The Fundamentals of Acquiring an E-Cig Merchant Account
Securing an e-cig merchant account means that your electronic cigarette business can accept credit cards. Payment processing is a top consideration when opening any commercial enterprise. E-cigarettes have become lucrative ventures since they hit the market in 2005. With consumers becoming wary of traditional cigarettes and their health effects, e-cigs, vape pens, and hookahs serve as viable alternatives. The regulation of e-cigarettes varies across regions. The products are legal in the UK and US, while the EU institutes strict regulations. However, e-cigs are illegal in some countries and unregulated in others. The varied laws are part of the high risk associated with e-cig merchants. Keep reading to find out more about vape merchant accounts.
What is an E-cig merchant account?
With e-cigarettes being considered as healthier alternatives to tobacco-based cigarettes, the products opened a billion-dollar market. The vape industry is expected to hit $8.26 billion by 2025. So, you can see the appeal to open an e-cig store. Whether you are selling smoking accessories, vaporizers, or hookahs online, you need a merchant account. An e-cig merchant account lets a store accept credit cards. Traditional banks consider e-cig merchants high risk for various reasons that we will explore more below. For those reasons, it’s impossible for vape sellers to get approval.
However, that doesn’t mean that an entrepreneur who wants to get into the business cannot find payment processing solutions. Different credit card processors provide merchant services for businesses with a high risk. Finding the right payment gateway for a high-risk merchant is not easy. Businesses in the e-cig industry can expect to pay more compared to a low-risk venture.
Why is Electronic Cigarette and Vape Shops considered a High Risk Industry
Understanding what makes a vaping products vendor high risk is crucial if you are to get the most out of a merchant account. For online vape shops, the challenges are consistent across different sectors. E-commerce stores are known for their high chargeback rates. Online buyers have a tendency to dispute credit card transactions, which happens for a variety of reasons like remorse and delayed shipping. Regardless of the motivation, a disputed credit card payment triggers a chargeback. A merchant can opt to fight the chargeback if it’s identified in time. However, that is not always the case. So, the more chargebacks a merchant account receives, the higher the risk for payment processors.
The high risk of an e-cig merchant account is attributed to industry regulation. Because laws on the sale of electronic cigarettes are always changing, the uncertainty makes these businesses a high risk for processors. Selling vape pens, e-cig accessories, and other non-nicotine products is not considered a long-term venture. The enterprises are famous for capitalizing on the attention, making profits, and moving on, hence their high risk as merchants.
Is it easy to get an e-cig merchant account?
Acquiring a merchant account for your e-cig business starts with knowing your requirements. What is the credit card transaction volume? Is it a new or existing venture? How big is your customer base? Once you identify such needs, then you can settle on a credit card processor. A merchant account application is not overly complicated, especially when you find the right partner for your e-cig or vape company. A majority of merchant account providers will require you to maintain a certain chargeback ratio, for example, 2%, to get approval. Applications are usually online, with approval for electronic cig merchant accounts taking anything from 48 hours to 5 business days. Some of the documents to submit to a credit card processor are:
- Recent bank statements (for the past 3-6 months)
- Valid government ID
- Bank letter
- Credit card processing history, if applicable
What to look for when choosing a payment processor for electronic cigarette and vape shops
Although traditional credit card processors might not be willing to work with e-cig shops, it doesn’t mean that these merchants can’t find suitable payment solutions. Various payment processors offer merchant services for high-risk businesses. Therefore, finding an electronic cigarette merchant account doesn’t have to be complicated. However, you can’t trust the first processor that promises a dependable merchant account. You could get a vape merchant account, then end up with your funds frozen and no way to accept credit cards. Thus, a cig merchant should be careful about the processors they pick. Here’s what to look for.
Reasonable and clear contract terms with no hidden fees
Some companies take advantage of the ‘high risk’ label of vape shops to overcharge them or rope them into unfavorable contracts. Selling e-cigarettes has its risks, which you must be aware of beforehand. If you understand the challenges of the business and how to deal with them, then it’s unlikely you will fall prey to dubious processors. Before starting the application process for an e-cig merchant account, ensure that the provider you select doesn’t play fast and loose with contracts. Read customer reviews to see what other merchants think. When negotiating the terms, ask about all the charges that a vape merchant account incurs.
Easy integration
E-cig, vaping, and smoking accessories online stores have to integrate several systems to streamline purchasing. The e-cig merchant account that you acquire should be able to work seamlessly with the existing systems. Most payment processing offerings integrate with multiple shopping cart applications like Magento, Shopify, and OpenCart. The integration with the backend of an e-cig website should be easy, such that your shop can begin accepting payments in no time. Age verification systems are also critical elements of e-cig sites that must be integrated into a merchant account. Ask a processor about its integration capabilities beforehand to ensure that they align with your platform’s requirements.
Accept all card brands
The joy of buying electronic cigarettes online is the convenience offered. Buyers appreciate that they can enter the card details and purchase what they need. However, card transactions are only efficient if a payment gateway accepts different brands. So, cigarette merchant accounts should work with multiple credit card brands. Visa, MasterCard, and American Express are the most-used cards. Hence, you can make sure that e-cig buyers can pay using these alternatives.
Low Fees
One thing to know about high-risk merchant accounts is that they are more expensive than low-risk solutions. Due to the regulation of the e-cig industry, additional underwriting is necessary for a merchant account. Also, vape merchant accounts need a large volume of rolling reserves to cover the high chargeback ratio. For these reasons, e-cigarette merchant accounts incur more costs compared to other businesses. Nevertheless, you can find card processors that offer reasonable pricing for e-cig and vape merchant accounts. Some companies eliminate setup fees and other charges, allowing merchants to find suitable services without overspending.
Customer support
Any successful business has good quality customer service. When clients run into problems with their e-cigarette merchant accounts, they should be able to find the necessary assistance. You can tell how reliable a company’s customer support is from the onset. When you contact a processor about acquiring an e-cig merchant account, look at how they treat you. If your merchant account fails, it might prevent you from accepting credit card payments. With each minute the problem goes unresolved, it means you are losing sales. For this reason, ensure that your chosen processor is equipped to handle different issues when they arise.
Which Payment Processor is Best For Your Electronic Cigarette and Vape Shop Business?
If you are planning to sell electronic cigarettes, vaping juices, and other smoking accessories, you must provide secure, efficient, and convenient credit card payment solutions. A high-risk e-cig merchant account is the best option for you. An e-cig business needs a processor that has worked within the industry and knows what works. For one, it should have an ISO/MSP registration, so you are confident that it’s a trustworthy company.
The best merchant account provider should be capable of handling the high chargeback volumes and the rolling reserves e-cig merchant accounts require. Additionally, a high-risk credit card processing service should offer tools to help an electronic cigarette merchant reduce chargebacks and fraud. For example, an e-cig merchant account should be able to identify and track credit card disputes. PCI compliance adds to the credibility of a processor. Shoppers are cautious about submitting their credit card information. Therefore, high-security standards are crucial.
Top E-cig Merchant Processors
The high risk of e-cig, hookah, and vape shops means that finding a merchant account can be daunting. Not a lot of credit card processors cater to high-risk enterprises. However, you can expect to find a reliable e-cig merchant account, provided that you find a reputable and trustworthy provider. With their high risk, e-cigarette merchants can find themselves receiving notice from processors after only a short term. Hence, you should ensure that the partner you choose is dependable. Also, have at least one backup in the event that you need to switch merchant services. We included some leading options for e-cig merchant accounts.
PaymentCloud
Whether you use OpenCart, 3DCart, or PrestaShop, PaymentCloud allows you to integrate your shopping cart without any problems. This processor is well-recognized for providing payment processing for high-risk companies. Expect to get a customized e-cig merchant account that aligns with your business objectives. PaymentCloud invests in technology-based credit card processing products. It offers online payment gateways, EMV smart chip technology, and mobile processing apps. So, whatever your credit card processing requirements, this processor doesn’t disappoint. An electronic cigarette merchant gets free rate reviews and competitive pricing that varies with business needs. Merchants also enjoy dedicated customer service.
Soar Payments
US-based electronic cigarette businesses will find Soar Payments more than satisfactory. The processor provides e-cigarette merchant accounts for stores accepting direct transfers or through a payment gateway. It integrates with an array of POS, e-commerce, and marketing automation platforms, including Shopify, Magento, and WooCommerce. An electronic cigarette merchant applying to Soar Payments must adhere to industry regulations. For example, you cannot sell unauthorized e-juice flavors. You can get retail, e-commerce, mobile, or virtual e-cig merchant account. Soar Payments offers 5-minute applications, instant quotes, and industry minimum pricing.
Host Merchant Services
Working with HMS to provide a vape merchant account means you get access to its salient products. A merchant can get an online payment gateway, online advertising tools, virtual terminal, and money advance, among others. Host Merchant Services specializes in enterprises that carry a high risk like glass shops, vape stores, and e-cig accessories. E-cig merchants will appreciate the quality customer support that ensures you have what you need for your e-cig credit card transactions from the get-go. HMS advertises some of the best rates for cig merchant solutions.