"Without this, some businesses may resort to other means in the cash economy which feeds into the transaction activity frequently associated with criminal organisations," Ms Carnell told Fairfax Media. Banks undermined efforts to combat the black economy by refusing services to adult industry businesses, she said. A recent report by Eros said 16 out of 24 adult businesses participating in a survey believed they had suffered discrimination from the major banks, which had denied loans and merchant services to operators, only giving scant reasons. The ABA said lending decisions were a matter for individual banks, which should exercise their own commercial discretion. Manager of Sydney- and Canberra-based adult business Ohzone Stores Rick Vermunt said he learnt from NAB at short notice in June it was cutting his merchant services, telling him it appeared he "may have breached the MasterCard Worldwide regulations in relation to adult content" on his website.

The bank left online purchasing gateways open for three days after cutting its services, so Mr Vermunt was unable to see whether customers buying items online had made a payment. "You've got people trying to purchase and then they can't complete their transaction," he said. "There's bad will created for the customer base and then you've got to bring those people back." He was able to move his websites onto an existing PayPal set-up, but said some businesses would have been crippled if they had to find a new service from scratch. Eros policy adviser Jarryd Bartle said it didn't oppose banks refusing services to businesses when they had legitimately found risks, but that the industry was facing discrimination based on "broad brush generalisations".

"That's overstepping the role of the banks, to be making those moral judgements, particularly when those judgements are not in step with the community's views," he said. "Because the banks haven't been transparent, it's hard for us to assess why they think these risks exist." NAB said a potential borrower's capacity to repay, and "the size, type, tenor and complexity of a transaction" were all factors in its decisions. "Accordingly, we do not provide lending or merchant services to brothels and escort agencies. Our exposure to the legal sex industry has been decreasing over time," a spokeswoman said. Westpac does not provide services to customers operating brothels, while Commonwealth Bank said it "actively considered" the social impacts of its clients' activities, and would "only lend to businesses and projects where we understand and believe those risks are well mitigated."

An ANZ spokesman said that if applicants passed normal credit policies for retail customers, the bank imposed no restrictions on lending to people employed in the adult industry. Loading "We assess each case on its merits and in line with our own risk appetite as we do with any application for lending." The small business ombudsman's call for banks to provide services to the adults-only sector comes after a Canberra-based online sex shop filed a complaint with the ACT Anti-Discrimination Commissioner when zipPay and Afterpay turned her down because her business was part of the adult industry.