Artificial intelligence is a hot topic these days. AI technology is speeding up the way we do business across all industries and offers numerous benefits, from automating processes to increasing efficiency and scalability. In the adult industry, some merchants are incorporating AI tools into their websites while others are building entire platforms based on AI-generated content. There are still important challenges to overcome, however — especially when it comes to getting an AI-driven site approved by payment processors and acquirers.
We’ve seen many adult merchants testing AI out in the wild, but beware: Getting approval isn’t as easy as you might think, and launching AI functionality without approval from your payment partners could land you in hot water. So this month, we’ve outlined what it takes to get your AI site up and running.
We’ve seen many adult merchants testing AI out in the wild, but beware: Getting approval isn’t as easy as you might think.
Card Brand Resistance and Restrictions
First, let’s look at why these steps are so important.
At Segpay, we work with seven acquirers: three in the U.S. and four in Europe. Only a few of those are open to processing AI-driven content. For example, only one U.S. acquirer will accept AI content — and even then, it’s restricted to our Payment Facilitator platform rather than direct merchant accounts. In the U.K. and Europe, we have two acquirers that will consider AI. PayPal, however, has taken a hard stance: no AI programs are allowed. If a merchant incorporates AI into an existing program, PayPal will require the AI components to be removed.
Why are banks so risk-averse when it comes to AI content? Apart from the fact that the technology is evolving at such a fast pace, one main reason is the increasing abuse of AI tools to generate prohibited or illegal content, such as nonconsensual sexual content — aka “revenge porn” — and child sexual abuse material (CSAM). Card brands like Visa and MasterCard are therefore closely monitoring AI-generated content to ensure it complies with their policies. At Segpay, we’ve seen this firsthand. For example, one AI merchant that we placed added a user-generated-content feature after going live, which created violating content. The merchant was fined, and we had to close their account.
As you can imagine, it can be incredibly frustrating for merchants who invest time and resources into creating a cool AI-driven content site — only to find that they can’t get approval, or they get closed down due to abuse of the site’s tools. So before speeding into the world of AI content generation, here are eight requirements and best practices to help you cross over the approval finish line.
1. Put Guardrails in Place
Closed-loop systems are key when it comes to AI-driven sites. This means restricting what users can generate through prompts. For example, if you’re offering a “virtual girlfriend experience,” allow users to customize characteristics like hair color, eye color and body shape — but with clear boundaries. Ensure that the prompts are well defined to avoid open-ended input, which could lead to content that violates card brand rules. Additionally, there should be strong guardrails to ensure that AI-generated chat doesn’t spiral into inappropriate or harmful territory. AI chatbots should have built-in moderation to prevent hate speech or anything else that could raise a red flag with card brands.
2. Avoid ‘Free Text’ Content Generation
Unrestricted text-based imagery generation can create a huge challenge for acquirers and payment processors because it’s nearly impossible to fully control the output. Many merchants assume that content moderation can handle this, but more often than not, content moderation systems fail to catch everything. Our compliance teams as well as acquirers spend hours testing sites’ rule sets, and most of the time we find that those rules can be broken. When this happens, the account is declined. From a resource perspective, this is a waste of time for everyone involved. It’s not just the merchants who invest in this content but also the acquirers, who must assess and decide whether the content meets guidelines. Without a controlled system, AI sites are often an issue.
Instead of “free text,” consider offering pre-vetted options. This will mitigate the risk of brand-damaging or illegal content being created using terms that may not be blocked by standard controls. Options such as model age — over 18 — as well as physical characteristics and settings are permissible. Options that might facilitate illegal or brand-damaging activities — like schoolgirls or teens — are not permitted. All images must be reviewed before publishing using a reputable third-party AI image service. Evidence of moderation must be shared with your provider via means such as screenshots of the system in operation.
3. Stay Away from User-Uploaded Content
User-uploaded content in AI programs is an even bigger headache. If your site allows users to upload images that can be altered or customized by AI, you’ve opened a Pandora’s box. It is incredibly difficult to moderate and prevent such images from being used for illegal and brand-damaging purposes, which is why acquirers are extremely reluctant to accept these types of programs. This is generally a nonstarter.
4. Build a Library of Models with Clear Consent
There may come a day when payment partners accept the argument that the training data used to generate AI images have no rights issues, don’t belong to anyone and can’t be underage, but we don’t think that day is today. It is therefore safest for merchants to own and operate their own model libraries, within which content creators can be age-verified, give explicit consent to their likeness being modified by AI, and specify any limitations to be placed on such use. To be clear, there is no “carve-out” in the current rules, so you should make sure you are able to provide evidence that you are compliant with the law and card brand standards.
5. Moderate AI-Generated Chat Interactions
Chat-based AI programs, like the classic “boyfriend/girlfriend” models, come with their own unique challenges. You must make sure that any images created or shared in chats are compliant with all the guidelines mentioned and that monitoring is in place. Chats must be watched for illegal or inappropriate behavior in real time. All texts must be monitored in real time through a reputable third-party text moderation service to filter out problematic language and behavior. Be prepared to provide evidence that your controls work and that your terms of service prohibit discussions of illegal or brand-damaging behavior. This will go a long way toward getting your account approved.
6. Have Clear Policies in Place
This is something I write about often. Having clear, well-documented policies is important, but merchants often underestimate this. Make sure you outline how your content is created, that you have model consent, how the content is reviewed before publishing, how chats are monitored and what you will do if you find something that’s not compliant. List all the tools you and your team use for moderation. The more transparent and thorough you are with your policies, the better chance you have of getting your AI-driven program approved. This shows that you are proactive in managing compliance and taking the necessary steps to keep your site safe and trustworthy.
7. Leverage Your Existing Business History
If you’re already running a successful adult content site, you’re in a better position to get approval for an AI-driven addition. Acquirers are more likely to work with established merchants with a good history of managing compliant content in the high-risk adult space. Even if you’re new to the adult industry, having experience with processing for other online businesses can be a benefit. It demonstrates that you understand the complexity of online payments and compliance.
8. Transparency When Adding AI to Existing Programs
If you’re adding an AI component to an existing, approved program, be upfront with your payment service provider. As mentioned earlier, most acquirers are staying away from adult sites generated by AI. Some may refuse to process AI-driven content altogether, so it’s best to have that conversation early to avoid disrupting already-approved accounts.
While the adoption of AI in adult content creation seems like it is on the fast track, it’s important for your business to recognize and address the regulatory and compliance challenges that come with it. Acquirers, payment processors and card brands are still figuring out how to handle AI content, and many are being extremely cautious about it. By following these best practices, establishing strong policies and working closely with your payment provider, you can increase your chances of getting your AI-powered site approved. Understanding the requirements and limitations will save you time, resources and frustration as you head out on your AI journey.
Cathy Beardsley is president and CEO of Segpay, a merchant services provider offering a wide range of custom financial solutions including payment facilitator, direct merchant accounts and secure gateway services. Under her direction, Segpay has become one of four companies approved by Visa to operate as a high-risk internet payment services provider. Segpay offers secure turnkey solutions to accept online payments, with a guarantee that funds are kept safe and protected with its proprietary Fraud Mitigation System and customer service and support. For any questions or help, contact sales@segpay.com or compliance@segpay.com.
