Often it's because of secret government requirements.

Compare https://en.wikipedia.org/wiki/Operation_Choke_Point .

Somehow, it's forbidden for the government to oppress pornographers directly, but it's perfectly fine to impose legal sanctions on banks who maintain business relationships with them.

Does Valve actually have a high risk of chargebacks? I was under the impression that moreso than other platforms, most Valve customers would rather go through Valve's own refund system. I understand that chargebacks is supposedly the reason for adult-only platforms.

Yes. Steam used to have card declines if your address did not match exactly.

Card not present was and still is higher risk than in person shopping. Now that most US customers have chip cards in their wallets fraud has shifted from in person to CNP. Digital goods are high risk because a customer could theoretically download and enjoy the digital good or save a copy and then chargeback. There's no shipping tracking number to prove delivery. Or a fraudster could go on a spending spree from the comfort of their home in another country. Adult-only games are even higher risk because a customer might have to explain to a spouse what the Steam charges were for.

Of course copy protection and the prospect of a ban of their whole Steam account blunts the most obvious customer cheating of keeping a copy and charging back. Steam games cannot be resold. Digital goods that can be easily resold are magnets for fraud. Such as cloud GPUs or international long distance calls.

Sorry, I should clarify my question: does Valve actually face a significantly increased risk of chargebacks if it should be more liberal in its adult game rules.

I suppose that if consumer behavior is to have their adult game purchases and conventional game purchases on separate accounts, and the Steam platform allows for that, then that may be so.

These days Steam allows hiding games from your public profile by marking them as "private", meaning that people can't see that you own the game and can't see that you are playing the game (which is presumably what you would want if you were a fan of "Sex Adventures - Incest Family - Episode 9"). I imagine this is good enough for people so that they won't bother having a separate Steam account just for porn games, as having a single account is more convenient. There's a reason why people hate having multiple game launchers on PC.

https://help.steampowered.com/en/faqs/view/1150-C06F-4D62-49...

Chargebacks of legitimate purchases on most large platforms are extremely rare. Most will be from stolen cards. On most large platforms, if you start a chargeback you can expect your account to get locked. Do you want to give up your entire account just for a refund on one purchase? Luckily these large platforms typically have their own refund process.

>Chargebacks of legitimate purchases on most large platforms are extremely rare. Most will be from stolen cards.

I never used ecommerce back in the day on the internet but I can imagine that ecommerce fraud was widespread. And that's why excluding other reasons Satoshi invented Bitcoin[0].

I wonder if cryptocurrencies didn't exist would someone nowadays burn the midnight oil to figure out P2P crypto coin since modern payment solutions are fairly good.

Tbh I think Satoshi invented technology around which he wanted to build products unlike Steve Jobs who said that you first need to figure out the product then build technology.

[0] "Completely non-reversible transactions are not really possible, since financial institutions cannot avoid mediating disputes. The cost of mediation increases transaction costs, limiting the minimum practical transaction size and cutting off the possibility for small casual transactions, and there is a broader cost in the loss of ability to make non-reversible payments for nonreversible services. With the possibility of reversal, the need for trust spreads. Merchants must be wary of their customers, hassling them for more information than they would otherwise need. A certain percentage of fraud is accepted as unavoidable. These costs and payment uncertainties can be avoided in person by using physical currency, but no mechanism exists to make payments over a communications channel without a trusted party" https://bitcoin.org/bitcoin.pdf

I don't see how this makes any sense. A reason for the creation of Bitcoin was offering less service than traditional methods?

"Financial institutions cannot avoid mediating disputes" is nonsense, they "can't" because it's constantly demanded by their clients, attempting to sell that as a bug rather than a feature is preposterous.

Satoshi wanted to bypass banks and make P2P direct payments with no trusted party besides Bitcoin protocol hence >no mechanism exists to make payments over a communications channel without a trusted party

And crypto community speculated that Satoshi or team behind Bitcoin worked at the internet gambling industry and what use to happen is that angry customers would chargeback the money they lost at the internet casino and cause numerous problems for "merchants" or in this case internet entrepreneurs.

worked in the internet gambling industry*

Late grammar correction :/

The owner of a stolen number is going to use a chargeback.

> people whose spouses catch a XXX video or game on their card statement will lie and run chargebacks too.

I don't understand this claim. Steam doesn't list specific games on credit card bills- why would chargebacks be higher for a bill that says "9.99 - STEAMPOWERED.COM (WA)" than for one that says "9.99 - STEAMPOWERED.COM (WA)" just because the latter was used to pay for Undertale and the former was used to pay for Sex Simulator 25?

This is the correct answer. There are many merchant categories, adult being just one of them, that are susceptible to high chargeback rates which result in payment processors banning them.

It's not nonsense. I've hosted, moderated and managed sites that were only obliquely related to porn or gambling, and you wouldn't believe the level of rejection for running ads or getting payment processing that they are faced with. And I ran a casino for 4 years. I coded it and I ran it 24/7, and believe me, I did everything by the book. The CC companies do not give a shit as long as they make money. Chargebacks cost them a lot in time more than in actual cash, and they have categories of risk for every merchant who may expose them to that risk. The highest categories of risk are porn and gambling.

Any entity that uses a CC gateway and has any exposure to either of those risks is exposing itself to all the risk. The CC companies almost certainly told Valve that they would be considered a porn site and face a 1.5%-2% higher processing fee for every transaction.

No nonsense involved, that's how it works.

> I've hosted, moderated and managed sites that were only obliquely related to porn or gambling, and you wouldn't believe the level of rejection for running ads or getting payment processing that they are faced with. And I ran a casino for 4 years. I coded it and I ran it 24/7, and believe me, I did everything by the book. The CC companies do not give a shit as long as they make money.

It is not really comparable. Steam is not a casino, and it is largely the same platform with or without perfectly legal porn. The presence of a few (not even that popular) adult games does not change the overall demographics that much, or the risk profile. I am not even ready to accept without proof that the risks are higher than with all the other, non-porn shovelware.

Sure, if Steam turned into an adult-only platform, then the risk profile could change significantly. But that is not what happened.

Also, as many people pointed out, Steam really does not incentive customers to ask for chargebacks. All the available information points to Valve managing its platform quite well for everyone involved.

1. Thank you for the first hand experience post.

2. I think the argument being made is that the credit card companies are not actually experiencing higher risk (from Steam). Not that they have any qualms about putting a business into a “high risk” classification.

In this case, I suppose the argument is that Steam is a large enough entity that they should be able to “self-insure”. If the US had a relatively open way to become a payment processor, the free market would take care of this. Unfortunately that isn’t the case and also is very unlikely to change.

> that's how it works. On Steam specifically? But nothing you said shows proves that.

Valve already has a very generous refund policy and a chargeback would likely result in your account being banned.

Isn't it a little odd that Visa/Master isn't out there making that argument? Why would we assume them having the best of intentions of they aren't even willing to argue those intentions themselves?

They don't need to make an argument for anything. They tell Valve: "Hey, if 1% of your transactions are for smut and incur smut-level-chargebacks, we're going to just treat all your transactions as smut", and Valve says, "no problem, we'll pull those games." It's not like Valve stands to profit by holding the line for free speech here or something. Valve gives as little a shit about an indie porn game as it does about anything else. Honestly, why should they pay the extra percentage across the board to defend it anyway? This is why I'm saying a separate X-rated platform would get a lot of traction.

How would Visa/Master know? Steam doesn't include information about which games are purchased in the receipt (at least as far as I know). Unless they have some sort of back-channel they wouldn't know what's being charged back.

If Valve was getting a complaint from Visa/Master about charge back rates of certain games, I believe they'd be more forthcoming with that information. What we're seeing here is more consistent with Visa/Master taking offense with what the platform offers.

In either case, I find the lack of communication from Visa/Master deafening. If Visa/Master was seeing high chargeback rates from incest games on steam. Why would they not eagerly offer that data?

But can't they just block buying those games with visa/mc and only allow using steam wallet credit? Some Japanese sites have been having these issues for a while and that's what they ended up doing (or just closing shop entirely).

I guess that would be the logical thing to do. There's probably some synergy at work. If these games could be widely promoted, maybe their average value to Valve would be $10k each or something. Instead, they probably net 1/10th of that before they drop off the radar completely. Building in a sub-system that guarantees that certain games can only be bought with certain methods of payment seems like a pain in the ass. However, they could do it. And that sort of argues against the idea that you'd be building yourself any kind of moat by setting up a game platform for just the XXX stuff.

That would be a nice solution.

That's the problem though. The risk means the market for those riskier credit transactions is literally categorically not a great market. You think JP Morgan gives a shit about Japanese titty games? Hah. No. They care that these games get charged back way more often.

If there is a market opportunity, it's probably in a processor for debit-based transactions that are harder to reverse. But then that makes fraud harder to combat, and one of the reasons everyone loves credit cards so much is because consumers are far more confident to buy from random shops if they know they can always get their money back if the shop scams them.

So - this whole system's lucratively is entirely predicated on easy credit and low risk meaning low fees. Anyone who wants to play in the mud that's leftover by these companies taking the good business are inherently playing a low margin risky game.

I wouldn't scoff at the leftovers. You're talking about maybe a trillion dollar industry that struggles to find payment solutions. This is why I gave up on credit card processing for my startup casino in 2010 and just went to taking Bitcoin and other crypto. I originally planned to just take Visa. I wasn't looking to skirt the law. Card companies are looking out for themselves, and they don't really even need regulatory capture to shaft anyone running a business that the public could consider shady or immoral. There's plenty of demand out there, and in my opinion they're leaving money on the table. But their business model makes it difficult to take on the risk, especially in the case of something like Valve where they can't pick each transaction apart and evaluate the risk separately. So yeah... a globally accepted porn and gambling card? That would be a home run if the bills showed up never to someone's spouse, and it won't happen. Using a combination of crypto and higher CC fees to sell the content, though, there's a lot of pent-up demand.

Yes, about 90%. I would have had maybe the 6th or 7th biggest online casino in the world - let's say that my software was about 5th (somewhere between Galewind and Microgaming) - but I ended up being one which catered only to early adopters of cryptocurrency, who were not necessarily gamblers on roulette or blackjack but had nothing better to do with their coins. It was an interesting experience, and it didn't leave me as wealthy as I could have been if the barriers to entering the larger market hadn't already been negotiated between CC companies and governments. That said, at least I'm not in prison like a lot of people who followed and tried to do what I did.

> No. They care that these games get charged back way more often.

I highly doubt that's true. Buying porn games on game platforms is a very different demographic than normal porn/gambling platforms.

With the CFPB under threat, there may be room for payment processors which don’t protect consumers from fraud. (Regulation is only as strong as its enforcement)

Not a wise business model. Enforcement can return at any time if the political winds shift.

>Write a Steam knockoff platform that's trustworthy enough for people to download, and load it up with dirty games. Put the premium on the customers if they want to use credit card transactions, otherwise push them towards crypto payments.

Easier said than done. It is hard to earn trust....you would probably need to jumpstart the platform with quite a few indie devs so people start trusting the site and using it.

I remember having to redo all the art for a game because Apple's store rejected it. Six months. It would have been more fun with the original art. I'm sure there's many an indie dev in the same position who'd love a gray market for putting up games like that.

I'm not sure about that. Late stage capitalism would involve the government bailing out credit card companies if there were fraud. I kind of prefer for them to deal with it themselves. And whether they deal with fraud themselves or the government does, they're going to classify certain types of transactions as riskier than others. My point was that this is probably not a "moral" decision, just a business decision. It would be a lot worse if it were the government mandating it, and worse still if they were mandating it because it conflicted with the moral code of some plurality of voters. That's not the case here, and I'm glad it's not. I wouldn't want the government to control consumer protection to the degree that voters in Texas could decide whether to protect certain consumers or not.

This is not at all what I was talking about and reads like a tangent.

itch.io already serves this purpose no?

I guess so. I haven't spent that much time checking out the darker corners of it. I wonder what their situation is with the credit card companies.