Dating Merchant Account: Insider’s Guide.
Traditional sponsor banks and payment service providers avoid working with dating merchants. This is because the online dating industry is considered high risk. It is important to know that dating merchants are high risk but not illegal. Specialized processors cater to the credit card processing requirements of dating companies.
These providers follow special underwriting protocols. QuadraPay is a proud partner of acquiring institutions that offer dating merchant accounts. Our team has created this guide to help you easily get approval for a dating site merchant account. Let’s begin.
What is a dating merchant account?
A dating merchant account is a specialized bank account that allows dating apps and sites to accept credit card payments. With an online dating merchant account, companies can accept one-time and subscription payments. Processors classify dating merchant accounts as high risk and mandate high-risk registration. The MCC for dating merchants is 7273.
Recent developments regarding dating merchant accounts
There have been some serious policy changes in the payments industry. These changes have a huge impact on online dating and escort listing companies. New regulations require high-risk merchant registration for both escort and dating businesses.
Processors register merchants with card companies by submitting their business details. This includes the merchant’s URL, business address, MID, and estimated sales volume. Dating merchants pay annual high-risk registration fees ranging from $500 to $950.
Effective April 1, 2024, card companies categorize high-risk merchants into three tiers. Dating merchants fall under Tier 1. These merchants undergo an enhanced underwriting review. Acquirers regularly monitor these accounts to prevent illegal transactions. Processors must obtain separate approvals from card companies for dating accounts. Starting January 1, 2025, card brands will increase the Misuse of Authorization Fee. They will also raise the Excessive Authorization Attempts Fee. Dating merchants will be required to pay these fees as well.
Low-risk processors struggle to support dating merchants due to these challanges. Thus, dating entrepreneurs should only work with specialized high-risk online dating merchant processors. Fortunately, we have no scarcity of dating payment processors. QuadraPay works with some of the finest high-risk dating payment processors in the UK, EU, and US.
Dating Merchant Accounts are High-Risk: But Why?
There are many reasons why dating merchants are considered high risk. Historically, this industry has seen many serious legal challenges. In 2015, a well-known Canadian online dating service faced a major data breach. The platform targeted married users. It exposed the personal details of over millions people. Another serious instance happened in 2019. Investigators discovered a dating site manipulating users by creating fake profiles. The prominent dating site faced significant legal action.
Big brands like Grindr, Bumble, Tinder, and OkCupid have strict data security measures. Despite these efforts, they continue to face challenges related to privacy. Protecting user data remains a constant concern for all dating platforms.
All these instances of the past make banks worry when they onboard an online dating merchant. In addition to these concerns, there are many other factors to consider. Let’s look at a few of these factors.
Fraud and Scams: There have been many instances where innocent people were cheated 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, it can easily become a hub for criminal activities. These activities include stalking, harassment, and physical violence. Dating merchants must have robust systems in place. These systems should detect fraudulent users. They must also permanently ban these users.
Chargebacks: In this industry, it’s common for users to be dissatisfied by the overall experience of using the platform. Dating websites can offer the possibility of finding like-minded people. However, there is no guarantee. The outcomes are unpredictable, and users may ask for refunds, which can be problematic for payment processors.
Reputational risk for banks: In many societies talking online adult dating and sugar dating are still taboo. Many banks believe that their association with adult dating sites can affect their reputation.
Market Saturation: The market is very much working on an 80:20 principle. Existing big brands capture a large market share. This market saturation leaves little potential for new companies.
Features of Online Dating Merchant Accounts
Fraud Reduction Tools: Chargebacks are a big challenge for dating merchants. That’s why it’s important to choose a solution with advanced fraud reduction tools. The gateway should include tools that can proactively identify risky transactions. These tools must immediately block suspicious transactions.
Subscription payments are an important feature of a dating merchant account. This feature allows merchants to accept recurring payments. When a user signs up for paid membership on a dating website, then the user pays the subscription amount each month. Subscription payments are vital for dating sites.
International Payment Methods: Dating sites operate internationally. Merchants cannot limit themselves to accepting only local card payments. The payment processor must allow merchants to accept all types of cards. This includes cards issued internationally.
KYC for Dating Merchant Account
To get the approval of a dating merchant account, the business owner must submit certain documents. These KYC documents help verify the legal status of the company and the business owner.
For the business registration proof, you can provide the certificate of incorporation. The business registration document may vary based on the type of business structure.
Your payment processor deposits funds into your business bank account. Remember that the name on the bank account should match your registered company. For this, you can provide a voided check or a letter from the bank confirming your account details.
For personal identification, business owners can submit a copy of their passport or driver’s license. Make sure that these documents are valid and are in English.
A few other documents are required. These include domain registration proof, a processing statement, and a bank statement.
FAQ: Merchant Account for Dating Sites
Will I be able to get an extra 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. Yet, the payment processor must verify and approve the new URL. If merchants process transactions on unregistered URLs, they risk fines and account termination.
How should merchants handle uploaded content to ensure compliance with industry standards?
The merchant is responsible for ensuring compliance. They must make sure that any content uploaded follows the payment processor’s policy. For this, the merchant can use a combination of manual and automated moderation tools.
