PCCG Payment Processing Blog

Online Dating websites are bidding farewell to US merchant accounts

By Patricia Carlin Consulting Group

I work with many online dating companies including start-ups as well as very well-known established networks. I help them acquire new domestic merchant accounts as well as offshore merchant accounts. Five years ago, getting a US based direct merchant account for a company who offers dating and matchmaking services was a fairly simple task. There were many credit card processors and banks who chased after the dating vertical. The volume was good and the accounts were profitable for the banks. Fast-forward a few years to today, and banks have tightened the noose around the neck of processors and their merchants due to the substantial increase of online fraud and chargebacks. I can now count the number of banks who want this business on one hand.

With the limited supply of US merchant banks that want this business and the increase in affiliate and friendly fraud targeted towards the dating industry, it is virtually impossible to keep a dating website live long-term. If the dating merchant does stay live, they have to implement such stringent processes that end up killing conversions. This is the reason, more dating merchants are bringing some of their volume to offshore merchant banks.

In the past, “offshore merchant account” carried a bad stigma. It was for dirty business and TMF merchants. However, I have been working with offshore merchant accounts for more than ten years and can tell you that I am more comfortable working with select offshore processors than most domestic banks for the following reasons:

  1. With offshore merchant accounts, Visa ratios are 2% and 200 chargebacks vs. the US threshold of 1% and 100 chargebacks. This is not to say a merchant can be negligent. However, that extra percentage and count gives you breathing room. Both the merchant and I sleep better at night!
  2. Offshore merchant processors have more tolerance for high risk business models. They are comfortable with rapid growth and are open to reviewing issues that may arise with your account.
  3. When you work with a good offshore partner, they treat you like a partner. Unlike Paymentech and First Data who have some of the world’s largest retail and online accounts in their portfolio, higher risk banks don’t like losing accounts. They are not so quick to turn you off.

With all the positives, there are some negatives as well that include longer payment delays, reserves tend to be a bit higher, and you might have to establish a local corporation in some cases.

I believe that the benefits greatly outweigh the negatives when working in higher risk online businesses. If you are a dating website and are interested in learning more about offshore credit card processing and offshore merchant accounts, contact me. I will walk you through the requirements and explain the process in detail. If you want to move forward, you will work with my banking partners whom I have trusted my merchants with for more than ten years. I will handle all the paperwork and negotiate the best terms and rates. I prefer to bring over smaller volume initially so both you and the bank can become comfortable with the relationship. It’s very similar to dating. You need to test the waters to make sure you both like each other.

Let’s get started! Use the contact form on this website to get additional details.

Her Experience Is Everything

Leading expert in Card-Not Present Payment Processing and Merchant Account Management.

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