Strip clubs are a big business. In the US alone, the strip club industry is worth approximately seven billion USD, making it a financially lucrative industry nationwide. However, as with other adult entertainment businesses, strip clubs are usually denied basic, necessary merchant account services — such as credit card processing — that most other businesses take for granted.
Why are merchant accounts for strip clubs always denied approval? It’s an unfortunate fact that adult entertainment venues, retailers, and service providers are perennially categorized as “high-risk” industriesby credit card processors, banks, and financial institutions. This designation automatically keeps these businesses from getting approved for essential merchant account services, and business owners who apply for merchant accounts for strip clubs are often denied approval, even if their club is enormously successful.
If you own or manage a strip club, you may have already been denied approval for a merchant account. You might have even opened a Paypal or Stripe account, only to see it immediately suspended after the first transaction. However, the good news is you can get the help your business needs thanks to Bankcard. As the nation’s leading account provider for the adult industry, Bankcard specializes in helping these vital businesses get essential payment processing services, plus valuable tools such as payment tracking and automated billing.
Why are merchant accounts for strip clubs considered high-risk? As with everything else in business, it all comes down to money, banking, and perceived financial risk.
The adult entertainment industry is on the high-risk list for a variety of reasons. Some of them have to do with closure rates, fraud potential, and payment behaviors, while others have to do with outdated societal stigmas that banks may still follow. Here’s a look at some of those reasons, and why they may impact your ability to get a merchant account:
The word “chargeback” refers to a refund for a credit card purchase. While these types of refunds are a common and necessary part of any business, chargebacks are especially high in the strip club industry. And in particular, a great many of these chargebacks are associated with a phenomenon called “friendly fraud.”
Friendly fraud happens when a customer makes a charge on a credit card, then later revokes the charge, claims it wasn’t authorized and demands a refund from the credit card company. Friendly fraud isn’t always malicious — sometimes it occurs simply because a customer contacts the card company directly for a refund, rather than communicating with an e-commerce merchant — but no matter why it happens, it can wreak havoc on a company’s profits. According to Nasdaq, credit card fraud (including friendly fraud) costs companies more than 32 billion USD worldwide. To put this in perspective, six out of every 10 chargebacks involve friendly fraud. Likewise, eight out of 10 merchants say they’re seeing an increase in friendly fraud chargebacks, while 31 percent say that they’ve had difficulties trying to contest them. These high-risk chargebacks cut into profits for payment processing companies too — so much so, they’ll typically either charge higher processing fees for businesses with high chargeback rates or even drop them altogether.
Why are friendly fraud chargebacks so prevalent in the strip club industry? One common scenario involves customer privacy issues. If a customer receives a bill or invoice from a strip club and it’s accidentally discovered by a spouse, significant other, or employer, the customer may deny having visited the club and immediately call the credit card company to dispute the charges. Likewise, if a customer has a bad experience in a strip club, or feels that they were overcharged for drinks or food, they might either dispute the charges or claim that they were unauthorized.
Other types of fraud, unfortunately, impact the adult entertainment industry as well, and these might have a bearing on why you can’t get essential merchant services.
No matter how honest or reputable your strip club might be, you’re still in an industry that’s historically fraught with legal issues and sometimes even associated with increased criminal activity, and this can come with repercussions. For example, in 2014, the US Justice Department began investigating banks and financial institutions that worked with adult entertainment and other high-risk industries. This caused many banks to close the accounts of their adult entertainment clients as fast as possible.
While many strip clubs operate legitimately, there are always a few questionable club owners who make trouble for everyone, and they can give the entire industry a bad reputation in the eyes of banks and financial institutions. Added to that, the strip club industry is rife with regulations, including access limitations for minors, as well as laws prohibiting alcohol at certain times. Finally, there’s also the overall stigma that’s associated with the outdated societal prejudices many people still have about adult entertainment.
Because of these reasons, banking institutions are extremely reluctant to work with adult entertainment businesses, including strip clubs. And this reluctance doesn’t just impact payment processing approval; it also impacts access to financial backing as well.
Speaking of financial backing, why is it an issue, and how does it affect merchant account services?
“Underwriting” is a banking term for financial backing. When you get a loan, it’s underwritten by a bank, or by the financial institution that backs the lender you’re borrowing from. In much the same way, credit card processing companies are underwritten by banks and financial institutions, and they treat their merchant account clients the same as they would a loan applicant. Payment processors have to follow some of the same protocols that a bank would follow with a loan, and that’s why merchant account providers will typically deny credit card payment services to businesses in a high-risk industry.
These are the reasons why it’s so important to get the help of a payment gateway specialist. Through years of experience working with high-risk industries, Bankcard is an expert at getting these valuable merchant services, including debit and credit card payment services, for exotic dance clubs and all kinds of adult businesses. And if your gentlemen’s club has an online presence as well, Bankcard can help you set up online payments for your customers using all the major credit cards, including VISA, Mastercard, Discover, and American Express.
If you’re trying to get approved for a merchant account for your gentlemen’s club, there are several proactive steps you can take in the right direction — and one of these is to lower your chargeback rate.
Every business has chargebacks, but these tips can help you keep them under control:
One of the best ways to meet customer expectations is to make it clear exactly what they’re getting for their money, as well as how much it will cost. For a strip club business, this would include being upfront about all cover charges and fees as well as drinks and food pricing.
Club rules, regulations, and refund policies should be printed where everyone can see them.
If someone wants to speak to a manager, make sure there’s always one available. By going out of your way to provide good customer service, you can diffuse potential problems that could result in expensive chargebacks.
When it comes to bills and invoices, it’s a good idea to change your letterhead, as well as your company profile, so it doesn’t reflect your connection with the adult entertainment industry. By protecting your clients’ privacy, you can avoid costly chargebacks caused by the wrong person seeing the bill.
One of the best ways to protect client privacy is to offer automated billing regularly, so your customers will know exactly when they’ll be billed. Bankcard offers a variety of automated billing and invoicing tools that allow you to schedule bills according to your needs, as well as the needs of your customers.
It’s always a good idea to review activity and track payments regularly. Regular monitoring makes it easier to spot red flags such as inconsistent customer addresses or suspicious-looking contact information.
Studies show that 90 percent of consumers prefer having a variety of payment methods, including credit/debit card, e-check, and mobile app options. With a merchant account, you’ll be able to provide your customers with a whole range of convenient payment options.
You don’t want to spend your day keeping books. With a merchant account, you’ll be able to send out automated invoices to all your customers, on a schedule that’s customized for your convenience.
Tracking payments is an essential part of business, but it can also be a nightmare. With a merchant account, you’ll be able to track payments automatically, so you’ll always know exactly what’s going on in your account.
A merchant account will make your adult business look more polished, professional, and up-to-date. Without basic credit card options for your customers, your strip club might not seem legitimate, and in the eyes of some potential clients, might even look suspicious.
Before choosing a high-risk merchant account specialist, it’s a good idea to ask the following questions:
High-risk merchant account specialists aren’t equal. Some may only work with niche industries, such as cannabis or supplements, while others may only provide limited payment services for adult entertainment venues. Before signing on with a merchant account specialist, make sure they can provide a full line of services for adult entertainment businesses.
It’s unavoidable — you’ll have to pay higher fees for high-risk merchant services. Otherwise, payment processors wouldn’t be able to afford the risks. However, a good merchant service provider will only charge what’s necessary. Bankcard is committed to charging reasonable fees to its high-risk clients, making them affordable for all types of businesses. And, unlike some merchant providers, Bankcard charges the same rates for each brand of credit card, which is exactly how it should be.
Some merchant account specialists offer only limited payment methods for high-risk accounts. Be sure to choose one that offers the entire range of credit card options, plus extras like e-check and mobile app payments.
Cyber security is a prime consideration for any business, especially if you’re in adult entertainment. One of the most important things to look for in a merchant account specialist is state-of-the-art, next-gen security protocols, so you can rest assured that you and your customers will be safe.
As the No. 1 high-risk merchant account specialist for adult entertainment, Bankcard offers a full line of payment processing services, enabling you to take credit card, debit card, e-check, and mobile app payments. In addition, Bankcard offers valuable payment tracking tools, plus convenient automated billing options to suit the needs of your business. And to safeguard your account, Bankcard provides tools to help you track every payment from its point of sale to completion. In addition, Bankcard payment processing is protected with all of the latest protocols, including encoding and encryption.
Bankcard understands the unique needs of the adult entertainment industry and knows how to negotiate some of the payment processing obstacles that banks might impose on these businesses. If you’d like to learn more, contact us to find out how we can help you take your strip club business to a whole new level of success.
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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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Datacap Systems, Inc.
Epicor (CRS, NSB)
Gateway Ticketing Systems
Main Street Softworks
MBS Textbook Exchange
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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.