There's an old Chinese proverb that says: Never set up an adult Website unless you first know how to take a surfer's money. Okay, I admit it. I just made that up. But it most certainly should be an old Chinese proverb, because if your goal is to make money online then you have to learn to take money, right? Fortunately, when it comes to taking money, there are all kinds of options available to adult Webmasters. Each choice has its own strengths and weaknesses, and which options will work best for you will largely depend on what type of adult Website you're building.
Most adult Webmasters make money through one or more of the following revenue methods: third-party credit card billing companies, age verification systems, dialers, and affiliate programs. Keep in mind that there's no reason why a clever Webmaster shouldn't utilize several of these payment and revenue options on a single Website. Also note that it's rare for a Webmaster to use his or her own merchant account to accept online payments - the reasons for this we'll get into a little later.
Third-party billing companies make it pretty painless for any adult Webmaster to accept major credit cards on their Websites. The concept is easy enough to understand. When a surfer clicks on a Website's join button, he or she is taken to a page that collects the proper credit card and billing information for that surfer. The order is then submitted to the third-party billing company, which uses its own merchant account to process the order. The third-party billing company then takes out a percentage of the sale as its fee, and mails the rest to the Webmaster in the form of a check. The disadvantage of this is, of course, that the Webmaster doesn't get one hundred percent of the sale revenues. The advantages, on the other hand, are plentiful.
Third-party billing solutions make it possible for any adult Webmaster to take credit cards without the need to pass a credit check or merchant account application process. These companies also provide Webmasters with the software necessary to process the credit card orders and instantly add new members to the membership base after the approval of a new order. In theory you could accomplish all of this with your own merchant account if you were willing to put in the work to locate the software and set up the system, but the reality of chargebacks makes it far too risky for most adult Webmasters to process their own orders.
A chargeback is a charge that has been challenged by the credit card holder and subsequently reversed by the credit card company. Chargebacks are all too common in the adult industry - especially the online segment - for a variety of reasons. A surfer might make a purchase at your Website, then later deny the charge when an angry spouse produces a credit card bill. Children also present a problem; kids will sometimes swipe a parent's credit card and use it to buy porn. This scenario not only results in chargebacks when the parents find out, but also brings undue governmental pressure on the entire industry. Less than ethical Webmasters and adult companies also contribute to the problem by finding clever ways to trick surfers into making purchases that they either do not fully understand, or else had no intention to make. The classic example of this is the Website which does not make it clear that their membership fees recur monthly - the surfer buys what he or she thinks is a one month membership, only to find four months later that they have been billed every month. Then there are those sites that purposely make it nearly impossible for customers to find a way to cancel their memberships. All of these dirty tricks might result in extra revenues for the Webmaster, but they also further taint the reputation of the industry while increasing the number of chargebacks to levels that most credit card companies find unacceptable.
A few years ago, the major credit card companies (VISA, MasterCard, and American Express) decided that they had seen enough from the adult industry to warrant drastic changes. The largest third-party processor at that time, DMR, lost its merchant account and was forced out of business. American Express suddenly announced that it would no longer allow adult Websites to accept American Express online. VISA and MasterCard followed with staggeringly high penalties for any merchant whose chargebacks exceeded a ridiculously low limit - so low that very few adult merchants had any hope of avoiding the fines. Many Webmasters saw dark times ahead, wondering if VISA and MasterCard would pull out of the online adult industry as American Express had done. Fortunately, it hasn't come to that. The remaining third-party processors instead chose to implement elaborate "scrubbing" techniques into their approval process, with the goal of weeding out orders that were at high risk of a chargeback. Customers who had a number of previous chargebacks were added to black lists and denied future charges. These tactics dropped sales significantly for large-volume Websites, but they also succeeded in lowering chargeback rates and bringing some stability to adult e-commerce.
Third-party billing companies have brought a lot of positives to the industry. Not only have they helped curb chargeback rates, they also give all adult Webmasters a way to accept major credit cards and utilize the recurring billing method of collecting membership fees. If you operate a pay site, the chances are you use recurring billing - in other words, the member is automatically billed for his or her membership each month until that membership is cancelled. Obviously, this form of billing will result in bigger revenues for pay site owners, since requiring members to manually renew each month would provide them with the perfect opportunity to end their membership. Third-party bil ling solutions are one of the best ways to collect money on your Website, especially if you operate a quality membership-based site that features regular content upgrades.
But third-party credit card processors aren't the only way a Webmaster can collect money online. One of the Web's oldest methods of accepting payments for porn sites is the Age Verification System (AVS) model. The concept of the AVS relies on the premise that children are not likely to have access to a credit card; the premise isn't perfect of course, but it does help weed out a significant number of minors while providing Webmasters with a source of revenue. Webmasters "protect" their sites from minors by putting any uncensored adult content in a secret location on their server. Visitors to that site are told what they can expect to find in the secret area, then are informed that they must first prove they are legal adults by securing a username and password through the AVS company chosen by the Webmaster. If the surfer completes the account application process properly, he or she is provided with a username and password that will take them to the secret area of any Website that uses that AVS to weed out minors. The Webmaster who uses the AVS receives a sales commission for every new user that signs up for the AVS through the Webmaster's site.
While it's true that AVSs are used by Webmasters to make money, don't let this fool you into thinking that they do not still provide a valuable service in terms of keeping minors away from adult materials. Critics will point out that some minors now have their own credit cards, and that those who don't might be able to swipe a parent's credit card and gain access in that way. These observations are true enough, but by using an AVS to hide the uncensored adult content, the Webmaster is helping to significantly reduce the chances that a child will come into contact with the erotica on his or her site. And they're making some money in the process. You can't beat that!
The AVS model probably isn't the best way to go for a large Website with regular updates. The reason? If you're going to spend a lot of time and effort updating a Website, then you're probably better off using a third-party processor's recurring billing method. You'll make a lot more money with recurring monthly billing. But for Webmasters who want to build a lot of small, rarely updated sites - which are easier and cheaper to operate, much better for beginners, and a great way to build a traffic stream - using an AVS system is the way to go.
A pending legal issue that might impact the nature of the AVS model deals with whether or not AVS companies can be held liable for the content of the Webmasters who use their services. In other words, if a Webmaster operates a site offering bestiality pictures, and the AVS company profits from those illegal pictures through their association with the publishing Webmaster, is that AVS liable for the illegal activity? It's an issue that will be fought in court, but Webmasters need to understand that potential liability is something that the AVS companies take very seriously.
"While I'm not in the legal field, it is my personal feeling that AVS owners and all Webmasters have a shared responsibility to ensure that the content within their sites conforms to all known standards," said Craig Tant, Director of marketing for the AVS programs Man Sites and Sex Key. "At SexKey.com and ManSites.com, we do everything within our power to enforce this. We check every site that comes in, and we listen to our surfers when they have comments. The responsibility falls on all of us to work together."
In other words, don't be surprised if your Website has to jump through a few hoops before an AVS program will accept it. Usually the major companies aren't very intrusive in terms of their rules; and remember, the rules that are in place are usually there for the benefit of all parties involved.
One of the more controversial methods of collecting membership fees is through the use of programs called "dialers." Dialers are popular with customers who don't have access to a credit card; dialers are especially popular in Europe, where credit card use is less common. The customer downloads the dialer application from a Website, and then executes it. The program disconnects the user from the Internet and reconnects them by route of a toll call. The charge for accessing the Website is added to the customer's phone bill. No credit card required.
In the US, dialers are controversial for a number of reasons, primarily because they provide a tremendous potential for abuse and fraudulent activity. Unethical Websites have used dialers to trick surfers into being billed for Website memberships that they did not intend to purchase. The American government also has shown intolerance for dialers in the past. What this all means is that if you're going to use a dialer you should be absolutely certain that your customers understand what will happen if they download and execute the dialer application.
If most of your traffic is from the US, dialers aren't really the best choice as your primary source of collecting payment. Most Americans prefer to make online payments with credit cards, and dialers don't always instill adequate consumer confidence. The good news is that you can use dialers in addition to third party processing companies; the dialer then acts as a backup if the customer doesn't have a credit card but still wants to buy access to your Website.
There is, of course, one other commonly used method of securing revenues with online adult sites - you could always design "free" sites and then refer traffic to some of the various affiliate programs available to adult Webmasters. In theory, you wouldn't even have to build an adult site to make money in this manner; you could simply build any site that attracted adult surfers, throw up some advertisements for your sponsors' Websites, and then collect sales commissions on any sales generated from your traffic. This lets you share in the profits of some of the largest adult porn sites on the Internet without sharing in the expense of running them.
As you can see, there are quite a few choices when it comes to collecting payments and securing revenues online. Remember that these various options can be mixed and matched; the more choices you offer, the better your chances for a sale. A crafty Webmaster will find a way to use all of these payment options when building an online empire. Spend some time becoming familiar with all of them, and you'll be better able to make an informed decision about which system is right for you.
