How Payment Processors Have Become the Biggest Corporate Censors
In these tense political times, the debate surrounding freedom of speech and censorship has spilled over into the business sector. Recently, a slew of rightwing figureheads like, most famously, Alex Jones were booted from social media platforms like Facebook, Twitter, and YouTube and crowdfunding sites like Patreon for offensive statements or content.
Notably, payment processing company PayPal, closed the account of the far-right extremist group Proud Boys leader Gavin McInnes account stating, “our services will not be allowed to be used to promote hate, violence, or other forms of intolerance that is discriminatory.”
Patreon, a popular crowdfunding platform and largest provider of income for YouTube vloggers following the new YouTube ad monetization rules, shut down the accounts of alt-right leader Richard Spencer, provocateur Milo Yiannopoulos, and right-wing personality Lauren Southern. Other financial companies like Stripe, Visa, and Mastercard are following these examples, leaving many questioning their power of censorship over the constitutional right to free speech.
Although countless think pieces may decry this recent rash of corporate censorship, the truth remains that these are private companies who set their own terms of service. When a user opts in to use their service, they must play by the company’s rules or lose that service. For decades, merchants having to accept credit card payments have learned the hard way about payment processors’ fastidious morality.
The most popular payment processors like PayPal, Stripe, and Square will not do business with merchants who operate within a high risk processing industry. These businesses are considered high risk by these financial institutions because of factors like government regulation, the rate of consumer fraud, and reputational risk that leads to consumers requesting credit card chargebacks.
“We’ve seen merchants come to us after getting shut down by their processors without any warning or reason,” Kristin Ward of payment processing solutions firm PayKings said. “As soon as these companies catch a whiff of controversy they’ll boot those businesses to protect their other merchants.”
The reason being, Ward explained, is that these giants of the industry process payments in aggregate merchant accounts that consist of a huge number of unrelated companies. If some of these companies see higher amounts of chargebacks than average, it brings up the overall processing rate and merchant fees for all the companies within the aggregate account. Most of the censorship carried out by payment processors doesn’t come from a place of morality, it is really to protect their own bottom lines.
In fact, some of the fast-growing and highest-grossing industries like adult entertainment, tobacco, cannabis, alcohol, and firearms are considered high risk businesses. PayPal and Stripe are notoriously absent from these industries leaving high risk merchants to find payment processing solutions on their own.
Although corporate censorship is not a new concept to high risk businesses, to the public, it may seem like a shock to see the majority of public censorship carried out by tech companies or payment processors. But are they really politically correct or just profit-savvy capitalists? The philosophies of business point to the latter.