LOS ANGELES — After yesterday’s XBIZ report that Mastercard Inc. had decided to change the requirements it sets for banks that process payments for “sellers of adult content,” industry payment processors, attorneys and advocates shared their thoughts on what this might mean for content production and distribution.
XBIZ asked adult industry stakeholders about how they saw the Mastercard changes affecting the business, and to comment on possible changes for tube sites (like Pornhub or XVideos), premium fan sites (like OnlyFans or FanCentro), paysites, studios and content creators.
Changes Will 'Impact the Entire Adult Industry'
NETbilling’s Mitch Farber thinks that Visa is “sure to follow” Mastercard’s lead in their approach to ensure “illegal content is more closely monitored and removed from sites that they allow processing for.”
Farber pointed out that although that oversight is ultimately the responsibility of the site operators, Mastercard now will be holding banks (and in turn ISOs) responsible to make sure this is the case. Mastercard’s requirement that banks “ensure that sellers have documented consent as well as age and identity verification for those involved in the content before being able to process payments,” will result in that becoming “part of the merchant account underwriting process, as well as ongoing site reviews that undoubtedly will be more frequent.”
Segpay’s Cathy Beardsley opined that the changes “impact the entire adult industry, with requirements for all adult content providers, and some more focused requirements for those with user-generated content, which would include niches such as tube, cam, fan and adult dating sites.”
Beardsley explained that according to the new rules, “several new requirements will be placed on all adult sites to support a complaint process for violating content and takedown requests, which must be actioned within seven days, and involve a neutral mediator if the takedown request is denied.”
“Merchants will be required to submit monthly reports on this activity to their Acquirer,” she added.
The rules unveiled yesterday, according to Beardsley, delineate new requirements for user-generated content, including livestreamed content.
“The requirements in this section generally have to do with obtaining a written agreement with each provider addressing illegal activity, written consent from all persons depicted, consent to the public distribution of the content, consent to have the content downloaded and age verification documents,” she elaborated.
“Uploads should only be permitted to verified content providers and all uploads are to be reviewed prior to publication. For streaming providers, monitoring must be in real-time,” Beardsley said.
A More Positive Spin
Some payment processors actually gave a much more positive spin to the news of Mastercard’s update.
“The important thing is that the rules are clear,” said Vendo’s Payments and Risk specialist Thierry Arrondo. “Now it’s a level playing field. We’re going to need to develop new methods for auditing and ensuring compliance to protect our clients and the banks.”
Arrondo pointed out that Vendo can boast of “16 years of doing this for the largest companies in the business, so we feel prepared and have great relationships with the associations, the banks and our clients.”
Arrondo also said he recently spoke with merchants who operate paysites and they feel the changes are positive for them and others who already comply with 2257 records.
“I think in some ways it’s also positive for the tubes because it’s clear,” he added, noting that “there’s a whole sector of the market where this could have some major implications — fan sites are definitely one of them, and we will be working with them to create the best path forward.”
A Major Change for the Tube Site Business Model
Industry attorney Larry Walters, of Walters Law Group, concurred with Arrondo, seeing Mastercard’s new requirements for adult sites as “the wave of the future.”
The industry, Walters said, “should begin preparing for compliance, or switch to a free site model — or potentially cryptocurrency payments.”
Tube sites, according to the attorney, will likely be impacted most dramatically. “Currently sites that host third-party uploads are not generally required to maintain Section 2257 age records or model releases,” he explained. “Therefore, all of the existing content on those sites is in danger unless the operators can obtain the required age and consent documents. New uploads will be required to be supported by the verification documents as well.”
This, he added, will represent “a major change for the tube site business model.”
Walters warned that although paysites already collect and archive 2257 documentation, they also “could be impacted by the complaint and appeal process regarding removal of non-consensual content.”
“It is unclear whether the standards anticipate that consent can be withdrawn after a model signs a release,” he said.
Potential Risk to Indie/Amateur Producers
For NETbilling’s Farber, these new rules “can surely hurt independent performers. The tighter restrictions will make it more difficult for them to make money during these tough times.”
Anyone who uses newsfeed-style sites and social media to promote, he pointed out, relies on the ability to share content quickly and the new Mastercard rules “will make it more difficult to do so.”
Free Speech Coalition’s Communications Director Mike Stabile had a similar assessment.
“The new Mastercard restrictions are both vague and specific, and we're not yet sure how or to whom they'll be applied,” he said. “It's not easy to separate out a mythical 'adult internet' from a non-adult internet. Our businesses and content creators use many of the same platforms as mainstream businesses to reach audiences.”
“Truthfully,” Stabile added, “there's a lot we don't know yet, but overall this seems likely to hamper the growth of small, independent producers, and shift it back toward studios and bigger platforms.”
For Stabile, the Mastercard ruling “essentially treats all distributors of adult content as secondary producers, responsible for holding data and records for every person or producer on their site, as well as the identity of every uploader.”
In his view, this is “likely to hurt smaller businesses who don't have the resources needed for record-keeping on that scale.”
“This has the potential to be detrimental to amateur and non-commercial producers, whether they're on tube sites or Reddit,” Stabile added. “Since the dawn of the internet, sexual communities have thrived thanks to the anonymity it provided. MasterCard is really punishing these communities.”
How Different Sectors Will Be Affected: A Breakdown
Segpay’s Cathy Beardsley broke down how the new requirements, as she understands them, will affect different sectors:
Tubesites (e.g., Pornhub, XVideos) and Fan Sites (e.g., OnlyFans, JustFor.fans, FanCentro)
- Enter into a written agreement with any individual that is contributing content to the website. This includes the individual’s consent, their identity and age
- All persons depicted in the content must give consent for the content to be distributed and downloaded
- Age and identity of all persons depicted is required
- Only verified users can be permitted to upload content
- All content must be reviewed prior to publication, or real-time if it’s livestreamed, and no content can violate the Card Brand BRAM (Business Risk Assessment and Mitigation) policies
- Website must have a complaint process for reporting, review and removal of violating content
- Have policies in place to make sure that the website cannot be used for human trafficking
- Provide monthly reports to acquirer of flagged content and what was taken down
- No search terms or marketing partners give the illusion that the content they are marketing will contain child exploitation materials or depictions of non-consensual activity
- Website must have a complaint process for reporting, review and removal of such content
- Takedown requests/flagged content will need to be reported monthly to the acquirer
- Have policies in place to make sure that the website cannot be used for human trafficking
- No search terms or marketing partners that give the illusion that the content they are marketing will contain child exploitation materials or depictions of non-consensual activity
- Not a requirement, but studios should keep BRAM policies in mind when shooting content
- Have model consent forms which verify users identity and tools in place to verify users (two forms of ID or tools), ensure model releases address the consent provisions of Mastercard’s update (consent to have the content downloaded may not be in a standard release)
- Be prepared to provide identity and proof of identity
A Resilient Industry Will Learn to Adapt
Attorney Larry Walters assessed that “the impact of these Mastercard standards will be affected by how they are actually implemented by the acquiring banks.”
“All adult sites should be prepared for extensive KYC (Know Your Customer) compliance efforts to ensure that the operators are adhering to these expectations.”
His colleague Corey Silverstein, of Silverstein Legal, called the new rules “a game-changer.”
“If you don’t want to adhere to these rules,” the attorney pointed out, “then you always have the option of not using Mastercard as one of your payment options — nonetheless, I expect the other major credit card processors to follow suit, and soon.”
“It doesn’t matter what role you play in the adult entertainment industry,” Silverstein added, “Everyone’s lives have now changed. Whether you are a tube site, clip site or any other type of website that permits user uploads or accepts Mastercard as a payment option your entire business model must be re-evaluated from the ground-up.”
But, as payment processor Mitch Farber also pointed out, “the adult industry is extremely resilient.”
“All of us here at NETbilling have no doubt that our clients will adapt to the new rules, and continue to be profitable,” Farber said.
Vendo’s Arrondo was even more optimistic. “It’s going to be about helping everyone thrive in the new regulatory environment,” he concluded.