Industry News

Financial institutions consider companies that sell sex toys to be too risky

Sex toys generate more than $20 billion a year worldwide, and sales are projected to reach nearly $30 billion by 2020 (Bartek71/Thinkstock)

Polly Rodriguez, a sex toy entrepreneur , can't take the weird looks of bankers anymore.

Her online store, Unbound, sells colorful vibrators, cuff bracelets and other intimate products for women. Despite running out of stock, Rodriguez said he struggled to find a bank willing to give him a small business loan. She blames the financial sector's nervousness when it comes to sex.

That's why she sees digital currencies as a cause for hope.

“When you get the label as an adult company, you actually get blacklisted,” Rodriguez said. “By adopting coding and eliminating moral and subjective judgment, everything changes.”

Banks and credit card companies can be adamant with adult businesses, even though they can make a lot of money. Sex toys generate more than $20 billion a year worldwide, and sales are projected to reach nearly $30 billion by 2020, according to London-based market research firm Technavio. Still, financial institutions consider companies that sell sex toys too risky and put them in the same category as escort services and pornography websites, which sometimes border on illegal.

fear of chargeback

Credit card companies are also wary of chargebacks, which happen when a cardholder claims a transaction is fraudulent. For example, a man uses the card to watch pornography and then denies making the purchase when his wife discovers the payment, and the card company ends up losing money.

The possibility of getting rid of these complications causes some companies for the adult audience to celebrate the fever of digital currencies, such as bitcoin and ethereum, and the emergence of tokens for digital payments, which could help them dodge skeptical intermediaries and allow customers make direct payments.

Xavi Clos, director of production at BaDoink VR, a virtual reality porn producer, said tokens have great potential in the adult entertainment industry because they are a direct and anonymous way to accept payments. The problem, he said, is that "there's still nothing ready for real commercial use." Transaction costs remain too high and the infrastructure, subject to hacking and freezes, still needs to improve.

If the use of cryptocurrencies and digital tokens became popular in the adult sector, said Rodriguez of Unbound, “I wouldn't have to spend so much time worrying about the possibility that my bank account will be closed. The fact that we are so unwilling to talk about sexual health and well-being in a good and healthy way makes this sector relegated to the shadows. And that's not good for anyone."