Indeed, there is no doubt that the popularity of e-cigarettes is smoking hot, and entrepreneurs are taking advantage of the situation. However, due to government restrictions, the e-cigarette industry is having a hard time setting up electronic cigarette credit card processing services.
Traditional financial institutions have deemed electronic cigarette and related businesses as high risk, making it very difficult for them to get cost-effective and fair payment solutions. That doesn’t mean, however, that it’s impossible. There are still institutions who accept and specialize in high-risk merchant accounts for businesses such as online brick-and-mortar e-cigarette, vaping, and smoking accessory shops and customizes payment processing solutions for all sizes and types of companies.
Here in this article, we will be talking about what an e cigarette merchant account is, its types, and how to find the best e-cigarette credit card processing services.
What is e cigarette credit card processing?
Credit card processing in certain industries is considered riskier by payment processors. One of these industries often identified as high-risk by payment processors is vaping and e-cigarettes. As public bans on smoking increase, the demand for vaping supplies also increases.
You might be wondering why this matters so much especially if you’re a relatively new business owner in this industry. The reality is that being identified as a high-risk business means you may be denied partnerships with some payment processors. It also means you may have to pay higher fees for payment processing.
One of the biggest problems for small business owners, as most vape shops are small businesses, is that they may be required to have large cash reserves in order to maintain a partnership with a payment processor, severely limiting the cash flow of the business. You may also be subject to limitations on the number of transactions you’re allowed to process each month.
Businesses that sell electronic cigarettes, vaporizers, hookahs, and other related accessories need e-cig merchant accounts because traditional banks will not approve them. Due to ongoing regulatory changes and the high chargeback ratios, banks won’t approve accounts for these high-risk electronic cigarette merchant accounts.
E-cig merchants that want to accept credit cards need to apply to a high-risk credit card processor. High-risks merchant account providers that specialize in e-cig merchant account works with businesses like them to provide them with customized payment solutions needed for them to start their businesses and get it going.
Types of e-cig payment processing
Industry analysts predict global e-cigarette revenues will exceed $50 billion by 2025. This has led to more vape shops and increased need for e-cigarette merchant accounts. While the industry has operated without many regulations, the Federal Government has threatened to clamp it down. This has placed the e-cigarette merchant account industry into a grey area with many of the payment processing companies.
Merchants in the electronic cigarette and vaporizer industries have felt the effects of regulatory changes and tightening underwriting guidelines. It is not uncommon for an electronic cigarette payment processor to require the same documentation of tobacco businesses today. Working with an experienced vape shop merchant account provider can help ensure businesses have reliable and affordable payment processing.
As of 2016, the FDA regulates all types of tobacco, including electronic cigarettes and e-juices sold in the United States. At this time the regulation for e-cigarettes is still rather sparse, but this can change rather quickly depending on the ambitions of the FDA or any other government official. Since their introduction to the markets in 2004, Federal requirements of merchants selling e-cigarettes and e-juices keep changing. This resulted to many financial institutions changing their opinions and avoiding card not present transactions.
Partnering with an e-cigarette merchant services company that specializes in tobacco and electronic cigarettes can help ensure that any sudden changes in federal or other regulatory areas that will affect the industry can be handled in a manner that does not disrupt business. This means that a specialized e-cig merchant account processor will have a number of different solutions available to quickly and seamlessly adjust their e-cigarette merchant accounts to prevent any loss of credit card processing services.
Merchants selling e-cigarettes or e-juices are the types of businesses that can benefit the most from using a vaporizer merchant account designed for their business. Vape merchant accounts selling online or through a storefront will be set up properly with the banks. The financial industry has a reputation of changing their minds on certain types of merchants if industries are too risky. These decisions are usually based on changes in the legal or regulatory environment surrounding the industry.
Finding the Best e-cigarette payment processor
Searching for the best merchant services company to handle electronic cigarette payment processing can be difficult at best. Most processors will not accept online merchants, and those that do will require additional documents to satisfy the underwriters.
Below are a list of questions that are important for businesses to ask their merchant services provider:
- Are merchants allowed to perform Card-Not-Present (CNP) transactions?
- What items are prohibited from sale?
- What documents are required for application?
Before applying, businesses should confirm that the payment processor is able to provide merchant services for online sales. This can be a deal-breaker if merchants realize their payment processor will not allow them to sell using mail order or ecommerce. Asking these questions ahead of time can reduce wasted time on applications and other due diligence.
Another common problem that many e commerce electronic cigarette and vape shops run into are prohibited items. Whether it is ejuices or the terminology on the website, performing a site audit prior to application by the underwriters will save time from accounts being denied during the formal review. Many times your merchant services provider can help go through the website and make the appropriate changes to better the chances of the account being approved by the merchant acquirer.
One of the final questions that can prove to be very helpful is having a list of required documents sent by the underwriters. Knowing beforehand the documents that will be needed to create a complete application can save time and expedite the approval process. Incomplete applications will require underwriters to go back and forth with the merchants to receive all of their needed items. Sending in a complete and robust application package will only lessen the underwriting time and improve the approval chances.
Any payment processor with experience in the electronic cigarette industry will be happy to work with merchants to address each of these issues and help prepare their application for quicker approval. Any merchants with questions are encouraged to reach out to Allied Payments and to speak with one of our underwriting professionals.
Get Started Today!
Specializing in medium to high-risk businesses, Allied Payments knows exactly how to receive approvals for a merchant account and start accepting payments quickly. In addition to credit and debit cards, our payment processing professionals can also help with e-Check and ACH processing services. Using our high-risk payment gateway, merchants are able to use Allied Payments for all aspects of their vape businesses.
With a no-frills approach to merchant account processing, coupled with affordable rates and reliable solutions, Allied Payments is the right processor for high risk industries. Talk to the electronic cigarette payment professionals at Allied Payments now to learn more.
