In addition to tobacco, many of the non-tobacco products and accessories sold in smoke shops; including hookahs, tobacco grinders, and rolling papers have become targeted by government regulation. The threat of large fines and other problems has affected the financial institutions servicing the head shop merchant account industry. Most payment processors have responded by increasing their underwriting requirements or simply exit the industry altogether. These changes are creating a void that can only be filled by a specialized smoke shop credit card processing service.
Who needs Smoke Shop Payment Processing?
Tobacco businesses in a storefront location with a merchant account usually operate without any problems from their payment processor. However, merchants that are trying to establish an online e-commerce store will need the ability to accept CNP (card not present) transactions. Not all payment processors can offer these services, including processors that accept retail brick-and-mortar tobacco merchants.
Smoke shops are not the only type of tobacco industry that requires specialized credit card processing services. Merchants operating head shops, selling glass pipes, hookahs and other types of drug paraphernalia will also need a specialized account. Merchants that are operating an online smoke shop need to be set up with a merchant account designed for their industry. Allied Payments is able to help merchants in the various tobacco industries and approve them for merchant services.
Advantages of using a Smoke Shop Credit Card Processor
As the trends and popularity of smoking continue to change, the types of smoking products and accessories sold in smoke shops needs to evolve and follow the demand of their customers. What was once simply rolling papers and loose tobacco has become hookahs, e-juices, and electronic cigarettes. Partnering with a payment processor in the tobacco industry will help businesses weather any changes or regulations that would otherwise hinder their clients.
Many times higher risk merchants will choose an eWallet or an aggregated merchant account because of the simple application process. Unfortunately, these types of solutions are not always the best for long term payment processing services. Fortunately for businesses with a merchant account, they can integrate directly into their acquiring bank; allowing for more authorizations, faster settlements, and lower fees.
Using a merchant account also lends itself to giving merchants the option their payment gateway service. Most payment processors will provide a fully PCI Compliant payment gateway that will quickly integrate into both the acquiring bank and shopping cart. Most payment gateways offer a robust catalog of transaction management and reporting features can make operating the business much easier. We integrate with; WooCommerce, Shopify, BigCommerce, Ecwid, LimeLight, Magento, Opencart and Prestashop to name a few.
Vape Shop Merchant Accounts
Falling into a grey area of the tobacco industry, vape merchants operate without much regulation from either the government or payment processors. As changes continue to take place within the government over the sale of these products, merchants will need to adapt. Many payment processors that process transactions for vape shops are starting to restrict the allowable types of sales.
Vape shops that offer card-not-present sales will want to partner with a merchant services provider that is knowledgable and specializes in the industry. Once strict regulation is enforced by the government, many of the current payment processors will leave the industry. Allied Payments is one of the few processors that specializes in all types of vape shop credit card processing accounts. This ensures that our clients will not have accounts suddenly terminated due to their business model.
Why are Smoke Shop Merchants Considered High Risk
Tobacco merchants vary differently depending on the payment acceptance methods used by their customers. While retail storefront smoke shops are not considered high risk, accepting payments from a customer online carries much more risk. Though both types of stores could accidentally sell to minors, the chances of an online violation are significantly higher. With stiff penalties and fines for violations, many payment processors have opted to avoid the industry.
To combat the threat of underage sales online, online merchants have installed various protocols to restrict users that should not be accessing their websites. Most websites have installed an age verification program to require customers to verify their age. Usually done with a popup on-screen or a button in the shopping cart, customers are required to attest to their age. More sophisticated software requires customers to upload copies of their ID for both age and address verification, a possible look into the future of online verification programs.
Violations by merchants can result in heavy fines assessed to the payment processors, a reason many will not accept online or other types of card-not-present tobacco sales. Though payment processors require merchants to verify their age verification process, many will also require additional documentation. The most common document is from by an attorney in the form of a compliance letter stating the merchant understands, agrees and will conduct business according to government and payment card network guidelines. The payment card networks also assess merchants an annual fee as part of their yearly compliance for the tobacco industry.
In addition to following all laws and maintaining compliance with the various card networks, having a partner experienced in the industry is paramount. Working with Allied Payments, merchants will gain a partner that understands payment processing and how to handle higher risk businesses. This knowledge can help merchants avoid costly compliance or loss of business due to mismanagement by their payment processor, a completely avoidable mistake.
Start Your Tobacco Credit Card Processing Today!
Smoke shops looking to set up a merchant account for their online business, storefront or both can benefit from partnering with Allied Payments. As one of the largest providers of tobacco store merchant accounts, we have become an industry leader. Building our business by providing fast applications, and reliable payment processing with minimal fees remains our recipe for success.
Our quick application process along with our fast merchant setup makes starting a merchant account with us a simple process for businesses of all sizes. All merchants are set up directly with their acquiring bank, eliminating middlemen and excess fees. Specialized tobacco merchant accounts allow smoke shops higher volume limits and fewer restrictions than other payment processing solutions.
For merchants looking to expand their smoke shop business online, Allied Payments can help. As one of the few payment processors that can provide these services to e commerce smoke shops. For more information, or to set up your business with credit card processing services, please get in touch with one of our helpful representatives and we will gladly answer all your questions.