of the chargebacks can be offset with 3DS/3DS 2 to shift the liability off the merchant (In this case OnlyFans) and onto the issuing bank.

I can answer any questions within reason if someone wanted to know anything more.

Source: Worked/wrote code for a high risk payment processor with volume +$1B/Yr.

Disclaimer: Opinions expressed are solely my own and only my own.

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Indeed, but it's odd that creditcard companies are so hard on merchants. Surely they could just offer some program where they hold payments in escrow until the transaction is final and just subtract chargebacks from the escrow account as necessary.

They already do this. Credit card transactions don't "finalize" for 180 days. Until they do, Visa can reach into the merchant's bank account and claw back the funds plus a fee.

Some people who buy porn will lie to other people in their life and open chargebacks if they’re found out, and dealing with those people is a nightmare because they’re lying and they get loud and angry and litigious to try to sell the lie so they don’t lose social standing and/or in-person sex.

Something like Apple Pay, that is rooted in a biometric/pin-verified payment (low fraud) rather than “enter your card number manually” (high fraud) would be a godsend for the industry, since it would detect the lie in the fraudulent chargebacks as described above.

Human beings in many world cultures are such a huge pain when it comes admitting and openly talking about paying for sex and sex-tangential things, that I can understand and grudgingly concede that higher processing fees are necessary. I do not know if they need to be 25%, but they do definitely need to be higher than for other industries.

Besides adult content, what else is considered "high risk"? What are the commissions in this space?

Also, major media outlets* are now doing bait and switch subscriptions. Does that make them high risk too?

*Bloomberg $2/mo->$35/mo after 3m

NYT $4/mo->$17/mo after 1yr

WAPO $4/mo->$10/mo after 1yr

Economist $25/qtr->$55/qtr after 1 qtr

> Besides adult content, what else is considered "high risk"?

Off the top of my head: gambling, medication, gift cards...stuff that's legal but more-likely-than-average to chargeback or default.

Is it feasible for someone to start their own payment processor?

Yes and no. It's not feasible for me, and I don't know you but I'm gonna go ahead and day it's not feasible for you either. The barriers to entry are extremely high, regulators need to be convinced you know what you're doing, as do banks, and you need to be accepted by enough places for it to be worthwhile people paying for things through you and merchants paying your fee to accept you. You can choose to do only parts of the payments processing picture and that's easier, but it's not easy. Bottom end startup costs would likely be in the hundreds of thousands, ignoring actually developing your payments platform (so just to get everyone onside and regulatory approvals etc), more realistically a budget of say low tens of millions might get one off the ground.

What do you think what they will do to handle the high risk?

The risk in this kind of model was much lower when I worked at the payment processor. Direct content like this was always lower chargebacks than subscriptions/trials.

OnlyFans should be aggressively poaching people from the other companies in this space but pay them SF salaries. The expertise they'll get hiring existing employees in the space will help them.

If you've already worked in this industry you'll know to do 3ds/3dsv2 to shift some liability to issuing banks. The card networks have different rules based off their region like MC NA and MC Europe. There are some loopholes to shifting your acquiring process into other regions to get more liability shift as a merchant. Bin routing to maximize your approval ratio, the higher your non-chargeback volume the easier it is to deal with the chargeback volume.

Introduce micro transactions to pad volume. Users less likely to chargeback you want to have each micro transaction as a standalone charge because it increases your volume at the cost of additional card fees. Users unknown or likely to chargeback you want to "batch" or roll these charges into a single charge because then it is only a single chargeback that can happen instead of multiple smaller ones.

Plenty of other stuff...

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