Pointing to ongoing problems with third-party credit processing and tougher Visa/MasterCard chargeback thresholds, AdultShop.com has revealed they expect another $7.2 million hit on its Internet porn division.
AdultShop told The West Australian that their net cash flow for the second quarter fell to just over $1 million, putting them about $3.2 million in the red for the year to date.
"Though the business was currently cash flow positive and profitable, AdultShop said it had decided to write off the remaining $7.2 million in goodwill attributed to the division," the West Australian said.
AdultShop also said they're in a new legal battle with former traffic provider Pageseeker, whom they're suing for over $1.12 million, claiming they're trying to recover "overpayments" to Pageseeker, after invoices didn't show a previously-agreed discount, the newspaper said. Pageseeker claims that money was owed for traffic sent to Today's Success, according to a deal between that AdultShop subsidiary and Pageseeker.
AdultShop was already defending against a $2.8 million from a former American credit processor, the newspaper continued, with AdultShop chairman Kim Heitman telling the paper credit card processing "headaches" – and substantial non-compliance fines proposed by Visa and MasterCard – remain a big obstacle to its continuing Internet porn success.
"We anticipate those . . . are going to make significant changes to the industry as it is and certainly we are in the situation of re-evaluting our business model," Heitman told the West Australian. "Put simply, to keep under a one per cent charge-back threshold (set by Visa and MasterCard) will require a degree of discipline the industry hasn't yet been able to display."
