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RedEye · 12-06-2003

A few points if You allow me

1. There are no adult acquiring banks other than FDMS in USA now at all.
There used to be Humbolt, RedWood and FDMS.
Humbolt recently closed all adult merchant accounts.

I heard that Redwood did the same. Not sure if it's true.

You can always get an adult merchant account for Your site in a small bank in USA somewhere where You leave where You got friends and there are plently of examples, however I think they just dont code it as adult and thus violate the rules of VISA/MC.

It will work only as long as Your turnover is small.

2. DeutscheBank has not quit on adult. PAGO has quit on adult. PAGO is a huge processor, daughter of DeutscheBank. However PAGO is not the only way to get to DeutscheBank. Morover there are at least 3 more acquiring banks in Germany and most do take adult.

The difference is as usual, for PAGO You could have applied with just an EU company which includes simply offshore for non residents jurisdictions such as UK, for Deutschebank and other acquirers You got to be really German to apply.

By the way it's a very common story in Europe. Although VISA rules require the acquiring bank to deal with companies only in it's VISA region (which is EU) most european acquiring banks will deal only with companies located not only in the same region but in the same country as well where the acquirer sits. So if You want to become a client of Euroline.Se for example which seem not to have any problems with adult You'd have to become swedish.
Which is NOT easy.

3. One of the problems behind the fact that only a few acquiring banks are OK with adult at the moment is a very simple fact - the existance of third party billers. Like Ibill, CCBill and Epoch. Acquirers SMELL trouble.

On contrary to what is being said all the time these companies along with a few non-adult third party billers like 2checkout.com are non compliant with current VISA/MC regulations.
According to VISA and MC there is simply no such thing as third party billing.

What does exist though is a difficulty without too much exposure to close down giants like Ibill, CCbill and Epoch or PayPal. The problem lies within a simple fact that though these companies violate the credit card companies bylaws they are not violating real life laws. In this case with a proper amount of money it may become very difficult to close such a company down. That is the reason behind IPSP regulations in USA and the fact that at this time only the biggest third party billers survived.
And that is not for long as well.

The problem is NOT that these companies operate against rules of VISA or MC. For the correct amount of money its no problem to change the rules You know. Always been so.
The problem is that third party billing is against common sense.

Let me explain.
The number 1 thing of importance in financials is liability.
So to say "who gets blamed when something goes wrong?" Because in the world of financials something may always go wrong.

Suppose Mustafa in Saudi Arabia purchases 3 day trial membership for www.fuckingelephants.com through www.fuckingbill.com which is against for example the holy book of Koran since fucking elephants in an unholy act according to the book. The secret service of Saudi Arabia according to the civil law there finds Mustafa and cuts off his penis and kills all of his relatives.

Who is to blame?

Obviously the site owner FuckingElephants.com whos responcibility is to be sure that whatever he sells is ok where he sells it.
However site's owner Ivan Ivanov obviously doesnt give a fuck for poor Mustafa and has a nice vacation spending Mustafas money. And nobody is able to find Ivan as long FuckingBill.com says they got no fucking idea who Ivan really is and where he is and the funds went to Ivan's offshore bank account in the bank of Alaska. The next thing which happens with FuckingBill.com is that they close down the office, run and have excellent time somewhere on Seychelles.

Therefore the question goes who the fuck allowed FuckingBill.com to work without any serious background info check on Ivan?
The question of course goes to the acquiring bank. However the acquiring banks UNLESS it's forbidden by VISA rules tells everybody to go fuck themselves with all questions and suggest to ask VISA why it is allowed to use their system in such a way and to accept third party billing companies.

So who's to Blame? In the end they blame VISA.

So that is what I call against common sense.

Because in real life in finances there's always liability. If You process moneys of a third party You are supposed to be licensed to do it and therefore You are allowed by law to do it because the law insures that if You have license than You keep appropriate records of whom You deal with.
And that is the difference.

4. Even if Epoch, CCBill and Ibill combine their efforts they will not have enough funds to build a bank in USA or Europe. They are not even close to be big enough for it in established countries. To form one or to buy one. Banks in solid regions like EU or USA are the most solid business one can find. Therefore it's the MOST expencive. There is a rumour that a VERY VERY small bank in Switzerland is for sale now. Price is half a billion USD. Epoch, CCBill and Ibill make only around 3% or so of profit from the turnover. If the turnover is around 2 billions for all of them the overal profit is about: 60 millions per year. I suspect much less by the way.

Further, VISA and MC will not grant a new bank processing license in EU or USA. In third world countries the VISA/MC rules are different and chargeback regulations apply to the processor itself as well, if the processor goes over 0.35% it is looking at trouble. And in third world its impossible to fight it - You just loose VISA/MC processing license the next day and that's it.

5. If I were You I would start thinking how to profit on adult without rebills. Because that's the next thing which is going to happen.
Visa introduced a new protocol 3D Secure, You saw already a light version of it called Verified by Visa.
All banks in the world slowly migrate to this protocol at this moment. The protocol cuts at least half of the chargebacks but its very difficult to run rebills with it.

6. As soon as Ibill , CCBill and Epoch will go down than the situation will become better.

Prior to this moment no acquirer would try doing anything to simplify the procedure of opening direct merchant accounts for merchants because all OK porn sites (non extreme, based in USA or in EU) worked with Ibill, CCBill and Epoch.

Out of 10 adult merchant accounts applications which go to acquiring banks who allow processing of adult 9 are probably from people who do not qualify for Ibill, CCBill and Epoch. Which basicly means trouble more or less.

Well...it was so a year or two ago. And three years ago prior to IPSP regulations You may imagine what kind of people looked for their own merchant accounts. :-) The banks had NOTHING good left for them.

At this moment the situation is changing. People realise where the processing is coming to, time will pass and banks will move along.

12-06-2003	#15
RedEye Members Join Date: Oct 2003 Posts: 42	A few points if You allow me 1. There are no adult acquiring banks other than FDMS in USA now at all. There used to be Humbolt, RedWood and FDMS. Humbolt recently closed all adult merchant accounts. I heard that Redwood did the same. Not sure if it's true. You can always get an adult merchant account for Your site in a small bank in USA somewhere where You leave where You got friends and there are plently of examples, however I think they just dont code it as adult and thus violate the rules of VISA/MC. It will work only as long as Your turnover is small. 2. DeutscheBank has not quit on adult. PAGO has quit on adult. PAGO is a huge processor, daughter of DeutscheBank. However PAGO is not the only way to get to DeutscheBank. Morover there are at least 3 more acquiring banks in Germany and most do take adult. The difference is as usual, for PAGO You could have applied with just an EU company which includes simply offshore for non residents jurisdictions such as UK, for Deutschebank and other acquirers You got to be really German to apply. By the way it's a very common story in Europe. Although VISA rules require the acquiring bank to deal with companies only in it's VISA region (which is EU) most european acquiring banks will deal only with companies located not only in the same region but in the same country as well where the acquirer sits. So if You want to become a client of Euroline.Se for example which seem not to have any problems with adult You'd have to become swedish. Which is NOT easy. 3. One of the problems behind the fact that only a few acquiring banks are OK with adult at the moment is a very simple fact - the existance of third party billers. Like Ibill, CCBill and Epoch. Acquirers SMELL trouble. On contrary to what is being said all the time these companies along with a few non-adult third party billers like 2checkout.com are non compliant with current VISA/MC regulations. According to VISA and MC there is simply no such thing as third party billing. What does exist though is a difficulty without too much exposure to close down giants like Ibill, CCbill and Epoch or PayPal. The problem lies within a simple fact that though these companies violate the credit card companies bylaws they are not violating real life laws. In this case with a proper amount of money it may become very difficult to close such a company down. That is the reason behind IPSP regulations in USA and the fact that at this time only the biggest third party billers survived. And that is not for long as well. The problem is NOT that these companies operate against rules of VISA or MC. For the correct amount of money its no problem to change the rules You know. Always been so. The problem is that third party billing is against common sense. Let me explain. The number 1 thing of importance in financials is liability. So to say "who gets blamed when something goes wrong?" Because in the world of financials something may always go wrong. Suppose Mustafa in Saudi Arabia purchases 3 day trial membership for www.fuckingelephants.com through www.fuckingbill.com which is against for example the holy book of Koran since fucking elephants in an unholy act according to the book. The secret service of Saudi Arabia according to the civil law there finds Mustafa and cuts off his penis and kills all of his relatives. Who is to blame? Obviously the site owner FuckingElephants.com whos responcibility is to be sure that whatever he sells is ok where he sells it. However site's owner Ivan Ivanov obviously doesnt give a fuck for poor Mustafa and has a nice vacation spending Mustafas money. And nobody is able to find Ivan as long FuckingBill.com says they got no fucking idea who Ivan really is and where he is and the funds went to Ivan's offshore bank account in the bank of Alaska. The next thing which happens with FuckingBill.com is that they close down the office, run and have excellent time somewhere on Seychelles. Therefore the question goes who the fuck allowed FuckingBill.com to work without any serious background info check on Ivan? The question of course goes to the acquiring bank. However the acquiring banks UNLESS it's forbidden by VISA rules tells everybody to go fuck themselves with all questions and suggest to ask VISA why it is allowed to use their system in such a way and to accept third party billing companies. So who's to Blame? In the end they blame VISA. So that is what I call against common sense. Because in real life in finances there's always liability. If You process moneys of a third party You are supposed to be licensed to do it and therefore You are allowed by law to do it because the law insures that if You have license than You keep appropriate records of whom You deal with. And that is the difference. 4. Even if Epoch, CCBill and Ibill combine their efforts they will not have enough funds to build a bank in USA or Europe. They are not even close to be big enough for it in established countries. To form one or to buy one. Banks in solid regions like EU or USA are the most solid business one can find. Therefore it's the MOST expencive. There is a rumour that a VERY VERY small bank in Switzerland is for sale now. Price is half a billion USD. Epoch, CCBill and Ibill make only around 3% or so of profit from the turnover. If the turnover is around 2 billions for all of them the overal profit is about: 60 millions per year. I suspect much less by the way. Further, VISA and MC will not grant a new bank processing license in EU or USA. In third world countries the VISA/MC rules are different and chargeback regulations apply to the processor itself as well, if the processor goes over 0.35% it is looking at trouble. And in third world its impossible to fight it - You just loose VISA/MC processing license the next day and that's it. 5. If I were You I would start thinking how to profit on adult without rebills. Because that's the next thing which is going to happen. Visa introduced a new protocol 3D Secure, You saw already a light version of it called Verified by Visa. All banks in the world slowly migrate to this protocol at this moment. The protocol cuts at least half of the chargebacks but its very difficult to run rebills with it. 6. As soon as Ibill , CCBill and Epoch will go down than the situation will become better. Prior to this moment no acquirer would try doing anything to simplify the procedure of opening direct merchant accounts for merchants because all OK porn sites (non extreme, based in USA or in EU) worked with Ibill, CCBill and Epoch. Out of 10 adult merchant accounts applications which go to acquiring banks who allow processing of adult 9 are probably from people who do not qualify for Ibill, CCBill and Epoch. Which basicly means trouble more or less. Well...it was so a year or two ago. And three years ago prior to IPSP regulations You may imagine what kind of people looked for their own merchant accounts. :-) The banks had NOTHING good left for them. At this moment the situation is changing. People realise where the processing is coming to, time will pass and banks will move along.