UK Adult Retail Payments Guide 2026

The classification system governing adult retail payments traces back to decisions made in the early 2000s, when card networks began systematically categorising industries by perceived risk. Merchant Category Codes (MCCs) were never designed to penalise specific businesses; they were administrative identifiers helping acquirers route transactions. The transformation of MCC 5967, originally "Direct Marketing: Inbound Teleservices", into a high-risk designation happened gradually, driven by three converging pressures.

First, adult subscription services in the 2000s generated chargeback rates exceeding 3-4%, far above the 1% threshold that triggers scheme monitoring programmes. Much of this stemmed from "friendly fraud" like customers disputing legitimate charges due to shared cards, privacy concerns, or simple regret. Second, card networks grew increasingly sensitive to brand risk, particularly after high-profile content moderation failures on major platforms. Third, regulatory uncertainty across jurisdictions made acquirers reluctant to build expertise in age verification and content compliance.

The watershed moment came in December 2020, when investigative reporting exposed alleged illegal content on a major adult platform, prompting Visa and Mastercard to withdraw acceptance. Within months, Mastercard issued AN 5196 (April 2021), mandating identity verification for all depicted individuals, pre-publication content review, and documented consent processes. Visa followed with the Integrity Risk Program (VIRP) in May 2023, establishing a three-tier classification system that places adult content alongside gambling and pharmaceuticals in Tier 1, the highest risk category.

Today, MCC 5967 automatically triggers high-risk classification regardless of an individual merchant's performance. MCC 7841 (video entertainment) applies to physical media, while MCC 7273 covers dating and escort services. All three face mandatory registration with card schemes before processing can begin. This is categorical risk assessment: your industry determines your treatment, not your chargeback rate.

The distinction matters because a second layer of assessment exists (i.e individual underwriting) where processors evaluate your specific financials, processing history, and compliance documentation. Some processors collapse these layers, auto-rejecting any application from an adult merchant. Others, particularly specialist acquirers, use categorical classification only to determine which compliance requirements apply, then assess your actual risk profile to set terms. The difference between these approaches determines whether you pay 4% per transaction or 10%.

Processing fees for adult retail in the UK typically range from 4% to 10% of transaction value, compared to 1-2% for standard retail. This spread reflects several components, not all of which are visible on your merchant statement.

The visible portion includes your transaction percentage rate (i.e the headline number your processor quoted) plus per-transaction fees of £0.20-0.35. Monthly account fees run £50-100 versus £10-30 for standard retail. But the more significant costs often appear elsewhere.

Rolling reserves represent the most substantial hidden cost for most adult merchants. Standard requirements hold 5-15% of gross transaction volume for 90-180 days. On £100,000 monthly processing, a 10% reserve with 180-day holding means £60,000 permanently locked away from your business. This capital has an opportunity cost: money that could fund inventory, marketing, or simply sit in an interest-bearing account instead sits in your processor's trust account, earning nothing for you. Some processors extend reserve holds to 540 days post-termination, meaning your capital remains trapped for 18 months after you've stopped processing.

Settlement timing compounds the cash flow impact. Standard retail typically settles in 2-3 days; adult merchants commonly wait 5-7 days, sometimes longer. This delay may seem minor until you calculate a week's worth of receivables permanently deferred. On £500,000 annual processing, that's roughly £10,000 constantly in transit rather than available.

The fee schedule on your statement likely includes several line items you never negotiated. PCI compliance fees of £80-100 annually are standard; PCI non-compliance fees can reach £20 monthly if you miss certification deadlines. Statement fees of £5-10 per month persist even with paperless billing. Authorisation fees of 1-4p per transaction add up on high-volume accounts. Chargeback fees range from £25-100 per incident for adult merchants versus £15-25 for standard retail. Every dispute, regardless of outcome, triggers this fee.

Card schemes extract their own charges beyond processor markups. Visa's VIRP imposes a $950 annual registration fee per merchant, plus $0.10 per transaction and 10 basis points on volume. These fees barely existed five years ago; the $500 GBPP registration fee was the only scheme-level charge until VIRP's 2023 launch. Acquirers serving Tier 1 merchants pay $100,000 initial registration plus $100,000 annual renewal. Costs inevitably passed through in your pricing.

Understanding which processors actually serve UK adult retail versus which claim to without doing so, requires looking past marketing language to operational reality.

Worldpay, the UK's largest acquirer, explicitly prohibits "pornography or any adult-related services." The ongoing $22 billion acquisition by Global Payments changes ownership but shows no indication of changing policy. Adult merchants should not waste time on applications.

Stripe maintains an equally firm prohibition, banning "pornography and other mature audience content...depicting nudity or explicit sexual acts" plus "adult services including prostitution, escorts, pay-per-view, sexual massages, fetish services, mail-order brides and adult live-chat features." Merchants report initial approval followed by sudden termination when Stripe's automated systems detect industry type.

Square mirrors this approach: auto-rejection or delayed termination. PayPal prohibits "certain sexually oriented materials or services" without further definition, enforcing inconsistently but terminally when enforcement occurs.

Adyen offers the only potential pathway among mainstream processors. Adult goods and content carry a "Restricted" classification meaning approval requires "additional documentation" and written waiver from Adyen at their discretion.

The realistic processor landscape for UK adult retail consists of specialist acquirers who built their businesses serving this sector:

CCBill has processed adult payments since 1998, serving 30,000+ merchants and processing over $1 billion annually. Fees run 10.8-14.5% for adult content which is high, but predictable. Their compliance infrastructure handles Visa VIRP and Mastercard BRAM requirements directly.

Verotel operates as an Internet Payment Service Provider under Dutch Electronic Money Institution licensing since 1998. Acting as an aggregator, Verotel means merchants don't need their own merchant account. Useful for those unable to pass individual underwriting.

Segpay serves UK, EU, and US merchants with 24-72 hour onboarding after KYC completion. Strong compliance focus includes proactive guidance on scheme regulation changes.

Decta markets directly to "sectors that others often avoid," explicitly listing adult content alongside digital services and CBD.

Several regulatory and market developments will reshape the landscape over the next twelve months.

The Payment Systems Regulator will merge into the FCA by end of 2026, consolidating oversight of card schemes and payment processors under a single economic regulator. While administrative rather than substantive, this merger may increase regulatory bandwidth for scheme fee scrutiny.

Those cross-border interchange increases remain unresolved. Following Brexit, Visa and Mastercard raised UK-EEA card-not-present interchange from 0.2% to 1.15% (debit) and 0.3% to 1.5% (credit). These are increases of 475% and 400% respectively.

Visa's VAMP programme (Visa Acquirer Monitoring Program) takes full effect from October 2025, consolidating fraud and dispute monitoring into a single ratio. The threshold drops from 1.5% in April 2025 to 0.9% by January 2026. Adult merchants with chargebacks approaching this level face escalating pressure, as acquirers operating near thresholds become less tolerant of borderline accounts.

New FCA safeguarding rules taking effect H1 2026 strengthen requirements for how processors hold customer funds. Monthly safeguarding returns, annual audits for firms holding over £100,000, and next-business-day segregation requirements increase compliance costs for processors. They're potentially passed through to merchants, but also reduce counterparty risk if a processor fails.

Open Banking offers theoretical benefits for adult retail: account-to-account payments bypass card schemes entirely, eliminating both scheme fees and chargeback risk. Variable Recurring Payments expansion in H2 2025 covers limited use cases initially. The practical barrier remains consumer adoption. Most customers expect card payment options.

Certain contract terms and processor behaviours signal problems ranging from excessive cost to imminent termination.

Liquidated damages clauses represent the single most dangerous contract provision. Unlike flat early termination fees of £200-500, liquidated damages calculate penalties based on projected processing volume for the remaining contract term. A merchant processing £50,000 monthly on a 36-month contract, terminated after 12 months, could face liquidated damages exceeding £100,000. Never sign a contract containing this clause.

Reserve terms warrant scrutiny beyond the headline percentage. Reserves above 10% suggest the processor considers you higher-risk than typical adult merchants, or is simply extracting maximum capital. Holding periods beyond 180 days similarly indicate either elevated concern or unfavourable negotiation. Crucially, contracts lacking a reserve review clause trap you at initial terms regardless of subsequent clean processing. Post-closure reserve holds extending to 540 days mean 18 months of capital locked after you've moved on.

Contract structure reveals processor intent. Automatic renewal clauses extending the full term (another 24-36 months) rather than month-to-month post-initial-term suggest the processor prioritises lock-in over relationship quality.

Communication patterns provide early warning of account instability. "Risk appetite review" language in emails, requests for additional documentation without clear trigger, settlement delays becoming routine, unexplained fee increases mid-contract, or reserve increases without stated cause all indicate your account is under review.

Processors who assess individual merchants rather than auto-categorising by industry offer fundamentally different relationships than those applying blanket policies.

Individual assessment means your chargeback history, processing volume, years in business, financial stability, and compliance documentation actually influence terms. A merchant with 0.3% chargebacks over 24 months should not pay the same rate as a new entrant with no history.

Reasonable rate ranges for adult retail with clean processing history run 3.5-5% plus 20-25p per transaction from specialists willing to compete for quality merchants. Rates approaching 10%+ suggest either a desperate merchant with no alternatives or a processor exploiting information asymmetry.

Fair reserves for established merchants with documented low chargebacks should not exceed 5-7%, with holding periods of 90-120 days and explicit review clauses triggering reduction after six months of clean processing.

Settlement timing of T+3 (three business days) represents reasonable adult merchant treatment. T+5 or T+7 indicates either elevated risk assessment or punitive terms.

Stability indicators include processor tenure in the adult sector (10+ years suggests commitment), transparent pricing with itemised fee breakdowns, dedicated account management, and proactive communication about industry regulation changes.

Before signing, require clear answers to these questions. Evasive responses indicate either problematic terms or a sales representative unfamiliar with your actual account treatment.

The questions below cover fees, reserves, termination, chargebacks, contract terms, operations, and processor history. For each question, we've included what a good answer sounds like, what a concerning answer sounds like, and what silence or evasion tells you.

Processors present terms as fixed more often than reality supports. Understanding what's genuinely negotiable and what leverage creates movement matters substantially.

Processing fees are negotiable through markup reduction. Interchange rates and scheme fees are not; your processor pays these regardless. The margin between what you pay and what they pay to schemes is where negotiation occurs. Demonstrating low chargebacks (below 0.5%), consistent volume (£100,000+ monthly), and willingness to commit to longer terms all create leverage.

Reserve terms respond to documented history. After 6-12 months of clean processing, request reserve reduction from 10% to 5%, or holding period reduction from 180 to 90 days. Processors rationally reduce reserves for merchants demonstrating low risk.

Contract duration often reflects processor preference rather than requirement. Month-to-month arrangements exist; 36-month terms with auto-renewal favour the processor.

Using competitive quotes provides the most effective leverage. Obtaining written quotes from 2-3 processors, then presenting the best terms to your preferred processor, creates real negotiating position.

Timing matters. Negotiate at contract renewal (60-90 days before expiration), after volume milestones, or following 12+ months of clean processing.

What isn't negotiable: interchange rates, scheme assessment fees, PCI compliance requirements, and placement on termination lists like MATCH.

Changing processors involves more complexity than signing new contracts. Successful transitions require parallel running, subscriber management, and realistic timelines.

Timeline: Budget 6-8 weeks from initiating contact to full migration. Specialist processor underwriting for adult merchants takes 2-3 weeks (not the "instant approval" some claim). Technical integration adds 1-2 weeks. Parallel running should extend 4-6 weeks minimum.

Parallel running means maintaining your existing processor while the new relationship stabilises. Route new transactions to the new processor; let existing subscriptions continue on the old processor until natural renewal points. This approach eliminates downtime risk, provides real-world fee comparison, and maintains processing continuity if the new relationship fails.

Subscription migration presents the primary operational challenge. Stored card tokens don't transfer between processors. Each processor's tokenisation is proprietary. Subscribers must re-enter payment details, typically at their next renewal. Communicate proactively: explain the change, emphasise service continuity, and consider offering incentives for immediate card updates. Expect 5-15% subscriber attrition during migration, concentrated among least-engaged customers.

Documentation preparation before approaching new processors: gather six months of processing statements showing chargeback rates, current financial statements, updated compliance documentation (age verification systems, content policies), and current contract terms (to understand exit costs).

Exit costs require calculation before committing. Early termination fees, remaining reserve hold periods, and parallel-running period costs must be weighed against improved terms from the new processor.

Backup planning should survive the switch. Maintaining relationships with two processors, even if one handles minimal volume, provides insurance against arbitrary termination.

Key terms used throughout this guide. Click any term to expand its definition.