In a nutshell, I wouldn't bother, the majority of clients and many ladies do not want a paper trail.

Thats without even looking at whether we would need a merchant account or using a 3rd party, both quite expensive options for the limited use it would get.

There is a market out there for this sort of thing but I don't think its really the adult industry.

I can see that some people may be interested, but you've not even mentioned the big question: what's your cut? (And related, how long before someone has the money in their hands?)

I can also see that it's possible to minimise the 'it wasn't me' chargebacks, but how do you deal with the 'service not supplied / faulty' ones?

Thanks for the feedback - I'll try and answer the questions raised:
a) Rates charged by our company to the Escort market are 9%. There is the option to add a card "service charge" back to the cardholder to cover fees. Aside from the purchase of the hand held Chip and Pin terminal (approx ?120) these are the only charges. We do not charge an account set-up fee or annual maintenance fee - it is purely a transaction based cost - if you do not use the terminal then there are no additional fees or lengthy contracts.
b) Please note this is a dedicated account for an escort with non-UK european banks who are comfortable dealing with this industry. It is not a case of "piggy-backing on to a friend's existing merchant account which could result in his account being closed down for misuse.
c) As this is a cardholder present and chip and pin transaction, no reserves are witheld by our banks and all monies (less the transaction fee) are deposited into a bank account or a prepaid card within 3-4 working days.
d) With a cardholder present, chip and pin transaction, the liability for a chargeback shifts from the merchant (the escort) to the cardholder's own issuing bank. If the argument from the client is that the service was not supplied, then the cardholder would have to take this up with his issuing bank but I agree this could be embarassing to explain for them.
e) We can offer a prepaid card but as the account will be in the name of the escort then photo ID and proof of residential address would be required.
For the customer, an extremely discreet explanation of the transaction would appear on his card statement - this would be the name of the payment processor we use plus a reference number. There would be no mention at all of the service they had paid for or who they had visited.

As a brief explanation, we provide a free to download app which can be used on any smartphone - the details entered onto the phone are the transaction value, any admin fee plus the customers email address or mobile number should he require an electronic receipt. Once submitted, the app links via wifi or 3G to the handheld pin terminal where the client inserts his card and inputs his PIN. At no stage does the client hand his card details to the escort.

I hope I've answered your initial points and I'd be delighted to discuss the service further with anyone that is interested.

Thanks
Vince