This problem has existed forever. As long as I can remember. The main company that seems to be able to process credit cards for porn is CCBill. They seem to have no real competition other than small fringe services. As soon as those services get big enough it raises flags and they get shut down. How and why CCBill are able to do it while others aren’t I don’t know.
You can sell snake oil on Shopify all day long but sell a JPG with that shows female nipples and it raises flags.
Does anyone know WHY this actually is? I know it’s related to Title 18, Section 2257 somehow, but I don’t understand exactly how, nor why CCBill seems to operate without issue. Can somone with inside knowledge explain?
Porn has come such a long way in the last 10 years. Maybe I’m just more progressive than I realize, but I see stuff like X-Art as actual art and I wish there was something like iTunes for porn.
If someone can explain to be what the legal roadblock is for porn billing and how one might be able to get around it, I’d be the first investor and founder. Seriously. There is so much great pornography out there now I feel like you could actually change the way people think about it and maybe even clean up the industry. It doesn’t have to be a dirty thing you bury under 10 cryptic folders.
My biggest challenge of that time was reliable billing. That said, it wasn't quite as bad as you make it out to be. When you have a long history of low chargebacks you can make some deals, and even then there were a few options. We always had a few processors integrated at any one time because 1) any processor could pull the plug on us with minimal notice and 2) these organizations tended to be technologically inept and their platforms were not reliable.
Some payments we processed through our own merchant account. We tried to get more merchant accounts and were unsuccessful. It's difficult because (IIRC) banks only allow a certain percentage of their total volume to be "high risk" and porn is in that bucket no matter how low your chargeback rate is and how long you've been established. It's something you could probably arbitrage profitably if you were a bank, but by the time you get to be a big enough bank you are bound into the stodgy culture of banking ("ewww porn").
That ship has sailed however; there's not much money in porn anymore. The tube sites have killed the content business; this is a shrinking industry. I agree, the content is better than it ever has been before, and you can get it free... uploaded to tube sites by the very producers themselves, hoping to get exposure.
> That ship has sailed; there’s not much money in porn anymore
That’s interesting, and would be the very reason small creators would move to a patreon backed model. The logic is similar to how youtube and podcast creators diversify to patreon as the platform revenue can’t be counted on.
Also the impact of Patreon’s policy goes beyond porn, to take an extreme example, educational content involving sex in any graphic way would also get banned.
I wonder what happens next. Would moving to direct peer to peer payment with a one to one link between the creator and the “customer” be a workaround ? Then when volumes get big enough there would be ashakedown again ?
While content sites are not doing well, live cams have nowadays quite a high turnover. However all you said regarding merchants and banks is still an issue, payment processors get quite a large chunk of the pie. I’d also add Epoch to the dominant billers besides CCBill.
Hopefully the crypto world will mature in the upcoming years and people will use it for payments. That would help customers stay anonymous and there will be no charge-backs. Sure, we will miss recurring payments but still a win imo.
Source: I’m the CTO of a mid-sized live cam platform.
There is actually a really interesting story behind this that was once on HN, I unfortunately can't find it anymore but it has something to do with the following process:
1. New content creator enters market.
2. Content gets uploaded to tube sites constantly, take-downs are intentionally slow and ineffective to make this process as tiresome and inefficient as possible.
3. New creator is eventually forced to upload the content themselves in order to generate leads and collect some revenue although this is very little.
4. This revenue is not and was never planned to be enough for the creator, two options:
A. Quality of content and models is reduced in order to reduce costs and remain profitable.
B. This does not happen, studio struggles to stay afloat and is forced to sell, it gets acquired by guess who... the parent company of the tube site.
I probably got some things wrong so feel free to correct me!
Are you comfortable with sharing what are the main tech stacks in there? PHP, Ruby, Python, something else? Which frameworks?
As an example of something I heard at least a year ago back here in HN: I get it that PHP can be secure and fast but that requires a lot of extra effort and I'd bet most sites don't want their programmers to work more because they will have to pay more?
(I am skeptical if porn sites even keep fulltime programmers on a wage; I'd bet they just hire them periodically.)
...Or am I missing something very obvious here and talking uninformed? I am curious.
I am not asking about site names or anything identifiable; just the tech side of things.
Lots of php mostly. A bit of node. We use python but we are small players.
The fun thing is more about the db. E.g some go full in memory redis while others stay on a good old mysql.
Although, don't let yourself fooled by the poor ui. It doesn't reflect the tech behind, and is now mostly ugly for marketting reasons.
Big sites makes millions and of course have full time dev team. They need to innovate constantly. E.g provide best moments on the player timeline, add face recognition to categorize actors, buff the infra for live cams, etc.
However, very few use the cloud. It's mostly home made. Video streaming is expensive, and you can divide your costs by 10 by avoiding aws and cie.
They are smart for using their own metal. I am still waiting the world at large to recognize the fact that the popular cloud services are not actually cost-efficient at all.
I sometimes wondered if I should try and work in the area; these people seem to constantly have to do stuff better and better which is an appealing aspect for me and keeps me from being bored. And as more and more time passes, I don't care for societal approval. Plus I never viewed porn as a "sin" or whatever.
Thank you.
Also, are you folks open to something newer in terms of stacks? Something much more efficient and fast out of the box, like Go or Erlang/Elixir? Is the legacy too big for a code reorganization to ever be viable?
Even though parent is true, don't get the picture that it's just PHP/MySQL. I've seen and written Lua code on top of Openresty for a custom CDN authorization layer fe. Also Node is getting more and more common.
The problem with Go and the like is that you shoot yourself in the foot regarding recruiting. An exotic tech stack really narrows the already small pool of people willing to work for an adult company.
I understand that the adult companies' hiring pool is even smaller and I recognize it as a legitimate business problem to worry about.
But aren't these companies of the kind that like to nurture employees as a result? Namely good social programs, maybe some free food, some advertise good parties (wtf?) or maybe none of these -- just a promise for job stability and having a friendly and outgoing team and a "family"-like environment overall.
Regarding parties: I watched a video years ago when 2 of an adult site's programmers went to a company party and they were very pampered, including voluntary flirting and sex by some of the porn stars (that was a bit weird but also kind of hot). While as a very happily taken man I don't care about such activities in company parties one bit, this is one of the examples of a smaller community that has tighter bonds and (overly) friendly atmosphere.
I mean, not everybody is obsessed by growth and being able to replace humans as nuts and bolts in a machine, after all.
I believe the biggest player is MindGeek and they have a lot of open positions in various locations [0]. Technologies include Go, PHP, .Net, JS (React) and there are lots of DevOps positions too.
1) Porn (crypto, gambling, etc.) transactions are significantly riskier than other transactions.
2) CC processing involves a long chain of intermediaries.
3) At every step of the chain there's strong pressure upstream for better rates, and strong pressure downstream to ensure the blended payment stream is safer.
So, eventually, someone in the chain gets told "sure, we can give you better rates, but only if you can improve the risk profile of your payment stream". And then they crunch the numbers, and decide it's worth it, knowing they'll lose some volume but hoping they can make it up with better margins. And then the people who churn find one of the remaining partners who hasn't adopted strict policies, and this repeats until all the "dodgy" payments are going through a high-fee chain that can't possibly afford to change their policies, and everyone else is going through a low-fee chain.
If you check CCBill, their "Blue" package that allows adult content runs 10.8% to 14.5%, with a $1,000 yearly "high risk registration fee". And even their normal plan (which doesn't allow adult content) seems to be 5.9% + $0.55 per transaction? Braintree is 2.9% + $0.30; Stripe is the same.
You can see why, eg, Stripe would be happy to leave CCBill to have a virtual monopily on adult transactions: There's not that many of them, they're so risky you'll need to charge absurdly high rates just to cover your costs, and just touching them at all will potentially taint your other transactions in the eyes of your upstream partners, driving up your rates. Conversely, you can see why CCBill will never kick the adult payments off their platform; it's the only thing they have to offer.
Disruptive startups work best when they can start with a niche and then grow from there, but the logic of the financial system makes that very difficult.
And the times my other half sees odd payments on my credit card, she's on the phone claiming chargebacks lickety-split because nobody she knows would pay for porn.
So I have no data to provide on this matter. None at all.
I'm not aware of concrete stats, but anecdotally the porn industry suffers from extremely low margins caused by, among other things, incredibly pervasive content theft, horrifically low conversion rates, high rates of fraud, high rates of chargebacks, a lot of amateur producers happy to give their content away for free, etc.
Porn consumption is pretty common, but "nobody pays for porn" is a punchline for a reason.
10% of users is unlikely high. Porn has one of the lowest conversion in the online world. It's less than 0,05%. I knew a guy once who ran one of the infamous thumbnails sites and he was struggling keeping afloat although the traffic his site was getting was big.
Cryptocurrencies "solve" the issue by not supporting chargeback. It's not like chargeback is intrinsically tied to Visa and friends, they just realized that overall it was beneficial if the buyer felt more comfortable buying things because they have the peace of mind of being able to chargeback later if they feel they've been scammed.
I often hear lack of chargeback being touted as a feature for cryptocurrencies but it's more like the lack of a feature. It's obviously beneficial if you're in the shoes of the seller but if it's so great then why does chargeback exist in the first place?
Put yourselves in the shoes of a porn buyer, would you really put your billing info on bigtitties.ru if you knew that if they steal your money you have no recourse whatsoever? Also there's now a transaction on an immutable public ledger that might trivially show anybody who cares to look for it that you're buying incest porn online?
I think chargebacks for credit cards are needed, because their model is based on trust. You give your credit card number to the seller und you have to trust that he pulls only the amount he promised he would pull.
For Cryptocurrencies on the other hand, you never give you private key to somebody. You always decide yourself which amount to transfer. No chargeback is needed for this model.
I have an EC-card and chargeback is only available for pull-transactions, not for push-transactions.
> I think chargebacks for credit cards are needed, because their model is based on trust. You give your credit card number to the seller und you have to trust that he pulls only the amount he promised he would pull.
I've initiated chargebacks before, but overwhelmingly it's not because I've been overcharged (that only happened once and, ironically, by a company that subsequently launched an ICO...): It's because I did not receive the product/service, or it wasn't as advertised.
And that is just as much of an issue with crypto.
Keep in mind, in many cases the standard advise to consumers is to use credit, NOT cash, purely to be able to obtain the protections of chargebacks, but cash already has all the advantages you list as meaning chargebacks aren't needed for crypto.
There are many other reasons for chargebacks: Perhaps the product isn't what was advertised or not what the buyer expected. Perhaps the seller doesn't provide the product, either due to fraud, incompetence, or a technical problem. Perhaps there's simply a misunderstanding.
EDIT: Apparently chargeback may be the major issue for porn payment processing:
How is bigtitties.ru going to steal your money if you only send them payment as you consume the content? Chargebacks are very useful for the shipment of physical goods, but not relevant here.
This is the problem with HN’s blind hatred for cryptocurrency. People make weird assumptions, not understanding how it works. There are many different micropayment schemes under development or already operational. With these, you can pay per second of content. See spankchain
> Crypto currencies is a solution to this problem and not just in porn.
By which you mean, the solution for the high rate of people initiating chargebacks is to just use a payment method which won't let them? I think the underlying problem is that people want to make chargebacks, not that Visa lets them. And if I'm right, then you'd expect to see customers refusing to switch, since from there point of view this isn't the solution to a problem, it's taking a solution away from them.
> We have still only a few customers using them though, so it's not a success yet.
Charge back in porn are not by honest people. Unless you have worked in the industry you would not have a good idea of the size of the scam phenomenon there. It's way higher than in the regular market.
Sites scaming customers has been solved mostly by communities organising and insta banning bad apples.
The reverse is insolved. And yes, removing a gun will make people mug less.
Why aren't debit card transactions handled separately and differently from credit card transactions? Since they come from a guaranteed fund source, I would think they would make possible a special "no chargebacks permitted" transaction type? I see no way to get people to stop doing chargebacks after they've come down off their sexual arousal inhibition lowering short of widespread social education of a sort nearly guaranteed not to happen, so it'll have to be some solution that simply makes it so people CAN'T unspend the money.
I used to work for a payment processor. Our upstream bank would not allow us to handle any adult content at all. The justification used is that adult content is too risky because of chargeback rates.
Apparently the chargeback rates on adult content is really high. Anecdotally, it makes sense. You buy the nude pics, your husband sees the charge on your card, "I was hacked" boom, chargeback. You buy the nude pics, do the nasty alone in your room, have some regrets once the pressure to do the nasty is gone, try to get a refund, get refused, boom chargeback.
I'm not sure that quite holds up in our post-Pornhub world, where everyone is openly admitting to using porn these days. But banks are conservative (in all the ways) and slow to change.
That's not the real reason (source: used to work in adult).
High chargebacks in high-risk industries are related to three things:
1) The goods are digital and delivered immediately. This means that if I just got a hold of a 100 stolen CC numbers and want to test whether or not they're legit before moving on to physical goods, I'm going to test them out at one such service - which shoots up the CB/refund rate.
2) This also creates a secondary market for illicitly opened accounts / access, which is easy money (and anything else you can imagine down the lane on piracy etc.)
3) Because the margins are so low due to high marketing costs + competition, many sites (especially in the past) would sign the user up to endless recurring billing schemes which are nigh impossible (or costly) to cancel, also driving up the chargeback rate.
Yes this is true. Also most porn subscriptions have "cross-sales" meaning you get signed up to another subscription when you join the first. This leads to higher chargebacks.
I run product for Pornhub Premium, we have a clean, no cross-sale offer and it's very easy to cancel, our chargeback ratio is near 0.
I always thought this as payment processors optimizing their bussiness model till it's overfitted to "non-porn".
I never worked in porn but I did work with payment and clearance systems from carrier companies a long time ago, think billing customers for SMS messages to specific numbers and then getting clearance for the carrier for the money. The risk of fraud or any kind of weird issue is stupidly higher for porn. Either simple "customer doesn't have the money" fraud or "the police knocks on your door because you got money from X customer" fraud. So maybe you need more people or better systems to deal with it while still being profitable. CCBill charges are huge when compared to other credit card processors.
It's easy to reduce costs and complexity until the easiest solution to keep or improve current margins is don't do porn.
Yeah, it may well be chargebacks, not legal or moral concerns.
I live in New Orleans, which has an unusual concentration of strip clubs. I've heard people who work in them complain that to use a credit card, they require you to let them photograph your ID, make an impression or photo of your card, and have you sign a carbon copied form.
This gives some customers cold enough feet that they head out, but the reason is that people will run up a serious tab with lap dances, champagne and whatever else and then strenuously deny they ever set foot in such an establishment. I'm sure porn has the same problem.
It's pretty gross as far as I'm concerned. There's no legitimate moral distinction between falsely saying you never signed up for (random porn service) and Netflix, or saying you never got a lap dance and saying you never went to the ballet, and people acting differently causes legal businesses with avid customers real harm.
A (former) friend of mine used to work for a very popular porn site. He said that some absurd number of sign-ups were canceled through chargeback, and he figured it was kids signing up to a porn site and then the parents getting the bill at the end of the month. Apparently, he could tell, because genuine users would browse for a bit, download some stuff, but the ones who were more likely to do a chargeback would log in, download much of the site's content in a few days.
I wonder if it might be because of how much free porn there is.
"Paying for porn is stupid. But I just have to have everything of this specific person or fetish, so I'll pay, scrape, then chargeback."
I'm skeptical that it's a lot of kids because I feel like finding free porn is pretty darn easy if you try. Why would they ever bother with all the friction that goes with charging their parents CC?
(Just checked, the top three Googles for "free porn" are sites with a lifetime of free porn)
Well there are free movies, free music too if you search hard enough. I'm happy not everybody thinks like you because this thinking destroys quality and industries.
I think it's because porn doesn't have so much of a social aspect as movies or music do. So tastes are less regulated by normalization through discussion, which means "movies I can talk about with friends" is an important factor in that industry.
Porn is much more about revealed preferences in isolation.
A common myth. Mindgeek owns Pornhub, YouPorn, Redtube, Tube8, xtube and Gaytube for tube sites.
They own Brazzers, Digital Playground, Reality Kings, Twistys, Babes, Sean Cody and Men.com for production studios.
There are thousands of tube sites, two of which have more traffic than those mentioned above. There are hundreds of porn studios, many which are more popular than those listed above.
I think it counts when it's a subsidiary of Mindgeek that owns the sites as well. Which is what you will find if you dig into the ownership of most porn sites and studios today.
Not true. I listed the sites that Mindgeek owns above. There are no secret subsidiaries. The porn industry is incredibly competitive, if it wasn't, my job wouldn't be so difficult.
> the ones who were more likely to do a chargeback would log in, download much of the site's content in a few days
I download a lot of that content too (sans the chargeback). I like to have it available locally, even when the internet is down, when the site decides to take a particular video down for whatever reason, or even when my account expires. And paying for it makes it just a little more likely they will continue to produce more of it in the future.
It's the distinction people make with things done while drunk. Sexual arousal markedly reduces a persons inhibitions. Because people see that state of lowered inhibitions as "not themselves", once they're no longer aroused the various anxieties and pressures they function under normally are re-established they see retracting their decision as OK because it's what they would have done "if they were being themselves." It's morally unjustifiable IMO, and smacks of emotional immaturity, but that's where most people are. 'Just because I did it doesn't mean it's something I would do!'
CCBill has a “relationship” with First Data which is a very large payment processor and an acquiring bank.
They are also willing to eat the fines that come with supporting merchants with more than 1% chargeback.
The reason why there aren’t many more of them isn’t morality it’s just very hard to maintain profits in this environment.
Patreon will have to pay fines if they have high chargeback rates and those fines are intentionally huge so for them it’s a none-brainer they need to reduce chargeback rates and their adult content creators are likely one of the biggest offenders and even if they are not they are an easy sacrifice to the PCI gods.
Porn buyers preserve their relationships with spouses who notice the charges by denying knowledge of them. Porn transactions are thus exceptionally likely to be treated as fraud, whether or not they actually are. That’s the folk tale, anyway.
Adult content usually sees large volumes of chargebacks. This is because when people are aroused, their inhibitions markedly decline. Because modern people do not see themselves as fundamentally sexual beings, when the arousal has passed they feel regret, shame, or that the person who made the charge "wasn't them" or similar, so they feel no moral reluctance to refuse to pay for the content they enjoyed. It's not really something that can be fixed, the human element of it anyway. What can and should be fixed are payment processors. They are very lightly regulated taxing bodies whose policies are not decided by elected representatives, yet control the majority of our economy. If payment processors wanted to actively override the decisions of the Federal Reserve and set national monetary policy they could do it tomorrow.
It's really pretty absurd how a handful of companies who do nothing but shuffle numbers from one place to another not only charge steep fees for the service, but also manage to charge a percentage of the transaction - as if transferring a bigger number down a wire cost more! In the past there was some sense in that there were liabilities involved, but most all of that has been eliminated and only the fees remain.
I have not tried to do what you describe, but this is my best take:
The problem isn't really the law most of the time: It's how companies are hooked up to the financial system.
The Stripes and Paypals of the world aren't really connected to all the credit card networks directly: There's layers underneath, and one of them is banks that act as intermediaries. These kind of companies start with one bank (say, Wells Fargo), and might expand to more as they want to expand to other parts of the world. Eventually, they might have dozens of banking partners that are part of the transaction processing. Even though this online processors are carrying most of the fraud risk, they still have to adhere to what their baking partners will accept, and pretty much every bank out there will tell them things that they can't sponsor past what is legal, and that almost always includes pornography, drug paraphernalia, medicines and sex toys. The bank will come knocking to their door, and they'll have to say no. This is not just down to banks disliking the businesses for image reasons, but also has to do with risk: The number of stolen credit cards used in those sites, and the amount of disputes on the charges for other reasons is pretty high compared to other lines of business.
Therefore, what you need is to form all your banking relationships with entities that have no problem with you processing cards for porn sites. So you have to find banks that will deal with this companies at all, and then convince them that your fraud protection is good enough, and your pockets deep enough, to take the risk.
It isn't about seeing x-rated stuff as art, but rather about the ability to be open about sex. Traditional-minded people are rarely as open about it in my experience.
I'm female. I watch porn. So does my spouse. There is no secret there. If either of us were going to a strip club for whatever reason or visited a prostitute somewhere legal, we can simply tell each other about it knowing the other won't be angry. We can openly discuss folks we are attracted to. We understand that finding others attractive is normal human behavior, and would rather not lie about it.
On the other hand, I've known plenty of women that get angry about men watching porn. I have known plenty of men that won't admit to their wife - this person they claim to trust - that they watch porn or have visited a strip club. There are others that actively protest against porn for whatever reason. In general, you find more "porn is morally wrong!" arguements in conservative environments.
That in particular is, and hasn't been something that happened. But you know, if either of us want something the other isn't so willing to do, we both understand. Not such a big deal for us - though I do understand where it would be a line for other folks. And that's OK, the main point is to be open about this sort of thing and be able to discuss it without fear of the other being angry. Yes, this has been discussed in my household, more in the theoretical sense because we both have some hesitations about the other person not wanting to be involved or worse, forced by a third, unknown party... even where it is legal. My own main reasoning for wanting such a thing is because I'm bisexual, and there are lots more men available for me than women. Folks have urges and get stuff stuck in their head, after all. Being able to share these thoughts is pretty great.
The rest of it is pretty normal stuff (watching porn, being physically attracted to others), though it is stuff folks tend to not discuss openly.
I am about to go put myself at risk right now with a casual partner. I believe in a another simulation where porn did not exist I’d be snuggled up and listening to some snores of my beautiful wife and newborn. But it exists and grows.
You can sell snake oil on Shopify all day long but sell a JPG with that shows female nipples and it raises flags.
Does anyone know WHY this actually is? I know it’s related to Title 18, Section 2257 somehow, but I don’t understand exactly how, nor why CCBill seems to operate without issue. Can somone with inside knowledge explain?
Porn has come such a long way in the last 10 years. Maybe I’m just more progressive than I realize, but I see stuff like X-Art as actual art and I wish there was something like iTunes for porn.
If someone can explain to be what the legal roadblock is for porn billing and how one might be able to get around it, I’d be the first investor and founder. Seriously. There is so much great pornography out there now I feel like you could actually change the way people think about it and maybe even clean up the industry. It doesn’t have to be a dirty thing you bury under 10 cryptic folders.