In the US, the adult nightclub industry is worth approximately seven billion USD. Yet despite these impressive revenues, gentlemen’s clubs are part of the growing list of “high-risk” industries that are prohibited from using payment processing services. Many of these services, including credit card and debit card processing, are essential to the success of any business.
If you’re the owner or manager of a gentlemen’s club, you may have already applied for — and been denied — a merchant account. If this has happened to you, you’re not alone. Scores of high-revenue industries are also considered high-risk by banks and financial institutions, making it nearly impossible for them to get payment processing services. However, the good news is that one leading payment processing provider, Bankcard, specializes in providing a full roster of merchant account services for gentlemen’s clubs and other businesses in the adult entertainment industry. With Bankcard, you can get credit card and e-check processing as well as a variety of tools to help you streamline your business accounts and transactions.
Why is it so difficult to get merchant accounts for gentlemen’s clubs? As with any type of financing scenario, the answer lies in the ratio of risk, as perceived by the bank. But exactly how are banks involved, and why should they impose these limitations? The answers might surprise you.
For financial underwriters and merchant account providers, nightclubs and bars are considered high-risk when it comes to credit card processing. This is especially true of any type of entertainment venue that serves alcohol and/or provides adult entertainment. And while some of the reasons may seem archaic by 21st century standards, others are based on standard assessments used for evaluating loan risks.
Essentially, adult entertainment venues, like some bars and nightclubs, have a high closure rate, and this automatically puts the entire industry in the high-risk category for financial services. However, this is only one of several issues. If you’re operating a highly successful gentlemen’s club with a great track record in business, yet you’re still denied a merchant account, you need to know that other factors are involved as well. And one of those prime factors has to do with chargebacks.
A chargeback is an industry term for a credit card refund. Every time someone makes a purchase and then asks for a refund to their credit card, it’s a chargeback. In many cases, chargebacks are completely legit and made with good intentions, but sometimes criminals use chargebacks as a way to scam businesses and payment processing companies.
Another problematic component is “friendly fraud” which occurs when customers make a credit card payment and later claim it was unauthorized. Then they demand a refund. Customers often do this because something ends up being more expensive than they bargained for such as a magazine subscription that starts at a special rate, then skyrockets a few months later. Customers can inadvertently commit “friendly fraud” with the best intentions in the world, but the results still lead to unsustainable profit loss for banks, credit card processors, and businesses.
In the case of gentlemen’s clubs, one common reason for friendly fraud is accidental detection. In cases like these, a customer is billed and their spouse, significant other, or employer sees the bill. In some cases, the customer will deny the charges, call the credit card company, and claim that the charges are fraudulent rather than admit they actually visited the club. Friendly fraud is prevalent. In fact, eight out of every 10 merchants say they’ve seen a significant increase in friendly fraud chargebacks, while 31 percent say they’ve had trouble contesting them.
Why are chargebacks such a big deal? According to Nasdaq, losses due to credit card fraud rose above 32 billion USD in 2021. And surprisingly, a whopping 86 percent of reversed transactions aren’t even legitimate claims. Likewise, some experts predict that by the next year or so, six out of ten chargebacks will involve friendly fraud.
Regardless of the reasons for them, chargebacks cut into merchant profits as well as the profits for payment processors. Because of this, merchant account providers typically charge higher fees for businesses with high chargeback rates. However, as a leader in high-risk payment processing, Bankcard charges processing rates that are not only reasonable but affordable as well.
Although we’ve reached the 21st century, when it comes to banking circles, certain industries are still considered unsavory and controversial. And this attitude leads to something called “reputational risk.”
As industry operators admit, even if you have a strong credit history, banks are extremely wary of providing merchant accounts for gentlemen’s clubs or giving any type of financial backing to adult entertainment businesses. As one example, in 2014 the US Justice Department cracked down on banks and lenders that worked with industries deemed high-risk for money laundering and fraud. Right after this, many banks immediately closed the accounts of their adult entertainment industry clients.
Gentlemen’s clubs often have an unsavory reputation, even when it’s undeserved. While a few bad actors in the industry may run their clubs with criminal intent, there are also plenty of honest business owners who are simply trying to make a decent living. However, these reputable operators are often stigmatized because of the industry they’re in. Likewise, many financial institutions fear their reputations will be sullied if they work with businesses in these industries. Added to the mix, adult entertainment venues have to jump through a lot of legal hoops to remain operational. These include imposing age restrictions on clientele and keeping security on hand in case of troublemakers. This all adds to the perception of a shady underground industry and further prejudices financial institutions against these businesses.
To recap: Gateway payment processors, which are backed by banks and credit card companies, are reluctant to accept merchant accounts for gentlemen’s clubs and other high-risk industries because of high chargeback rates, the potential for fraudulent transactions, high closure rates, and social stigma. Now that you know why you’re being denied a merchant account, is there anything you can do to reverse the situation?
The good news is yes. In spite of all these obstacles, you can still successfully apply for a gentlemen’s club merchant account. But before you do, it pays to get expert help from a high-risk merchant account specialist. As the nation’s leading merchant account specialist for the adult entertainment industry, Bankcard provides payment options and business streamlining tools and solutions geared specifically for gentlemen’s clubs and adult entertainment venues. By getting help from an industry professional like Bankcard, you can avoid wasting valuable time on strategies that won’t work.
For example, have you ever applied for a Stripe or Paypal account, only to have it mysteriously close as soon as you made your first transaction? You may not have realized it at the time, but when you made that transaction, the payment processor detected that your industry was high-risk and acted accordingly. With Bankcard, you’ll be able to get the processing services you need without being subjected to sudden, unexplained account closures.
Practically speaking, there are several ways you can be proactive in increasing your chances of getting merchant account approval. One of these ways is to lower your chargeback rate.
Providing full disclosure on products, services, costs, and fees can dramatically decrease your refund rate. For online sales and services, the more information, photos, and videos you can offer your customers, the more informed their purchases will be. In addition, let your customers know upfront what your return policies are.
This includes regular reviews of all transactions and activity as well as paying close attention to anything that looks like a red flag. Incorrect shipping addresses or inaccurate contact information are two of the most common warning signs.
Cyber security is vital for any adult entertainment business because the industry is already highly prone to increased criminal activity and hacking. Be sure to use top-tier cyber security software protection, and follow safety protocols for every transaction.
Adult entertainment customers may deny a charge because it was accidentally discovered by someone else and demand a refund to cover their tracks. You can protect your customers’ privacy by printing invoices with a discreet name that doesn’t tie your business in with adult entertainment.
Studies show that 90 percent of consumers prefer having multiple payment options, and with a merchant account from Bankcard, you can offer your customers the convenience of credit card and debit card payments as well as e-check transactions.
Bookkeeping is one of the most tedious — and difficult — aspects of owning a business. With a merchant account, you’ll have the tools you need to create automated invoices and billing with a click of the mouse.
Keeping track of payments manually is a headache, but a merchant account service provider will automatically track everything, from point of sale through payment approval and transfer.
A merchant account system like Bankcard’s uses top-tier security protocols such as coding and encryption, so you can rest assured that your payments are secure. Plus, your customers will be able to use e-checks which decreases the risk of bounced checks.
In today’s global economy, a cash-only business is a dinosaur. And operating on a cash-only basis can actually affect your reputation by making your company look like a shady, hole-in-the-corner business that’s not honest enough for legitimate financial services. By offering a full roster of legitimate, bank-approved payment options, you’ll enhance the reputation of your gentlemen’s club and reassure customers that it’s a legit and honest business.
Some high-risk merchant accounts will only work with niche industries such as cannabis or e-cigarettes. Before signing on, make sure the merchant account specialist works with adult entertainment businesses.
High-risk merchant payment processors charge more for their services because they need to cover the cost of risks such as chargebacks, fraud potential, and high closure rates. These fees, however, should still be within reason. If they seem too high, shop somewhere else.
Payment processors give full and fair disclosure of all fees upfront. Also, make sure they charge the same fee for different credit cards. If they’re charging different fees for Mastercard, VISA, Discover, or American Express, find out why, and be prepared to go elsewhere.
Some high-risk payment processors might provide debit card services but not e-check transactions. Try to find a high-risk processor that offers multiple payment options for your customers.
A high-risk payment processor should offer top-tier cyber security protections including coding and encryption to protect each transaction.
As one of the first payment processing specialists to take on adult industry clients, Bankcard is the No. 1 high-risk merchant account specialist for gentlemen’s clubs, strip clubs, and other adult entertainment venues. With years of experience in the adult entertainment industry, Bankcard offers resources and solutions that are custom-tailored to the unique needs of adult entertainment businesses. With Bankcard, you can get the merchant account approval you need to boost your sales and streamline your business.
If you’re the owner or manager of a gentlemen’s club, and you’re ready to take your business to the next level, contact us to learn how Bankcard can help. We provide convenient payment processing services for your customers plus easy management tools to help you succeed.
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Bankcard Connect integrates seamlessly with ISV software to simplify payment processing for merchants: any payment type, on any device, anywhere.
Bankcard integrates with over 99% of the tools you are already using, including popular accounting software and e-commerce apps, regardless of your industry. Our payment services were designed to be adaptable to provide seamless integrations for our customers.
Paid Memberships Pro
911 Software, Inc.
Aldelo Systems, Inc.
Applied Micro Technology
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Data Business Systems
Datacap Systems, Inc.
Epicor (CRS, NSB)
Gateway Ticketing Systems
Main Street Softworks
MBS Textbook Exchange
/n Software, Inc.
RATEX Business Solutions
Retail Data Systems
RTL Payment Systems
Sicom Systems, Inc.
Tender Retail Systems
The Software Mills
Total Computing Solutions
TouchNet Information Systems
XProtean, Inc. (C-Payment Software)
Vista Entertainment Systems
911 Software, Inc.
Data Business Systems
Datacap Systems, Inc.
Main Street Softworks
Menusoft Systems Corp.
Midnite Express, Inc.
/n Software Inc.
Sicom Systems, Inc.
XProtean, Inc. (C-Payment Software)
Elavon (previously Southern DataComm and Global Card Services)
Fiscal Systems, Inc.
Main Street Softworks
VeriFone Ruby System
911 Software, Inc.
Hotel Software Systems
Government organizations face a growing need for secure payment processing services while managing highly specific needs for content management and security.
We can work with popular technology products government agencies prefer, like Ciber and Cubic, to create an integrated solution that meets all your needs for processing payments, managing information, and more.
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Regardless of your industry, we can help you get approved for a high-risk merchant account.
The industries we accept for high risk merchant accounts include, but are not limited to the below industries.
Bankcard can provide merchant accounts to customers in the below countries. Kindly note that many payment solutions are regulated based on location.
Being a start-up business will not hinder a business from getting approved for a merchant account. While having a processing history helps your likelihood of getting approved, the lack of processing will not necessarily stop you from getting an approval. Consult an experienced Account Executive today to learn more.
There are never guarantees when it comes to the approval of a merchant account. However, we do work with merchants that have low credit scores. Reach out to an Account Executive today for a consultation.
If you’re a United States citizen applying for a merchant account for a United States registered business, a social security number is required.
A merchant account can be labeled high risk for many reasons. You can be labeled as such due to high average tickets, being in an industry that historically has high chargebacks, or an industry that tier one banks do not support.
To apply for a high-risk merchant account, you need to complete our pre-qualification form and upload all required documentation. Once the pre-qualification is complete your Account Executive will locate the best placement for your account, and send you a final agreement. Once that final agreement is signed, underwriting will complete a full package review for approval.
There is no fee to apply for a merchant services account with Bankcard. However, If you get approved with us there may be a small setup fee for your gateway account.
Square, Stripe, and Paypal are all payment facilitators and do not accept high-risk merchant accounts. Signing up with Bankcard gives you a direct merchant relationship with a sponsor bank. The approval process requires more documentation, but you’re at a significantly lower risk of getting terminated.
This depends upon how quickly you, the merchant, completes our pre-qualification form. Once we have all of your documentation, we get to work. We can typically locate placement for your merchant services account in 48 hours.
Once you get an approval, you’ll be able to accept credit card payments within 24 business hours.
Depending upon the program, you will receive your funds anywhere from 24 to 72 hours after the batch is settled.
The industry type is a major determining factor when it comes to risk levels of merchant services. But, other factors such as credit, card-present vs not present, and chargeback ratios can also push an account into the high-risk category as well.
Your legal business name should match the business name on the state business registration or licensure. However, if you are a sole proprietor, your name would be the legal business name.
If you’re not sure how much processing you’ll do, we recommend applying for $5,000 to $10,000 monthly. You don’t need to hit that number each month, but if you’re close to going over, reach out to your Account Executive for assistance.
Your average transaction amount should be the average of all transactions you would accept with your merchant account. Your maximum transaction should be the anticipated maximum amount accepted in one transaction. If you attempt to process a transaction that is higher than the maximum amount provided, additional proof of purchase may be requested.
You may provide personal bank statements in lieu of bank statements if your business bank account is new or does not have any activity.
If you’re applying for a merchant account for ecommerce processing you will need a fully functional website with products or services listed with associated pricing.
Yes, a credit check is required in order to obtain a high-risk merchant account. Once a final agreement is signed, a hard credit pull is done. Credit scores are taken into consideration when underwriting reviews a full application for merchant services.
If you’re a United States citizen applying for a merchant account for a business registered in the United States, your social security number will be required to apply.
The first step to applying for a high-risk merchant account is completing the pre-qualification form. Three months bank statements, three months processing statements (if applicable), a voided check or bank letter, and driver’s license or passport will be required to apply.
If your business does not utilize checks, we can accept a bank letter that includes your full account and routing number as well as the business or account holder’s name. The letter should be on bank letterhead, be dated within the last 30 days, and be signed by a bank representative.
If you don’t have three months of business bank statements, don’t fret. We can accept three months’ personal bank statements from a business owner, or director.
Bank statements show a lot about a prospective merchant, namely, processing activity, and the average monthly ending balance. If a merchant is currently processing, we want to know why they’re switching, if we know a merchant’s pain points we can find better solutions for their needs. The average monthly ending balance is also relevant to show financial stability within the business as well as validating the monthly volume requested.
If a merchant is currently processing credit card payments and successfully managing a merchant account this can increase the likelihood of getting approved. Some payment facilitators such as Paypal, Stripe, and Square might not supply monthly processing statements. Underwriting may request login credentials so they can get an overview of the processing activities.
For in-person retail card acceptance, Bankcard can provide equipment that will arrive programmed and ready to accept payments. Discuss your equipment options with your experienced Account Executive.
Here at Bankcard, we do offer our own gateway solution that’s exclusive to merchants that sign up with us. Of course, if there’s a gateway you prefer we are willing to work with you as long as integration is possible. Please reach out to your dedicated Account Executive for details.
Bankcard integrates with NMI, Authorize.net, and more. For specific gateway integration questions reach out to an experienced Account Executive.
Your merchant account will be set up to accept Mastercard, Visa, American Express, Discover, and ATM cards.
Load balancing is the strategy of spreading transactions over more than one MID. It’s not necessary for all high-risk accounts, but can be considered as a way to manage chargeback ratios with high-risk merchants.
Not to worry, this number can be increased as needed. However, the bank underwriting your merchant account needs to be aware of the expected monthly volume to ensure they have capacity available for all merchants processing with that bank.
If you go over by a small amount you might be asked for a copy of the invoice or receipt. However, if you go over the monthly limit by a large amount there is a chance your excess funds might be held temporarily.
When it comes to high-risk accounts, banks ideally want chargeback ratios below the 3% threshold. If you can provide long term processing history the bank may take this into consideration. Lower chargeback ratios are ideal. Consult your knowledgeable Account Executive for assistance in lowering your chargeback ratio.
Rolling reserves are a way to financially protect the processing bank from potential losses from chargebacks or refunds. Not all high-risk merchant accounts require a rolling reserve. The risk department will determine if and when a rolling reserve is required.
Interchange fees refer to the issuing credit card brand fees such as Mastercard, Visa, Discover, and American express. These fees vary depending on the card type, American Express tends to be the most expensive card to process. Interchange rates can range from 1% to 2.5%.
Of course! Once you’ve established a healthy processing history, you may reach out to your Account Executive for a rate review. We recommend only doing this if your processing history shows low chargeback ratios and relatively low refund activity.
You may request an increase in your monthly volume at any time. However, it’s recommended to wait until your merchant account reflects healthy processing history as well as financial stability from your bank statements.
Reach out to our support team, or your dedicated Account Executive for any account-related updates you may need.
Depending on the program your merchant account fees are either taken at the beginning of each month. Some programs require daily discounts. Program details will be notated on your final agreement and if you have further questions you can always consult your Account Executive.
Bankcard can assist with ACH or eCheck services. An application and approval process still applies to this service, or it can be an added service with your processing account. Reach out to your Account Executive for details.
The approval process requires less documentation than applying for a merchant services account. And if you’re already processing with Bankcard an approval can be expedited.
Every account is different, however, most programs allow next-day settlements for ACH transactions.
ACH payment acceptance can be integrated into most website platforms. Reach out to a dedicated Account Executive for more information.
High-risk merchant accounts are priced higher than low-risk accounts because fewer banks are willing to work with businesses labeled “high risk”. Banks also need additional financial protections from loss on these accounts.
Bankcard will always provide fair pricing based on the risk level of every merchant. And if a current processing statement is provided we’ll do everything in our power to beat the merchant’s current rates.
While we love working with merchants that are considered high risk. There are limitations put in place by bank and card brand rules. If a merchant does not abide by the specific program rules described by the Account Executive assisting them we cannot ensure an approval.
Think of merchant accounts as a loan or a line of credit. And processing banks take on the risk of transactions getting charged back. Banks can end up liable for the actions of merchants, a problematic merchant can damage the reputation of the bank funding and processing the transactions.