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Micropayments Making Headway in the Adult Space

Micropayments Making Headway in the Adult Space

June 2, 2014
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" While the model for micropayments may work well with many mainstream business models, much still needs to be done in regards to its cost-effectiveness in the high-risk marketplace. "

For years adult online business owners have looked at payment models like iTunes with envy. Massive traffic portals that maintain payment information from a massive amount of consumers and provide one click payment functionality for content providers. Now the micropayment method of billing consumers is coming to adult in a variety of ways and making the purchase of adult content easier than ever for people who prefer to pay in per scene or per site increments.

ICM Registry already has a micropayment system in the works for .xxx sites.

According to Stuart Lawley CEO of ICM, the “.xxx micropayment system will be similar to iTunes except we wont host the content so its more like iTunes meets Paypal. Users will have an ICM account that they can prepay or load a payment method to and then they can skip from .xxx site to .xxx site making payments as little as 99 cents via a one-click or two-click system and stay logged in.

“We will hold their payments details and we will be fully onshore and regulated so everyone’s payments will be safe and the user’s identity and personal details and payment details never reveled to the site owner,” he said.

That method provides convenience as “the consumer can sign up for his account at our portals like Search.xxx and then use the wallet to pay at any participating .xxx merchant” according to Lawley. “There will be literally hundreds of ways to pay into and load the account. We expect to credit and debit cards as usual, bank accounts, SMS and phone billing, cash vouchers and other localized currencies from nearly all countries , meaning for the first time, may people who up to date have been unable to pay for this content can now do so.”

Similarly, Epoch quietly announced last year that they were pleased to inform clients that they were launching a pilot program with PayPal for European-based merchants and their European customers.

The program allows EU companies using their processing platform, which already offers merchants the ability to accept more than 35 international payment types and process in 59 currencies, the ability to accept PayPal payments from E.U. customers. While PayPal is not currently available to U.S.-based merchants, the success of the E.U. system would suggest that it is headed for American soil as a micropayment option sometime in the near future as well.

On the gay side of the adult industry, Corbin Fisher announced the launch of its CF Select micropayment website.

“CF Select has been developed to complement our subscription sites and ensure our fans have a flexible experience with access to the utmost value and choice,” said COO Brian Dunlap. “I’m confident our own excitement over its launch will be matched by the enthusiasm with which it’s received by fans of our product.”

Another key element is the unique digital watermarking technology employed to protect content while allowing users fast, secure downloads.

Founder and CEO Jason Gibson said, “While the online subscription model continues to be the best value for our consumers, we see CF Select as an incredible supplement to our core site. Fans can enjoy a taste of the Corbin Fisher experience without committing to a full membership, while existing subscribers can pick and choose the exclusive scenes and collections they’re interested in.”

From a pure processor perspective “Micropayments appear to be in growing demand by the adult end user. However, there remains a disconnect between the card associations and acquirers specifically in regards to the high discount rates and transaction fees required by merchants to pay for these high risk adult microtransactions,” said Lane Farinacci, global operations director for Processing Partners Inc.

“While the model for micropayments may work well with many mainstream business models, much still needs to be done in regards to its cost-effectiveness in the high-risk marketplace. Acquirers offering aggregate accounts are in a more favorable position and some have even begun taking the necessary steps to address this growing demand.”

Perhaps the most interesting aspect of micropayments is that many customers are paying more in aggregate for individual content purchases than it would have cost to buy a membership to the entire site.

“We are seeing this micropayment trend developing even quicker on the retail side of mainstream than elsewhere,” said Sean Holland, vice president of OrbitalPay.com. “We have several mobile gaming and mobile app store merchants utilizing micropayments. We also have been receiving a lot of additional inquiries about them lately. On the adult side there has been an influx of micropayment systems to purchase content. The membership model is changing to include the addition of micropayments because consumers have demonstrated an enduring desire to consume content on an a la carte basis, especially when it is presented alongside other membership options. The interesting thing is that the a la carte solution is turning out to be more productive than memberships in many instances and consumers are actually returning for multiple purchases, often spending more on per scene buys than monthly memberships may cost and doing it all with far fewer refunds or chargeback requests..”

As the micropayment model continues to evolve, forward-thinking processors are looking for innovative ways to service consumer desires.

“Micropayments have become a very important aspect in e-commerce,” said Mitch Farber, president of NETbilling Inc. “However, unless you are a huge e-tailer such as Apple or Google, utilizing this method for general credit card sales can be cost prohibitive because of the interchange fees associated with such payments. A merchant must rely on larger dollar amount transactions to offset the smaller margins with the micro transactions. However, using a stored value larger dollar amount, merchants can initiate a larger charge with incentives to customers and allow them to spend as needed. This model is much more lucrative because it reduces the amount of actual credit or debit card transactions being processed through the payment networks.”

Payment methods are always changing and improving to make it simpler, faster and more convenient for consumer to actually pay for content. In face of so much free or pirated adult entertainment available online, it is imperative that site owners find ways to allow people to buy things without leaving their screen to go find their wallet. Micropayments are another exciting way to monetize your traffic without requiring anyone to find their pants or the credit cards they keep in their wallet pocket.


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