However, payment processing companies are still wary of e-cigarette merchants. While there were no strict regulations that were initially imposed, the Federal Government has made legal changes that have put the industry in the grey area. And this does not sound favorable to payment processing companies.
Why do you need a vape shop merchant account in the first place?
A merchant account enables a vape shop to accept payments through credit card terminals, a POS machine, and other online payment gateways. The merchant account is integrated to an eCommerce platform so when a transaction is made through the terminals, it is processed from the acquiring bank to the payment card network, whether it’s American Express, Discover, MasterCard, and Visa.
During the process, the transaction is verified and checked if the requesting customer has enough credits to proceed with the purchase. A transaction receipt is then made available in the merchant’s end or sent through an email on the customer’s email address. All these steps happen during a vape shop credit card processing. With all this sensitive information on the line, it is important to find a reliable payment processor and vape shop merchant account provider.
But, as mentioned, the biggest roadblock merchants face in finding a vape credit card processor is that the industry itself is tagged as high risk. The regulation set for vape and e-juice businesses can quickly change as the Food and Drug Administration (FDA) continues to look into the sale of all tobacco-related products which blankets electronic cigarettes, vaporizers, and e-juices.
In fact, some cities in the US have banned the sale of e-cigarettes within their city. San Francisco for one has prohibited sales starting early 2020 through a citywide ordinance that was signed in July 2019. A similar ordinance is yet to take effect in Beverly Hills in 2021.
All that considered, is it still plausible for e-cig stores to be approved for a merchant account? Yes, it is.
How to Get a Merchant Account for Vape Stores
Like any other industry, there are required documents for vape merchant account services. Having the following documents will hasten the process for one to have a high-risk credit card processing vape shop account.
- A completed application form from the processor
- Copies of government identification cards
- Any proof of business (i.e photo of physical store, inventory receipts, or licenses)
- A copy of bank statements from the last 2-3 months
- A copy of merchant account statements from the last 2-3 months
On top of these, a clear financial record will also put the merchant on a positive light in the eyes of banks and payment processors. The merchants have to establish themselves as a legitimate business and a compliant one to the guidelines set by the local and federal governments.
What to Look for in a Merchant Service Company
There are a lot of options when it comes to payment processors but not all of them are the perfect fit to every vape business and not all processors offer the same services. Here are a few of the things that one should look into before choosing a merchant service company.
A processor with specialties in e-cig and tobacco should be on top of their list. Someone who already has knowledge of the latest regulations set by the FDA and how to handle them will be able to manage any change in the regulations in the future. These vape store credit card processors will be able to provide a better service.
A payment processor should also be able to provide fraud and chargeback protection tools. Many buyers change their mind after their purchase or simply forget the transaction they made. This is one of the many reasons why chargeback rates are high on vape stores. A processor should be able to help out in minimizing these risks to keep the chargeback rates low.
The pricing model for the merchant account should also be put into consideration. Merchant account service companies will offer either a tiered pricing or cost-plus pricing. Some services will come up with deals such as flat monthly dues to entice more clients. One should weigh the pricing scheme of processors to get the best value for their service.
Lastly, one should thoroughly check the coverage of the merchant account service. These include but are not limited to POS machines, payment gateways, a secured terminal, and a trained customer support. It is important for the payment gateway to be PCI compliant.
FDA Regulations for Vaporizers and E Cigarettes
While every state has its own local guidelines for the sale of electronic cigarettes, the FDA itself has a general ruling for all tobacco businesses within the country.
- A photo ID must be presented by anyone under the age of 27 who want to purchase electronic nicotine.
- E-cigarettes are only to be sold to individuals aged 18 and older.
- No free samples of electronic nicotine and its component and parts are to be given away to anyone.
- E-cigarettes cannot be sold in vending machines unless located in an adult-only facility.
- Vape stores should include a health warning statement to all the packages of their products.
- Advertising of vape products and components should have health warning statements.
Since its classification as tobacco product on August 8, 2016, importation and sale of e-cig in the US have been subjected to the evaluation and regulation of the Food, Drug, and Cosmetic Act (FDCA) as well. And in September 2019, the US government started working on banning e-cigarette liquid favors in general.
Need a high risk credit card processing vape shop merchant account? Get in touch with the experts at Allied Payments to get started!