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0 pointsDoreenMichele6y ago0 comments

I haven't specifically investigated the question of payment processing and adult businesses. I have done some research into this issue wrt marijuana businesses and bank accounts. Marijuana is legal in some US states but still not legal at the federal level (last I checked). They have enormous difficulty getting bank accounts.

With marijuana businesses, the issue is that the bank could potentially lose access to the federal system for knowingly issuing a bank account to a business that is violating federal law. This would basically shut the bank down, from what I gather.

My assumption is there is likely a similar mechanism in place poisoning the entire payment system for adult content. If I wanted to work on the issue, I would dig until I found the root cause, which is very likely legal/regulatory and very likely at the federal level in the US. Then put resources into addressing the actual root cause instead of fussing at the payment processors.

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chipotle_coyote6y ago· 2 in thread

While I haven't dug really deeply, I don't think the situations are directly comparable. Adult businesses aren't banned at the federal level, and as long as there's no state law that bans them, there's nothing that legally prevents them from opening a bank account, processing credit cards, and so on.

The problem appears to be specifically with the policies of payment processors. As I understand it, the actual payment processing networks -- MasterCard, Visa, et. al. -- historically charged a significant premium to process transactions for businesses that had a reputation for very high chargeback rates (people calling to cancel payment). Adult businesses had that reputation. From what I've been able to tell, this has persisted to today. It's presumably just easier for payment processors like Stripe and PayPal to ban adult content than to work out multiple rates with their credit card networks, let alone try to make the (correct and I would argue obvious) case that Patreon, Buy Me a Coffee, Ko-Fi, et. al. aren't "adult businesses" even if they allow legal adult content creators on their platform any more than Amazon is an "adult business" if they let you buy books with explicit content.

That's a point I've always wondered about, actually; Amazon does let you buy books with explicit content, both text and visual (a search for Erika Moen's "Oh Joy Sex Toy" right now immediately showed it was available both in paperback and on both Kindle and Comixology!), so it's clearly not as verboten as the crowdfunding platforms make it sound. I know Amazon has the advantage of being Amazon -- MasterCard isn't gonna stop processing their transactions no matter what they sell -- but I also know a few very small publishers who sell erotic comics and that use Stripe and/or Square for payment processing. Again, those publishers aren't really "adult businesses," per se (not all their titles are adults-only).

I would really like a processor like Stripe -- or a competitor, but I suspect size matters in this case -- to step up and not ban legal adult material. Maybe even just in small steps, by explicitly exempting publishers or crowdfunding platforms that aren't exclusively adult.

DoreenMicheleOP6y ago

To be clear, I meant "Stop fussing at people like Patreon and Buy Me A Coffee. The problem appears to be upstream and a real solution would need to somehow address the root cause, which is not these online platforms. Their hands are tied and taking a stand likely means going out of business."

Given that this is a Launch HN, that's all I'm going to say here. This is not really the time and place to hash this detail out.

danShumway6y ago

Payment processors like Stripe rely on creator platforms like Patreon and BMaC for non-trivial portions of their business. That kind of demand is why Stripe Marketplace exists in the first place. If consumers aren't putting pressure on every step of the chain, that pressure won't work its way up to the payment processors.

In other words, if marketplaces themselves aren't going to Stripe and complaining, Stripe will not fix its Marketplace TOS. A really good way to create that demand is to hold businesses that build on top of these processors accountable.

If I build a calendar app on top of Facebook, and Facebook requires me to share all of my user data with them, you can make a reasonable argument that this is all Facebook's fault for having bad terms. But even so, if my users start asking me why all of their data is going to Facebook, that puts a lot of pressure on me to look for other platforms that have better terms, or complain to Facebook that their offering isn't good enough for me.

I'm not saying that Buy Me A Coffee should be abandoned or that I want it to fail. We don't want to block better platforms or decrease competition in the pursuit of perfection.

But even if on net Buy Me A Coffee is a good service, and even if we ultimately want it to succeed, and even if the owners genuinely can't do anything at all, it is still a good thing to force the owners to go through additional friction and to endure additional criticism because of their content decisions -- because if a better, more permissive payment processor ever pops up in the future, owners that have gone through that friction will be able to see a real business case for switching and revising their policies. When Stripe advertises its Marketplace services, platforms like Buy Me A Coffee will have an incentive to say, "yeah, but my users are still going to chew me out over your policies. How can you help me with that?"

Criticism of creator platforms over payment methods creates demand for better payment methods.

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