Gentleman Club Adult Entertainment Clubs

Merchant Account for STRIP CLUBS, GENTLEMANS CLUBS, Adult Clubs

Strip club, gentleman's clubs, and adult club industry

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Due to fast growth in tourism, there has been rapid growth in strip and adult club industry. Hot destinations all over the world concentrated in the development of such clubs. These clubs provide good entertainment. Tourist population gets attracted as such clubs make the vacation more meaningful.

These clubs are the only avenues which provide adult entertainment. The origin of these clubs happened soon after the second world war. These clubs entered Asia only in the late 80s. In the year 2002 itself, an estimate reveals that the industry had the potential to generate up to 19% of legal adult entertainment income for the US.

These clubs provide excellent facilities, equipment, and furniture. Most of these have premium services such as VIP rooms. These clubs expand their customer base upon word-of-mouth. Hence, they never compromise on the quality of services provided by them. The industry thrives very well on locations where customers spending is huge. In a few countries, the law is liberal. Legal status is provided to the industry in such nations.

Why do they need a merchant account

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Strip and adult clubs are visited by people all over the world. Various tourists using multiple cards, Visa/Mastercard/Discover/Amex throng these places. Hence, having a merchant account will be very helpful in collecting customer payments.

Having a merchant account will help in getting an online business through a virtual terminal. There are iPhone/Droid mobile apps through which reservations can be made. In order to tap the business from E-commerce and website, a merchant account is vital.

What are the present challenges in merchant accounts

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Strip and adult clubs are considered as the high-risk profile clients. The merchant account applications are normally accepted by banks. A painful factor is that they shut off the accounts after 6 weeks when they review the nature of the business. That is why most club merchant accounts are denied/Shutoff/Closed by Other Credit Card Processors like First Data, PayPal, Square, Stripe.

This will result in a sudden stop of cash-inflow. Also, the customers find it easier to swipe cards. Once that option is not available, they switch over to other clubs where payment is easier.

Most banks do not use in-house underwriting services. As a result, these clubs have to chase multiple underwriting banks. These banks do not entertain high-risk businesses. They charge huge underwriting, premium. In the case of high-risk vs low risk, a low-risk profile always get more benefits like No Rolling Reserve Requirements and No setup fees. They get friendly treatment from banks as well as underwriters. Right from the opening of the merchant account, various sops like No Application Fees, simple application process with minimal formalities etc.

But a high-risk profile client like strip and adult club often find the path tough. In spite of all the rejections and difficulties, they have to depend on banks. This is because excellent ACH Processing/Check Processing, Check Drafting, quick payment processing, etc. is mandatory for a merchant account. Any reduced compatibility will increase the time span of getting customer’s money into clubs bank account. Hence, these clubs are in a position to depend on banks.

Identity thefts and credit card scams are high in this industry. These clubs are legally and socially viewed as objectionable types of business. Hence the banks that offer merchant account fear to lose their reputation. In spite of having good profits and credit history, there were many occasions where the accounts were abruptly closed by banks. Such action will affect the reputation of the club concerned. Besides, there is a risk of losing celebrity and high-profile members who are regular visitors to the club.

Startups:

Basically, startups face all type of difficulties. The banks redirect them to underwriters. The underwriters have to adhere to strict legal regulations. Hence, they demand past few years of data. Startups naturally do not possess this data. As a result, banks adopt an attitude where rates vary by startup vs history. In spite of low profitability, the startups are forced to pay fees at higher rates.

Strip and adult clubs having good credit history face rejections. In such a scenario, it is even tough for startup clubs.

Domestic and offshore accounts:

Offshore acquirers avail the services of, their in-house underwriters. Hence, accepting a high-risk profile client is not a tough job for them.

They have good technological competence to deal with issues like card not present (or) huge chargeback claims.

For strip and adult clubs, the terminals provide a good avenue to offer a wide range of membership options.

A simple domestic merchant account also has advantages. Where the club has regular customers, the domestic acquirer can support well in recurring billing. The customers need not bother about regular payments since their accounts would be automatically debited. The clubs, too need not worry as the payments would be regularly credited every month in their bank accounts. Fun being the primary motive, customers, encourage such arrangements. They see it as a facility. Hence a merchant account should offer such facilities with speed and quality.

However, the majority of customers happen to be tourists or one-timers. They look for saving money on entertainment so that more can be spent on shopping. Only when the merchant gateway setup offers services at low cost, the clubs can charge a reasonable fee. If the card swiping transaction charges are too high, then customers would shun away.

Whether domestic or offshore account, the bank should offer good customer support. This is because frequent communication happens between the client and the bank. Queries regarding delays, chargeback disputes etc.willhappen frequently. Only when there are proper people who can answer the client from the banker side, the merchant account can be operated without hassle. A courteous team of customer support is greatly helpful. Unreasonable delays in settling the payments can cause huge financial impacts. This will certainly affect the profitability and reputation of the clubs. Hence finding the right banker for an opening merchant account is vital.



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