How the payment processor fiasco actually works. I think.

Disclaimer and warnings

Sorry this is so long. I could probably tighten it up, but I have stuff to work on and I don't want to spend too much more time on this.

Everything I say in this post is real life fanfiction I developed in my brain based on fantasy corporations in a cyperpunk dystopian setting much like our own world but where payment processors control free speech. Crazy right? It's a totally fictional setting with only a passing resemblance to our reality.

The following information is based on stuff I've heard second- and third-hand from various people who I know personally or who I just happen to follow on social media. I've confirmed some of this with multiple people and my own limited ability to research where appropriate, but I had to fill in gaps with less reliable information in some places. Some of this was also recently confirmed and some gaps were filled in by PCGamer, who published this great article you should also read. I'm no an expert on this stuff, and the people I know are mostly in the IT field so they are also not experts, so there's probably some telephone game going on here. Take it with a whole ass lump of salt.

I don't really have any special access to any information or sources not available to most other ordinary people, so don't expect any crazy revelations in this post, I just want to lay out what we know about what happened, along with some speculation and context, all in one go.

Background info and how this all started

Basically, there are these third-party payment processor companies, and at least one is involved in this story for sure, but I won't name them, because I'm not 100% sure I have the right company. For now I'll call it a/the "middleman company" since we call this entire sector payment processors. These companies are the ones that provide the payment services on behalf of companies like Mastercard, to Internet-based companies like Valve. You can think of it like Valve has an account with this middleman company, and through that account, their business has access to the payment systems of Mastercard, Visa, etc. Stripe is sort of one of these companies, but also an account holder to one of these companies--Stripe is a bit weird positionally in this ecosystem.

So as you know by now, some Australian lobbyists affiliated with the fake feminist* right-wing reactionary advocacy group Collective Shout contacted Mastercard, Visa, and PayPal. It was probably not their actual pressure campaign that got them anywhere (they only got 1000 or so people to actually call), it was probably mostly the lobbyists they are affiliated with. In response, Mastercard and Visa, though maybe more Mastercard from what I've heard, basically contacted one of these middleman companies that handle Internet payment systems and told them to basically "take care of it." This company then pressured Valve specifically, pointing to Mastercard's brand safety rules, which specifically enumerate certain types of sexual content (more on that later). This led to the de-platforming of a massive number of games on Steam and kicked off the mass banning of adult games across the Internet.

*I call Collective Shout fake feminists because they're right-wing reactionaries that are only "protecting" women in the sense that they're protecting what they call the "biological" definition of womanhood. In other words they're gender-critical transphobe freaks (terfs, basically, but without any actual feminism at all). Many advocacy groups that oppose trans rights have co-opted the label feminism in recent times; don't let them get away with it.

PCGamer reports that Valve tried to directly speak with Mastercard, but Mastercard seemingly deferred to this middleman company, and so Valve ultimately complied with Mastercard's brand safety policy as presented by the middleman company. My understanding is that Collective Shout specifically had Itch in its sights, as well, but Itch does not directly do business with this middleman company, so instead someone, probably at the same middleman company as was talking to Valve, then reached out to Stripe, who handles Itch's payment infrastructure alongside PayPal. Stripe is, from what I've heard, anti-porn as an ideological position from its leadership down. Stripe operates and is structured more like a tech startup than a banking company, and because of that, their leadership has a lot more direct and personal control over operations than what you'd see in the financial sector. Maybe because of this they were supposedly not shy at all about throwing their weight around with Itch, which may have caused some panic over there which ultimately led to the much more dramatic response we saw.

After the backlash from red-blooded gooners the world over started, Stripe retreated and pointed to its "banking partners" in correspondence with Itch.io, and have even said they hope to be able to support adult content in the future. I have it on good authority that they too are referring to the Mastercard brand safety rules when they talk about their partners, but in my opinion, the rest of this seems to be a little bit of a fib. Stripe's list of prohibited businesses makes their rules far, far more draconian than anyone else, basically restricting their services from being used for any and all adult content of any kind, period. As I've alluded to, I've heard that there are crusading anti-porn ideologues in leadership positions inside Stripe, but I of course cannot confirm this. But based on their history of behavior (they were the ones that--almost all by themselves--nearly did in OnlyFans back in 2021, btw) and how far beyond everyone else they are in terms of restricting adult content, it wouldn't be hard to believe.

How the rationale of the payment processors seems to work

Now let's talk about those band safety rules that the entire universe seems to hinge on, because they're gonna be very familiar to you. Here is the gigantic PDF of Mastercard's rules: https://www.mastercard.us/content/dam/public/mastercardcom/na/global-site/documents/mastercard-rules.pdf

PCGamer got it quoted to them by Valve, chapter and verse: we're looking at rule 5.12.7 - Illegal or Brand-damaging Transactions. This specific rule states, in part:

A Merchant must not submit...any Transaction that...may damage the goodwill of the Corporation or reflect negatively on the Marks

The Corporation considers any of the following activities to be in violation of this Rule:

[...] The sale of a product or service...which is patently offensive and lacks serious artistic value (such as, by way of example and not limitation, images of nonconsensual sexual behavior, sexual exploitation of a minor, nonconsensual mutilation of a person or body part, and bestiality), or any other material that the Corporation deems unacceptable to sell in connection with a Mark.

Emphasis mine. This is like, word-for-word the enforcement that we are currently seeing across the Internet. It's specifically targeting non-/dub-con, content with minors, anything sexual that's overly gory or violent, and content with animals. This is like THE LIST™ that's going around and it's the list we always see going around every few years when this happens.

Now, Mastercard claims that they haven't stopped any legal purchases or restricted any legal activity! And this is a bit of a game. It is true in one sense because it's the middleman company and maybe Stripe as well that have actively carried out the enforcement of these rules. So even though the action is based fully on Mastercard's rules and seems to be happening at the explicit or implicit direction of Mastercard, they technically haven't enforced this themselves, and in fact, no one has really stopped any transactions, since the middleman company and Stripe are forcing censorship at the platform level, not on individual buyers or products. It's also true in a second sense because this all is more tied up with Matercard's IP and trademarks than it's payment system, but more on that in a bit.

Here's a portion of their actual statement:

Mastercard has not evaluated any game or required restrictions of any activity on game creator sites and platforms, contrary to media reports and allegations.

Like I said, this is technically true, but it's not really what Mastercard is being accused of. I mean I guess it's nice that Mastercard isn't paying corporate goons to directly inspect each piece of porn in existence and personally banning anything they don't like, but come on. At least be tricky with the PR if you're gonna hide the ball.

But it is interesting; since this is legal content, and because thanks to Citizens United, spending money is free speech (when rich people do it at least), so how does Mastercard actually have the power to enforce any of these restrictions anyway?

Based on my understanding, it's apparently down to trademark law. What Mastercard has going on here is quite a rat's nest of legalese, but it seems that Mastercard requires businesses like Valve or Stripe to display their trademark "circles" logo (and/or other trademarks) in order to indicate that they accept Mastercard payments. Importantly, as a merchant, you cannot use Mastercard for payments if you do not also display this logo, they are a package deal. However, they impose certain restrictions on these companies because those companies are now licensing the logo, and have a responsibility to not "damage" the Mastercard brand through their use of that logo, as laid out in the brand-safety rules. And if you know anything about trademarks and IP law in general, you know that the holders of these trademarks are given tons of power under the law.

So Valve showing the logo on the page that includes an adult game "damages the brand." Or so seems the logic. It's not really your payments or money that Mastercard is technically restricting, instead they're defending their trademark by not allowing it to appear alongside this "brand-unsafe" content. But if the trademark goes, so does the entire payment system, because in order to accept Mastercard payments, you have to display the logo. It's a catch-22 that also provides a pretty sound legal rationale for Mastercard to essentially de-bank any industry that's slightly more controversial than average, and they'd of course benefit from enforcing that in an aggressive way against so-called "high-risk" industries like porn.

It reminds me a bit of the YouTube "adpocalypse" from some years ago. They're able to get around laws regarding platform neutrality, speech, and de-banking by making the argument "our brand will be damaged if our logo appears next to X or next to Y." That is my understanding of what's actually happening here, and the battle that we're actually fighting and why it may not be enough to just say we have the right to do what we want with out own money.

We are going after the right target, no matter what they say

What this means is basically what you probably already know: we have found the correct target no matter how much they pass the buck. Mastercard, Visa, Stripe, and PayPal continue to be, and always were, the problem. There is nothing about porn, adult games, or anything else that is brand-unsafe for a payment processor. No one on earth thinks Mastercard produces or condones whatever appears next to their logo in an online shopping interface. No one. It's a fake issue, and changing it will have no negative effect on Mastercard's brand. So we need to push Mastercard (et al) to change its policies and allow all legal adult content to be purchased through their payment system, period.

Can you imagine if Windows banned porn because you watched it right after the Windows logo appeared on your computer? That's the level of nonsense I think we're dealing with here. No other industry is able to exert this level of control over business or free expression, through trademark law or any other power, and it's ridiculous and should be illegal for payment processors to even have this kind of power. Not even the government has the authority to prevent people from buying otherwise completely legal products and services with legal tender!