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Comment by Insanity | Hacker News Reader

Serious question - why do credit card companies care? What harm does it do to them if people buy adult oriented games?

There's an unwritten compact between American politicians and American payment providers.

The payment providers get to charge a 2% fee on all transactions, without any pesky questions about antitrust law.

In exchange, when politicians ask nicely, the payment provider cuts folks Wikileaks, out of the financial system without any pesky questions about the first amendment.

I think the root of the problem is that it's just extremely unpleasant to moderate user-generated adult content. It's already difficult to moderate content on a somewhat serious online forum like Hacker News. Facebook moderators have been in the news and on South Park due to the emotional drain of the task. Who's going to sign up to pore over everyone else's weirdest thoughts given form? Certainly not me.

So this results in websites that allow people to upload pornography having lapses of moderation where something bad gets through every now and then. One day some creepy clip goes viral among some social conservatives and they try to make legal threats against the site and anyone they consider "affiliated". This creates problems, credit card companies are very protective of their reputations, and they usually decide the conservatives seem less bad.

Then someone sets up a new site that allows user-generated adult content and the cycle repeats.

I suspect they really couldn't give a shit either way but porn is not a remotely significant proportion of their profit and it's just easier to cave to the "think of the children" busy bodies. They'd like to keep their sweet gig out of the news as much as possible and standing up to that noise attracts attention for little gain.

The same reason they make it difficult to use credit cards for gambling.

Merchants that sell porn, gambling, and other vice have higher rates of fraud. If they allow them to accept credit cards at all, they charge them much higher merchant’s fees to do so.

Ah, gotcha. That rationale does make some sense then.

Well, until you realize that the merchants affected in this specific incidence, itch.io and steam, have had 12 and 21 years respectively of operation without causing issue for online payment systems, indicating that this is a BS excuse.

If the payment systems find that 90% of the fraud/chargebacks through these platforms is from 0.1% of the games, of course they would push for those 0.1% to be banned.

The payment networks don’t pay for the cost of chargebacks - that’s borne by the merchant or the card issuer, the network makes money either way.

This is one of those situations where the optimal level of fraud isn’t zero.

Who does chargebacks on Steam? They'd lose their whole account.

Why should that be the case?

Do the credit card companies go to Wal-Mart, find all the fraud is people buying cigarettes, spirits and razor blades, and tell Wal-Mart to stop stocking those?

Of course they don't.

Is there any evidence that this is the case, though?

If this was all there was to it, I'd expect a surcharge for risky payments instead.

Exactly. And that mechanism is already in place: some payment processors will accept sex industry vendors. They just charge more.

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