You can't have a bank account

How banks are financially discriminating against the adult industry

A bank account is central now to all of our lives. And if you don’t have or can’t get a bank account then you have a serious problem on your hands. This was a problem that I was not anticipating having when I started my company. 

In the country I started my company, being a pornographic site is legal. When starting my company I just applied for a basic bank account, easy. And, yes this was easy at first. 6 months later I had an investment coming in. It bounced. Then I suddenly got a notification that my account was frozen and I had 60 days to get out. We hadn't actually violated any rules or anything, and when we first applied to this bank we were allowed, they just changed their policy. That was clearly quite scary, and awkward to have to state to your investor why you couldn’t receive their finances. Not a great look … 

But I thought oh well, I can just get another bank account, there’s plenty of banks in the world. Once again, I was very wrong. We began our bank search. This was probably one of the most stressful experiences. We applied to bank after bank to only be met with more rejection, and our 60 days were running out fast. 

I tried reaching out to other adult sites(non-competitors) to ask for their advice on this matter. It was very interesting speaking to other companies about this, as everyone had the same frustration but everyone was also scared to even talk about it, because they were just so worried about losing their current bank accounts. 

So, why do banks not allow adult sites, even though it’s perfectly legal? Banks often will discriminate against adult business’ be that you are a tube site, fan site, studio, sex store, or individual sex worker. They often will reject or ban your account under the ‘morality clauses’, which are aimed at businesses that are legal but are regarded as taboo. 

Banks are not allowed to discriminate based on race, color, religion, national origin, sex, disability, or familial status. However, there are no laws that stop them from discriminating against adult or sex tech businesses. This kind of financial discrimination tends to high individual sex workers, and new sex related businesses’ the hardest, rather than the old guard. Banking discrimination is not the only issue that new adult or sextech companies face, they face further discrimination in that private and VC investors cannot invest in them, also because of these ESG, ‘morality’ clauses. 

One of the key claims banks will use against adult sites is that they are ‘high-risk’ due to chargebacks. You might be wondering what a chargeback is …

A chargeback is a demand by a credit-card provider for a retailer to make good the loss on a fraudulent or disputed transaction.

Basically, what it usually is (in the case of porn) is a user will purchase content from for example, a performer. They then tell their bank that this transaction was not them. Then, the adult site will have to give this money back. It usually costs way more to fight the chargeback, so it’s easier to just give it back. This also in turn means the performer doesn’t receive that money, even though the person took their content. And, if a site receives too many chargebacks this can red flag them, and can leave the possibility of being ‘cut off’ by Visa or Mastercard. Yet, there isn’t any solid data that shows that the adult industry receives more chargebacks than other types of industries. 

In addition, another justification by these players is that adult sites are filled with illegal content. But, once again this argument doesn’t suffice. Because, these same banks still allow other companies, e.g. Twitter, Meta etc, who also have large issues with harmful and illegal content, and arguably on a larger scale. So, this argument alone is not enough to justify the financial discrimination. 

However, what is more likely for the financial discrimination is not chargebacks, ‘harmful’ content, but rather taboo, and the views of the people making the top decisions. 

These conservative views trickle down, and make the financial discrimination grow more widespread. These old ideologies also influence newer companies that have worked with or wanted to work with sex tech/adult  but then quickly backtracked on it when they realize that ‘it’s not worth the hassle’ because they still also succumb to the old guard. For instance Paypal and Stripe cannot due to their relationship with Mastercard and Visa. Their hands are tied.  And so, the cycle continues of not just financial discrimination but also social stigma and segregation.