Head Shop Merchant Account

Head Shop Merchant Account

Customers have shifted their buying habits toward online payment methods and merchants have kept up with this trend.  This has remained evident in the drug paraphernalia industry where the demand for head shop merchant account services continues to grow.  Even though many head shops do not sell tobacco products, payment processors view the sale of bongs, glass pipes, and other glassware as high risk.  Online head shops face more stringent restrictions from payment processors for card not present sales.

head shop credit card processingAs financial institutions have continuously been tightening tobacco underwriting guidelines, its become more difficult to find a payment processor.  Working with an online tobacco credit card processing company lacking experience can cause headaches and unnecessary expenses later on. Allied Payments specializes in all types of head shop credit card processing and glass pipe payment processing services.

Commonly Sold Head Shop Paraphanelia

Most items sold in head shops fall into a higher risk category. Financial services companies classify a number of these products as drug paraphernalia, making approval for a merchant account a challenge.  The most commonly seen products include:

  • Bongs
  • Cigar Cutters
  • Detox
  • Grinders
  • Glass Pipes
  • Glassware
  • Hydroponics
  • Incense
  • Lighters
  • Pipes
  • Pipe Cleaning Products
  • Pipe Screens
  • Roach Clips
  • Rolling Machines
  • Rolling Papers
  • Water Bubblers

Some of these products can be sold online, but associating them with tobacco or smoking might result in them being considered a prohibited item. Setting up a head shop merchant account might require businesses to follow specific guidelines for terminology and images. If merchants are aware of these headwinds beforehand, they can properly be prepared their website for underwriting.

What are Bongs and Water Pipes?

Bongs, also known as water pipes, are a commonly used smoking device for the consumption of tobacco and cannabis. Made of a composite glass or plastic, they are designed to be durable and withstand repeated use through heating. Using water inside the bong, smoke is drawn through the water towards the mouthpiece by inhaling. This is thought to create a more pleasant experience since the smoke is smoother after the water acts as a filter separating heavier particles.

What are Glass Pipes and Glassware Products?

Glass pipes, also known as a piece, bowl or smoking pipe, are commonly used with tobacco or cannabis products. Coming in a variety of different shapes, sizes, and materials, pipes use a filter to separate particles and create a smoother smoking experience. Most of the time these pipes are decorated and are made of composite glass, but they can also be made of ceramic, wood or stone.

Types of Bong Merchant Account Services

As merchant services providers have tightened the restrictions on the different industries they service, businesses using head shop credit card processing services have experienced pushback. While many of the larger retailers are able to set up services, the medium-sized to startup businesses have been left without many options.

Having a merchant account that can accept debit and credit cards is possible when working with the proper bank and selling non-prohibited items. These businesses will have to adhere to the guidelines set forth by the underwriters, but many times merchants do not want to be restricted. This creates issues between the payment processors and merchants, resulting in many accounts being terminated for lack of compliance.

The most common alternative merchant account solution that has become available is an electronic check account. By accepting checks, merchants can avoid the restrictions set for by the payment card associations and imposed by the payment processors. Abiding to local and state laws, merchants can accept e check payments with being concerned with violating most payment processing guidelines. In addition, the fees charged by most e check payment processors are significantly less than credit or debit cards, becoming a low-cost alternative for merchants.

Merchants shopping around for an affordable and practical payment processing solution are welcome to contact Allied Payments. Our team of head shop credit card processing professionals is happy to help businesses weigh their opens and determine what is their best solution.

Glass Pipe Merchant Account Requirements

Merchants preparing to apply for a head shop merchant account should be aware of the types of documents that will be required. Underwriting will be more critical of head shops than most other types of merchant accounts, making supporting documentation even more important. Some of the most common requirements from underwriters will include:

  • Completed Application
  • Copy of Government ID
  • Voided Bank Check
  • Business Bank Statements
  • Merchant Account Statements

Providing underwriters with a completed application will help improve the speed of which applications are being reviewed. While not always the case, underwriters might also become leary of incomplete applications for fear that information is being withheld on purpose. For the time it takes to review an application prior to submission, it can prevent merchants from experiencing days of delays.

A simple color photo will suffice for the Government ID and a voided check requirement. Underwriters need to complete their KYC documentation and will want to keep a photo ID on file. The voided check ensures that the settlement account is set up properly so payouts to the merchant are not delayed. Many applications have banking information filled out incorrectly, thus providing a copy helps the underwriters verify banking information is correct.

A glimpse of the company's financial history is an essential part of the decision making process. The processing history of a business will let the payment processor see how the business operates; does it experience high chargebacks or high returns? Seeing the monthly volume trends is very important to prevent any surprises when the account starts accepting payments. Understanding how the financials will also let the underwriters know if the company is able to handle chargeback, refunds and their monthly fees.

In addition to supporting documents, underwriters might conditionally approve an account while requiring additional documents or conditions. This can include the following requirements or additional terms.

  • Website Compliance
  • Photos of Inventory and Store
  • Verification of Orders

Many times businesses that are operating in a higher risk category will need to abide by strict website guidelines. Underwriters are prepared to help the business make changes to get their business in full compliance. In some cases, underwriters will want proof of inventory in the business location. One of the final ways that payment processors can verify transactions is by calling random customers to confirm their orders and that the products were received. Any of the above requirements are in place to limit the risk of the payment processor and help the merchant operate with reduced risk, aiding in the longevity of the merchant accounts.

Open a Drug Paraphanelia Merchant Account Today!

Similar to the hookah merchants, businesses that sell glass pipes online have experienced increasing difficulty finding approvals for a merchant account. Even glass pipe dealers that are not selling tobacco products have had little to no luck finding reliable merchant accounts for their businesses. This has made it difficult for e-commerce merchants to accept payments in the glassware industry.

Government guidelines have expanded to include these tobacco accessories as regulated products, forcing more and more payment processors to decline to accept these merchants. Facing stiff fines and regulatory penalties has become too risky for many merchant service providers to chance. This has resulted in many of the payment processors dropping existing glassware and glass pipe companies while startups struggle to find service providers.

As an experienced payment processor for the glass pipe industry, Allied Payments has a number of solutions for glass pipe and glassware merchants. Our financial network allows us to place most medium to high-risk businesses without an issue. As a specialized glass pipe processor, we help new and existing merchants sell their pipes and glassware products online.