Dating Merchant Account: Insiders Guide.
QuadraPay has been a well-known provider of high-quality dating merchant accounts since 2016. We believe that dating apps and websites not only help people to find like-minded individuals but also generate a lot of wealth for business owners of these dating enterprises.
We are proudly introducing this extensive guide for business owners to understand every aspect of dating merchant accounts. The guide covers various topics such as types of dating merchant accounts, features of dating payment gateway, fee structure, application process, KYC process and additional FAQs. We are confident that after reading this guide, you will have all your questions answered. Let’s begin.
What is a Dating Merchant Account?
An online dating merchant account is a special type of bank account that allows dating apps and websites to accept credit card payments from users. With an online dating merchant account companies can accept one-time and subscription payments.
Unfortunately, because of some recent incidents and policy changes of card companies, now dating merchants find it even harder to get account approved. The payment industry has made major policy changes in regards to dating websites and apps.
Card brands introduced High Risk Merchant Registration program effective October 2020. This registration became mandatory for all dating and escort merchants (MCC 7273). Processors are required to register the merchant with card companies by providing details of the merchant such as URL, business address, and sales volume. The annual fees that a dating merchant pays for high-risk registration range from $500 to $950. These new requirements can be a big challenge for startup companies as they may struggle to pay initial and annual fees for high-risk registration.
Effective April 1, 2024, card companies categorize high-risk merchants in 3 tiers and dating merchants fall in tier 1. Dating merchants undergo enhanced underwriting review, acquirers are required to regularly monitor such accounts to prevent illegal transactions. It is mandatory for processors to get a separate approval for dating accounts by card companies.
From January 1, 2025, card brands are going to raise the Misuse of Authorization Fee and Excessive Authorization Attempts Fee. All such fees are also applicable to dating merchants.
These changes and complexities make it hard for low-risk processors to support dating merchants. We strongly recommend entrepreneurs from this industry to work with specialized high-risk online dating merchant account providers only.
Fortunately, we have no scarcity of dating payment processors. Quadrapay directly works with some of the finest and most regarded high-risk dating payment processors in UK, EU and US. Email us today and we will be happy to answer your questions regarding dating merchant processing. You can write to us on [email protected].
Dating Merchant Accounts are High-Risk: But Why?
The online dating industry has seen many legal and ethical violations and we can say that these are the main reasons why banks find dating merchants to be high risk. In year 2015 a well-known Canadian online dating service that was primarily targeting married users was found to expose personal details of over 32 million users. Fake profiles are sometimes used by dating sites to manipulate users which is unethical. In year 2019, FTC lawsuit against a well-known dating site is a classic case of the same nature. There have been instances of data privacy issues and GDPR violations.
Big brands like Grindr, Bumble, Tinder, OkCupid and Facebook, despite taking all important measures, have seen some challenges with respect to privacy and data. All these instances of the past make banks worry when they onboard an online dating merchant. Apart from these, there are many other reasons as well. Let’s look at a few of these factors.
Fraud and Scams: There have been many instances across US, Canada, UK and EU where innocent people were cheated emotionally and monetarily. Scammers are experts in catfishing; they create fraudulent profiles using someone else’s pictures to manipulate users. If a dating app is not properly managed, then it can very easily become a hub for criminal activities like stalking, harassment, and physical violence. Dating merchants must have robust systems that detect and permanently ban fraudulent users.
Chargebacks: In this industry, it’s quite common for users to be dissatisfied by the overall experience of using the platform. Dating websites are definitely a place where one can have a possibility of finding like-minded people; however, there is absolutely no guarantee. Because of the unpredictable nature of the outcome of the subscription, users may ask for money back, and this can be very problematic for payment processors.
Reputational Risk for Banks: The overall nature of adult dating is intimate and this involves handling a lot of personal information and media. In some societies, online dating or talking about LGBTQ+ and sugar dating are still taboo. Many banks think that being associated with any industry related to adult or erotic industries can have a negative impact on the banks’ overall reputation.
Market Saturation: The market is very much working on an 80:20 principle where the larger share is captured by existing big brands like Tinder, Bumble, Hinge, OkCupid, and Happn etc. This market saturation leaves very small growth potential for new companies. Payment processors are well aware of this and that is why they only support new players that have strong financial backgrounds and have excellent business plans.
Most Important Features of Dating Merchant Accounts
Fraud Reduction Tools: Chargebacks are a big problem for dating merchants and that is why the payment solution you choose must have advanced fraud reduction tools. The gateway should have tools in place that proactively identify risky transactions and immediately block them. By keeping a close automated watch on transactions in real time, merchants as well as payment processors can reduce credit risk to a high extent.
Subscription Payments: Another most important feature of dating merchant account is the ability to accept recurring payments. When a user signs up for a paid account on a dating website, the charges for subscription are generally charged each month. If a payment processor does not support subscription payments, then it can be very problematic for the merchant.
Multiple Payment Methods: Most dating sites are generally international and that is why only accepting credit card payments is not an option for merchants. The payment processor must allow the merchant to accept all kinds of credit and debit cards as well as local payment methods. Without having access to regional payment methods, merchants can face serious growth challenges.
KYC for a Dating Merchant Account
To get the approval of a dating merchant account, the business owner is required to submit few documents to the payment processor. These include documents that can verify the legal status of the company and also verify the identity of the business owner. Once these documents are submitted to the payment processor, the underwriters carefully evaluate these documents and validate them. This entire process is called KYC.
For business registration document, you can provide the certificate of incorporation or any similar document.
The payment processor will settle your funds into your business bank account. Keep in mind that the name on the account should be the same as the name of your registered company. For this, you can provide a voided check or a letter from the bank confirming your bank details such as account number, routing number, IBAN, BIC, Swift code, etc.
For the personal identification of the business owner, you can submit a copy of your passport or driver’s license. Make sure that these documents are valid and are in English.
Additional documents that you may need to submit include the domain registration proof, previous processing statement, recent bank statement, and any other document that your processor may ask for.
FAQ: Merchant Account for Dating Sites
Will I be able to get an additional MID if I want to start an online dating site for another niche?
A merchant can definitely have more than one MID depending on the requirements. However, it is important to know that the new URL must be verified and approved by the payment processor. Processing transactions on unregistered URLs can attract fines and termination of the account.
What is the MCC for Dating Merchants?
The Merchant Classification Code for online dating merchants is MCC 7273. The same code applies to escort services, matchmakers , adult dating, and related businesses.
How should merchants handle uploaded content to ensure compliance with industry standards?
It is definitely the responsibility of the merchant to ensure that any content uploaded on the website is as per the compliance and approval policy of the payment processor. For this, the merchant can use a combination of manual and automated moderation tools.
