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Comment by jasonlotito | Hacker News Reader

Everyone talking about crypto is forgetting that there are payment providers processing Visa and MC for adult content. The difference is that PayPal and Stripe (and others) aren't setup to process those kinds of transactions. Payments need to be coded properly. The issue wasn't that Visa/MC won't process adult content (they 100% will), but you can't sell adult content when you don't code it as adult content.

Finding a processor that specializes in that is what they should do. This will allow them to process adult content on those processors properly coded. Of course, those processors generally charge a higher amount because of the greater risk.

But none of this is new or crazy. It's decades old, and shouldn't be a surprise to anyone wanting to conduct business in the adult space online.

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Correct transaction coding is required, sure, but I think you buried the lede a little. Processing transactions for adult content is very high risk because of the increased rate of chargebacks (from fraud) and the exposure to illegal activity (csam, trafficking). Stripe, PayPal etc. are very protective over their standing with card providers and regulators. Stripe could charge more to process these transactions (even enough to cover the increase in chargebacks) but the risk of processing illegal transactions isn’t worth it at any price.

100% agreed. I didn't bring that up because there is a LOT more I could say on the topic, but wanted to try and keep it a short and concise as possible.

But yes, reputation is also critical. Amongst many other things.

I've been under the impression that MC/Visa claimed this is 'illegal content'. Seems like its more than just a coding issue, but an issue of payment processors acting as gatekeepers of what is allowed to be purchased.

Nah, you can purchase anything legal (and adult content is legal in many jurisdictions).

Problem is, different classes of goods and/or services have very different rates. Like, if you sell grocery it is 1%, if you sell computer games it is 2.5% and if your sell adult content it is 5% if you can see physical card (you are magazine stall with adult magazines) and 7% if you don't see card (on-line sell). Numbers are totally made up by me here, BTW, but principle is the same.

You see, Visa and MC are credit card system, so if transaction was done by stolen card (and probability of that event depends on the goods sold and type of point of sale) and it was charged back by proper card owner, it is Visa/MC who pays for troubles.

It is what why proper transaction coding is so enforced.

Many (a lot) of transactions are with effectively debit cards (overdraft limit is set to 0.0 by issuer bank), but technically any Visa (not Electron) and MC (not Maesto) card is credit one.

On the other hand, I didn't hear about successful charge backs for many years. Like, 20 years ago it was trivial with good European bank (one phone call, zero paper work — I seen this several times in person!), and now it is much harder.

And one more question: why do we need payment processors at all?! I don't need it to pay with my card, why do I need to accept payments? Why banks don't want to be payment processors directly for their clients? Why do we need these MitM?

How does the type of transaction help determine fraud?

Are you saying it's because these games weren't properly flagged as an 'adult' transaction? When I buy Call of Duty from GameStop, is it flagged as an 'adult' transaction?

Also, didnt MasterCard directly say they're enforcing their existing guidelines against "unlawful purchases, including illegal adult content.” ? It doesnt seem like it's just a coding issue....

Type of transaction directly influences commission of the system, as high-risk transactions are linked with higher commission.

If you sell adult products you are subject to higher commissions. If you sell adult products and don't mark these transactions as adult products you evade higher commission.

I don't say I agree with this logic, and I think tat Visa and MC are f*cking bastards, but it is how it works now.

It's convenience. People have gotten used to MC/Visa.

Debit cards are just MC/Visa that comes straight out of your bank account.

A true alternative would need to tie into banks, work with the current payment systems seamlessly, and offer credit options with reasonable terms.

Basically, it would have to be either funded by billionaires as a revenge passion project on MC/Visa or established by a country like the US as a public infrastructure.

I don't speak about MC/Visa in my last sentence but about Stripe, PayPal and all this middle layer between me as entrepreneur and my bank account. Why should I use them and not my bank directly? Why does this business exist?

MC and Visa is inter-bank systems, I don't like what they do with policies, but I understand why they are needed to "link" all banks around the world together and allow any acquiring bank to get payment from card of any other issuing bank without direct link between them. It is understandable.

And I, as card holder, don't need any men-in-the-middle when I pay at brick-and-mortar shop: such shop has account in some other bank and has payment terminal from this bank, not from PayPal. Why does online shop need Stripe, PayPal or other men-in-the-middle?

> And I, as card holder, don't need any men-in-the-middle when I pay at brick-and-mortar shop: such shop has account in some other bank and has payment terminal from this bank, not from PayPal. Why does online shop need Stripe, PayPal or other men-in-the-middle?

Most likely the shop DOES have an intermediary like Stripe and PayPal, just not Stripe and PayPal. There are other POS providers out there. They might also be dealing directly with a bank and using a 3rd party for the equipment and integration. But all that is different from the web. POS/brick and mortar is different from online. It's generally more secure and less prone to fraud.

> Why should I use them and not my bank directly? Why does this business exist?

You can. You can literally go to a bank and ask about opening up a merchant account. However, the overhead is much higher. Basically, you'll be opening up your financial history and have a lot of rule sand regulations you'll have to follow. And you'll have to do the integration work if it's not already done. And don't expect Stripe/PayPal levels of easy integrations.

And, on top of all that, you have PCI compliance you have to manage, and that's no small thing. On top of that, customers will be looking for PayPal/Stripe/Apple Pay/etc. Why? Because they are customer friendly and more convenient.

But you can 100% go the route of getting your own merchant account, going through all the paperwork, putting aside sums of money, integrating, taking on all the risk yourself, by all means.

Or you can slap PayPal/Stripe up and be done.

Probably because dealing with MC/Visa directly is a PITA, and that is likely on purpose even though they have a stranglehold on non-cash in-store payment processing worldwide.

Every payment processor went through some version of this: https://kindgeek.com/blog/post/what-is-a-payment-processor-a...

The convenience fee of not having to deal with that as a business owner seems worth it to me.

You're saying that all the video game retailers need to do is use the correct Merchant Category Code, but which one is that? A sexually explicit video game seems to match code 5816 ("Digital Goods: Games") exactly. There doesn't appear to even be a specific MCC for pornography that one could argue the game fits into.

> You're saying that all the video game retailers need to do is use the correct Merchant Category Code, but which one is that?

Apologies if that's what it sounds like. It's not. While ensuring you use the right code is part of it, it's also making sure that the bank/payment provider is also aware of what you are transacting. What code should you use for adult games? Don't ask someone online. You should talk to your bank/payment provider and make sure they understand what you are doing on that account and how it will properly be coded.

It's not just the code, but also the account and your relationship with the provider.

Keep in mind that often there are several categories something can fit into, and it's important to work with your provider to have a clear understanding of what they allow and are willing to process.

But the code for an adult game already exists, right? M rated games have existed for years...even X rated. How did gamestop sell me GTA? Is there not sex scenes and violence in the game?

Also, didnt MasterCard directly say they're enforcing their existing guidelines against "unlawful purchases, including illegal adult content.” ? It doesnt seem like a coding issue....

Mature and Adult games are different. Think R and XXX. Also, just because there is a sex scene doesn't make it a porn game.

> Also, didnt MasterCard directly say...

They say a lot of things. Doesn't mean it's accurate.

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