My understanding is the rules are dictated by Visa/MC/Amex, and are largely based on chargeback risk for categories of merchants. There are likely further legal and pearl-clutchy reasons that combine to just out and out ban.
Anecdote: we talked with every payment processor around for a product we were making that involved storing and spending value from a digital wallet. It was close enough to various Visa/MC rules and money transmitting statutes that the usual response was arguing for a few weeks about why we comply until higher management decided something akin to: well if you had a lot of volume we’d take the risk dealing with it, but you don’t so it’s not worth our time.
Last ditch effort was Stripe, who said: sure! And we asked again with more detail, making sure they saw the same issues and wouldn’t make us tear it down in a month. They said: sure! Did it a third time higher up for diligence, and finally just came to the conclusion they have different priorities and are getting big enough to use their scale to throw some weight around for all the small merchants.
+1 to the rules coming down from Visa & MC. Amex doesn't allow adult.
There's a bit more nuance there, as the rules actually come from the bank issuing your merchant account, rather than some master "Visa" entity. So if you're a big player in the adult game you're going to work to find the right banks willing to issue you merchant accounts.
Those banks will also have a compliance department which will look at your content and make sure it's inline with what they're willing to allow. If you want to make adult content where consensual adults do things together there's one group of banks you can go to. If you want to make niche content with acted out violence and such you're going to find a much smaller group of banks willing to issue you merchant accounts. Or possibly no banks at all. It's interesting that the thing deciding what adult content will be easily monetizable on the internet is small merchant account issuing banks.
On the charging side I believe Stripe uses Wells Fargo, which has pretty strict rules.
Source: worked for one of the large players in the adult market a while back. Some info may be dated.
Note: one of the fun things about credit cards is that Visa and MC are issued by banks, and Amex is issued by Amex. There was a new fraud style a few years ago that amex was able to lock down pretty quick due to its centralized nature, while Visa and MC had a harder time.
Visa is absolutely a master entity that dictates nearly everything including consumer credit reporting requirements and minimum credit lines. They publish an 886 page "public" version which is actually kind of an interesting read:
+1. For anyone, watch the movie "Yes man", with Jim Carrey. It's a run of the mile chick flick, but the bit about banks, which is fairly at beginning, it portraits the "we prefer to say NO" policy of banks very accurate.
Anecdote: we talked with every payment processor around for a product we were making that involved storing and spending value from a digital wallet. It was close enough to various Visa/MC rules and money transmitting statutes that the usual response was arguing for a few weeks about why we comply until higher management decided something akin to: well if you had a lot of volume we’d take the risk dealing with it, but you don’t so it’s not worth our time.
Last ditch effort was Stripe, who said: sure! And we asked again with more detail, making sure they saw the same issues and wouldn’t make us tear it down in a month. They said: sure! Did it a third time higher up for diligence, and finally just came to the conclusion they have different priorities and are getting big enough to use their scale to throw some weight around for all the small merchants.