You're describing your state banking regulator. Also, like a bajillion federal banking regulators.

The article talks about credit card networks. I'm referring to banks. Banks are highly regulated, including with respect to account closures. Credit card networks are much less regulated.

If you want a non-court public venue to dispute your bank on something, anything, you have several such venues. Depending on your state, they can be quite toothsome.

Well, they're doing that but there's also a huge set of things whose legal status is "shmaybe?", and AnthonyMouse's point is that this is where the defaults matter. Currently, banks tend to merge that third category into "illegal" set. They could merge it into "legal" set instead, which would arguably be better for society.

I’m not defending porn as a grand corner of free speech but I don’t like banks deciding who can and cannot be paid.

The alternative that might work is charging businesses fees that vary according to the risk of their transactions being illegal. Which sounds good on paper, but also runs the risk of leaving the bank in the position of making a large amount of fees from illegal activity, which rarely goes over well in court. Better, perhaps, to have a unified fee schedule and just refuse any business that could be unprofitable from liability.

I think the banker would have a strong point here. They're not in a place where these are always easy calls to make - transactions don't come with an evil bit. The constraints placed on them don't leave them a lot of viable choices.