For many years, the e-cigarette industry, estimated value at $2 billion, has gone largely unregulated by the US Food and Drug Administration. The FDA has put forth a new plan to install the regularization and oversight of the e-cigarette industry. Merchants and health group advocates have mixed reactions to the FDA’s plan, but for an e-cigarette merchant’s business, the FDA’s decision will have a direct impact on you and your merchant accounts.
The FDA’s new plan is like the plans for most other industries. E-cigarette companies will need to register their products, disclose the product ingredients, and wait for the FDA to review new products before marketing them. This should bring stability to an industry that has been rife with inconsistent goods and services.
Yet, at the core of the new FDA plan is the stipulation that e-cigarette merchants and companies would have to wait for FDA review before stating that a product reduces any risks.
This requirement is important because one of the cornerstones of marketing e-cigarettes is the perceived health benefits of vapor-based tobacco as opposed to smoke-based tobacco. Health studies conducted on the differences between cigarettes and e-cigarettes are underway but not complete. Until the research is completed, health benefits cannot be verified by the FDA—nor marketed by e-cigarette merchants.
Health advocacy groups still raise concerns over nicotine levels in e-cigarettes as previously unregulated e-cigarettes could contain dangerous quantities of nicotine for minors. Advocacy groups were also critical of the time it took the FDA to propose any form of regulation—so long in fact many local and state governments began independent legislation to regulate e-cigarettes.
What does this mean for you and your e-cigarette merchant account? Some trade groups from within the e-cigarette industry claim the additional paperwork and red tape will hurt small businesses. Yet, the status of e-cigarette companies as high risk is unlikely to change. Your e-cigarette merchant account will still likely need to be processed by alternative sources and not traditional banks.
Regulations and legislation are important to monitoring any industry, but for the electronic transaction side of the e-cigarette industry, the FDA’s decision is by no means a sweeping or unexpected surprise.