September 9, 2021 Reading Time: 6 minutes

Many people were shocked when OnlyFans, a popular website for porn, recently announced that it would ban “explicit conduct.” Less explicit nudity consistent with its acceptable use policy would still be allowed. Why would a porn-dependent company ban a big chunk of its business?

OnlyFans claimed that it was complying with the requests of its “banking partners and payments providers.” Social media quickly lit up with allegations of “Financial censorship!” and “The tyranny of payment processors!” A few days later the company rescinded its ban. For the foreseeable future, explicit conduct will continue to be permitted on OnlyFans.

The sex industry is a touchstone or barometer for the general state of payments inclusion. Operating at the fringes of society, sex workers are the first to suffer when the rules and social mores that govern access to payments systems tighten. That’s why I think it’s worthwhile to build an accurate understanding of OnlyFans’s motivations for enacting a ban. Was the event a symptom of a broader decline in the payments system’s inclusiveness? Or is the explanation for the ban more benign than that?

What is OnlyFans?

OnlyFans is a website that allows fans to subscribe to material offered by content creators. Many of the site’s content creators are sex workers. When people were forced to stay home due to the pandemic, the number of content providers on OnlyFans exploded, and so did the number of customers buying their work.

The most important tool that OnlyFans provides to users is a connection to the payments system. Subscribers to the site can pay for content using MasterCard and Visa. Content creators can get paid via direct deposit into a bank account or a digital wallet. OnlyFans keeps 20% of the receipts, the remaining 80% being paid out to content creators.

I see three possible reasons that might have motivated OnlyFans to ban explicit porn (and then unban it). One of these reasons is concerning. It constitutes a dangerous encroachment on payments system access. The other two are more local, and less worrisome.

The illegal activity theory

The first possibility is that OnlyFans may have been knowingly or unknowingly hosting illegal activity, say underage porn. In reaction, OnlyFans’ banking partners forced it to take action, which resulted in the ban.

Here you need to know a bit about how the payments industry works. Visa and MasterCard aren’t responsible for connecting businesses to their networks. Banks and payment processors act as the gateways between businesses and Visa and MasterCard.

The card networks have strict policies against facilitating illegal activity. In turn, banks and payment processors are responsible for enforcing the network’s rules on the businesses that they connect to the network.

Financial institutions are required to act as cops because the law has deputized them to do so. I explained the reasons for this when Pornhub was cut off by MasterCard and Visa. In short, money laundering laws make it illegal for financial institutions to “knowingly engage” in monetary transactions in any criminally derived property or unlawful activity. Thus, any bank or fintech that abets illegal activity such as underage porn can face large punishments. And so they do their best to filter this activity out.

So with all the characters outlined, let’s fill in the plot line. OnlyFans’s bank or payments processor may have noticed that certain illegal content was being hosted on the site and issued OnlyFans an ultimatum: clean up or scram. To appease its partners, OnlyFans may have responded with a hasty ban on explicit content. It subsequently rolled this ban back after scratching out some sort of compromise with its processors.

I don’t know if this is the actual plot line, but if it was I’d suggest that this sort of banking pressure was the benign sort. OnlyFans’s financial partners weren’t arbitrarily censoring the site. They were governing the network against unlawful usage.

Now, we could argue that certain types of sex work payments that Visa and MasterCard currently prohibit, like prostitution, should be legal. However, in the jurisdcitions where prostitution is legal, like the Netherlands and Nevada, card network access is available. So don’t blame Visa or Mastercard for censoring prostitutes from their networks. Blame governments in those jurisdcitions for prohibiting prostitution.

The OnlyFans is gentrifying theory

While many commentators painted OnlyFans as a victim of bankers, it’s possible that it was the aggressor… against its own sex worker clientele.

Beginning in 2020, a wave of influencers and celebrities who weren’t sex workers joined OnlyFans to create content. These included the likes of Bella Thorne, Tyler Posey, Blac Chyna, Cardi B, Tana Mongeau, and Corinna Kopf.

This “gentrification” of OnlyFans upset sex workers. They had helped build the platform by populating it with content and bringing in subscribers. They worried that OnlyFans might try to purge sex workers in order to make the site “safe” for this newer generation.

Viewed in this light, OnlyFans’ ban on explicit conduct may have been part of an overall corporate “mainstreamization” strategy, one that involved the company trying to chase away the more risqué sex workers while keeping the less naughty ones. From OnlyFans’ perspective, as long as this effort brought in more revenue from non-sexworkers than it from lost sex-workers, total profits would grow.

In executing this strategy, OnlyFans would have preferred to have a fall guy, a villain on whom to pin the blame. Who better than evil banksters? It may have used a routine disagreement with a payment processor as an excuse to blow things up. But it didn’t work. OnlyFans’s base of sex workers put up a fight, and ultimately OnlyFans had to walk back its ban.

If the gentrification story is accurate, it doesn’t augur the broader sorts of payments inclusiveness issues that concern me. At its own behest, a single platform changed its accessibility policy. Some sex workers on OnlyFans, those making explicit content, might have lost access to the payments system, but only temporarily. OnlyFans competitors AVN Stars, Fancentro, and JustForFans would have quickly extended their own card network access to ex-OnlyFans’s users.

The victims of financial censorship theory

The last possibility is the most worrying. Perhaps OnlyFans was publishing legitimate and legal content but its financial partners deemed that material to be controversial, and asked OnlyFans to stop.

Financial institutions worry about their reputations. They may believe that by facilitating legal but “immoral” activities, say tentacle porn or BDSM play, their brands will be damaged.

Under this scenario, one of OnlyFans’ payment processors, maybe Stripe, didn’t feel comfortable with certain legal but explicit material published on the site and asked OnlyFans for changes. OnlyFans complied with Stripe’s censorship request with a ban on the most risqué material.

This particular scenario doesn’t signal a general decline in payments inclusion, and here’s why. Stripe competes with a number of other payment processors, including CCBill, Epoch or Verotel, all of which specialize in connecting riskier clientele to the card networks. Even if Stripe was becoming more picky about controversial content, there is no evidence that this was the case with other processors. So OnlyFans could have cut ties with Stripe and moved to another payment processor.

Far more worrisome to me is the possibility that it wasn’t Stripe that voiced moral concerns. It was MasterCard or Visa. Unlike Stripe, MasterCard and Visa are oligopolies. If an online business is cut off by either of these two networks, it probably won’t survive. 

Unfortunately, card network accessibility policies do hinge on issues of morality. MasterCard, for instance, does not allow the sale of legal products that are “patently offensive” or “lack serious artistic value,” since these could damage its brand.

Because they are essential, the card networks should not be allowed to transpose their opinions about “artistic value” across the entire internet. If a product or service is explicit but legal, it should be possible to buy it with MasterCard or Visa. 

So what happened?

The payments world is incredibly opaque. It’s difficult for outsiders to get accurate insights into what is occurring. But let me try my best to narrow down our three possibilities.

OnlyFans was originally vague about why it banned explicit porn, blaming “banking partners and payments providers.” But did that indict the card networks? Many thought so. But in a subsequent interview with the Financial Times, CEO Tim Stokely disputed the claim that the card networks were at fault for the ban. Mastercard confirms this: “It’s a decision they came to themselves.” 

Taking OnlyFans and MasterCard at their word, then that rules out the most dangerous of the three possibilities. That is, OnlyFans’s ban probably wasn’t the result of a broad card network crackdown on legal material deemed to be obscene or lacking “artistic value.”

Instead, I suspect the ban was probably related to either OnlyFans’s own corporate gentrification policy or its partners’ worries over illegal content. It is unfortunate that OnlyFans content creators were nearly deplatformed due to these issues. However, it seems to be a local incident, and not indicative of a global decline in accessibility to payments.

J.P. Koning

listpg_koning

J.P. Koning is a financial writer and blogger with interests in monetary economics, economic history, finance, and fintech. He has worked as an equity researcher at a Canadian brokerage firm and a financial writer and publisher at a large Canadian bank. More recently, he has written several papers for R3, a distributed ledger company, on the topics of central bank cryptocurrency and cross border payments. He founded the popular blog Moneyness in 2012. He designs economics and financial wallcharts at Financial Graph & Art.

Koning earned his B.A. in Economics from McGill University.

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