Considering how complicated relationships have become, it comes as no surprise that escort services are on the rise. Escort services have been around since ancient civilizations, and serve as a means for men and women to engage in intimate activity with no strings attached.
These providers have come a long way from their controversial origins, and have adapted to modern-day solutions that many other businesses adopt, like cashless payments. The only problem however is that because financial institutions perceive escort merchants as high-risk, going cashless isn’t that simple.
The customer is always right, even when it comes to their payment preferences. And because buyers strongly uphold their payment method of choice, it’s the business’s job to meet them where they’re most comfortable.
Today, an estimated 80% of people in the United States prefer using cards over cash for all of their transactions. That means if your escort service doesn’t accept card payments, you might find potential customers walking out the door to find someone else who will. And given today’s trends, everybody else will accept card payments.
For these reasons, escort service providers would do well to set up a high-risk merchant account. These specialized bank accounts open the doors to cashless payments.
With a merchant account, an escort service provider may start accepting credit cards, debit cards, eChecks, and ACH payments, among many other forms of digital payments.
The only problem? Opening a merchant account for an escort service isn’t as easy as you might think. For the most part, the risk associated with escort service providers bars financial institutions from plunging into the partnership.
Merchant acquirers don’t just toss darts at a board to decide who’s high risk and who isn’t. They use a set of standards and measures that help them identify a business’s risk. Not all acquirers use the same calculations, but the factors they consider mostly remain the same across the board.
| FACTOR | LOW RISK | HIGH RISK |
|---|---|---|
| Location | Within the US, EU, Canada, Japan, or Australia | Everywhere else |
| Average transaction cost | Under $500 | More than $500 |
| Average monthly revenue | Under $20,000 | Over $20,000 |
| Transaction type | Card present | Card not present |
| Currency | Domestic | International |
| Customers | Domestic | International |
| Payment scheme | One-time | Subscription or recurring |
| Credit rating | Poor | High |
| Industry | Low risk industries include furniture, apparel, groceries, food, etc. | High risk industries include cannabis, hemp, online casinos, adult products and services, etc. |
So what is it specifically about escort service merchants that make them high-risk? Here’s what merchant acquirers tend to have apprehensions about:
And while that might seem convenient from a business perspective, it’s important to consider the bank’s situation. Even just two chargebacks filed from the escort services’ monthly transactions would cost $4,000 plus any associated fees and charges.
That’s why merchant acquirers tend to avoid businesses with high single transaction costs. Because if those transactions turn into a chargeback, everyone involved — from the merchant to the card issuer — gets slapped with exorbitant penalties.
The problem with this is that customers can always dispute their payment and say that the provider didn’t meet expectations, without anyone being able to prove otherwise. This lack of documentation proves problematic for merchant acquirers who prefer having something more solid to hold on to.
There’s a lot of stigma surrounding the escort service industry, and people often want to hide their identity when availing of escort services. This results in a uniquely high risk of fraud.
In some cases, individuals want to hide the transaction from their partners. Thus, they claim they never availed of the service in the first place despite the opposite being true.
If you’ve been applying for a high-risk escort merchant account through conventional acquirers, all of the rejections might have you thinking it’s not possible to set one up for a business of your nature.
Banking institutions are highly selective and conservative when it comes to approving client partners for a merchant account. Altogether, these acquirers try to avoid as much risk as possible. So even if you’ve got a clean track record, there’s no guarantee that you’ll get approved.
In fact, even in cases where escort service providers are approved, they face steep penalties, exorbitant recurring charges, and restrictive contract terms that could limit business growth and profit.
So before you waste your time and energy seeking approval from traditional acquirers, it’s probably a smart move to contact Shark Processing first.
Here at Shark Processing, high-risk doesn’t have to be a hurdle. We work with hard-to-place merchants and find suitable merchant acquirers to satisfy their merchant account needs. We boast an extensive network of merchant account service providers that we use to find you the perfect match.
If you’re looking to set up a high-risk escort merchant account, we’ve got you covered. Contact us today to find out more about our placement services, or send in a pre-application form to get started on setting up your high-risk merchant account for escort service providers.
