Visa Inc. and Mastercard Inc., the payments duopoly worth a combined $850 billion in market value, spend most of their time running silently in the background of a $2 trillion payments industry that enables purchases with little pieces of plastic.

Yet every so often, the elephant in the room becomes impossible to ignore. The kerfuffle around OnlyFans, a social network that says it was pressured by banking-service providers including Bank of New York Mellon Corp. to ban explicit content — a move it’s since reversed — is one such revelatory moment. It points to the centrality of online payments in people’s lives and the increasingly fraught role of the firms that manage them.

Like Casablanca’s Captain Renault, who was “shocked, shocked” to discover gambling under his roof, payment firms are being prodded to confront their ties to online porn. A text message in December from billionaire hedge funder Bill Ackman to the boss of Mastercard, over reports of illegal content on Pornhub featuring underage victims of assault, spurred action that led the card to suspend the website.

A similar turn of events seems to have struck OnlyFans: It blamed “banking partners and payout providers” for pushing it to hurriedly pivot away from porn, after a BBC report into apparent “tolerance” of illegal content. It has since pivoted back again.

In this case, the trigger seems to have come from banking partners in the background rather than the card firms — Mastercard has said it didn’t contact OnlyFans — but pressure has been building across the payments chain. After the Pornhub clampdown, Mastercard tightened its rules on explicit content in a move that was seen as a “huge” extra cost on the likes of OnlyFans. Porn industry advocates say card firms, alongside banks, are censoring their industry.

The weaponization of payments in these ESG times is hardly surprising. Financial firms have vested interests to please; they don’t want to look asleep at the wheel when it comes to online risks. Payments firm Wirecard had, after all, raised red flags at Visa and Mastercard before its collapse.

A processor like Stripe has explicit terms of service listing many “restricted” sectors and “high-risk” countries. Cannabis firms sit on literal piles of cash because they’re too risky to bank. It’s not just prudishness: “The Pay Off,” a book co-authored by the former boss of money-transfer network Swift, flagged the higher incidence of fraud and denied transactions in these “vice” industries that result in higher payment costs.

Yet the angry public backlash from OnlyFans users shows how these decisions are rippling out unpredictably after Covid-19. As the pandemic dragged more of the global economy online, more people have had to rely on tech platforms to scratch out a living. It’s not every day you have performers like Erica Cherry calling on banks to hear “the voices of the sex-work community.” We shouldn’t dismiss the dark side of online porn, but legitimate sex workers — not just banks — have networks to maintain, too.

How we pay is increasingly defining who we are. And in an increasingly cashless world, private firms are having to make decisions on who gets access to an economic lifeline. This isn’t just about porn: Wikileaks was cut off by card firms in 2010, and, during the Trump administration, officials in Europe feared tougher payments sanctions on firms dealing with Iran would hurt Europeans’ access.

As the pressure on gatekeepers to clean house grows, whether from political or business stakeholders, so does the risk of clumsy overreach.

Some argue it would be better to go off the existing payments grid and build new infrastructure, whether via the libertarian extreme of Bitcoin or the statist proposal of a new European Payments Initiative to establish “financial sovereignty” by grouping the region’s banks.

But these are niche solutions with high costs — think Bitcoin’s volatility and complexity — and few benefits, given a Europe-specific network would have a smaller scale and emptier pockets than the current duopoly. It’s likely most merchants and consumers will still prefer clunky costs, like the OnlyFans debacle and anti-fraud measures that can block legitimate payments, for the global reach that U.S. networks provide.

A better short-term answer, then, is closer supervision and regulation of the private firms that are handling a system that functions like a public good, according to Garen Markarian, a professor of financial accounting at HEC Lausanne. The digital breadcrumbs our card swipes leave behind are also valuable and need to be governed by stricter rules.

The need for more vigilance hasn’t been lost on regulators. Visa recently abandoned its proposed acquisition of fintech firm Plaid after U.S. antitrust concerns, a move that points to a potentially tougher ride for card firms’ empire-building abroad, according to Julie Chariell, analyst at Bloomberg Intelligence. And a class-action lawsuit against Mastercard in the U.K. is calling attention to the fees paid by merchants, which will quintuple in the U.K. after Brexit.

Longer term, regulators have a card to play in promoting new ways to pay. Account-to-account payments without cards and central-bank digital currencies could bring huge changes in transparency, regulation and financial inclusion. There’s a good chance improving payments can one day be done without trying to turn the likes of OnlyFans into LonelyFans.


This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Lionel Laurent is a Bloomberg Opinion columnist covering the European Union and France. He worked previously at Reuters and Forbes.

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