Credit Card Processing for Swinger / Lifestyle Events

A couple from Singapore who hosts a popular swinger podcast is hosting their first event in the United States. I reached out to them on Twitter to see if they needed advice on credit card processing for their party. They did. So I gave them all the 411. I’m writing it here in case anyone else needs advice.

After hundreds of hours of extensive research, I know that you only have three options for processing credit cards for lifestyle parties.

#1. Use Paypal, Stripe, or some other system without disclosing what type of event you are hosting. Swinger parties violate Stripe, Paypal, and almost every other payment processors’, “Terms and Conditions.” We used Stripe, not because we are intentionally deceitful but because we were naive. We didn’t consider that they wouldn’t want to work with events like ours. Eventually, we reached a large enough size to be noticed by them, and they kicked us off their platform.

#2. Use “Modern Lifestyle” which is a ticketing company that works with lifestyle events. There are two events in Chicagoland that use them, and likely at least 100 more across the United States. You must use their web platform and your attendee’s credit card statements will show your event as “ML Ticketing.” We almost used these guys, but in the end, I prefer my web platform over theirs, and I want to differentiate YCP from the other Chicago events which are sharing that platform.

#3. Use a broker to connect you with one of only two American banks which will serve a lifestyle client. We used the broker Payment Kings to join us with our bank.

Be warned, however, that this is extremely expensive. You see, the credit card and bank industry classify lifestyle events as “high risk.”

We have only had one “chargeback” in thousands of transactions. We are hundreds of times less risky to a credit card company than any other business. However, it’s not “high risk” in terms of finances but terms of reputation.

Banks usually do not want anything “adult” on their books, so they label you as “high risk.”

For example, we are forced to pay an annual fee of $1200. $600 to Visa and $600 to Mastercard for being in the high-risk “vertical.” We pay this every year, in addition to much higher per-transaction fees and percentage fees.

Additionally, the bank will demand a reserve, which for us was $5000. They keep 10% of our funds until they have a reserve account of $5000. We only get that money back six months after we close the account, which will hopefully be years from now.

In total, we pay about $1000 a month MORE in credit card fees than if we used Paypal, for example.

When I told our friends from Singapore that, they stopped responding. I don’t think they wanted to hear it, but it’s the simple reality of the situation. If you host a live event in the United States and you reach a size large enough to matter, you cannot use any bank except two. Those two banks charge you a tremendous amount of money for processing credit cards.

Usually, at this point in the conversation, people ask me why we don’t accept bitcoin or cash. We go out of our way to do everything by the book. Accepting bitcoin or cash can give the impression that you’re hiding income, and we most definitely are not.