Industry Leading High-Risk Merchant Account for Online Tobacco Sales

Feb 16, 2018

Shopping for cigars or other tobacco online is straightforward. Not exactly a task that you would think twice about as a consumer. However, as a business owner, you know how difficult it is to be able to offer tobacco products online; it is actually very complicated. While there is no federal law that prohibits the online sale of cigars, cigarettes, smokeless tobacco or loose-leaf tobacco, the credit card processing industry would make you believe otherwise.

Banks shy away from online tobacco stores for a number of reasons. This makes it incredibly difficult – if not impossible – for them to secure the credit card processing and business funding solutions they need to operate smoothly. Without safe credit card processing, the business is left unable to accept and process their customers payments. It goes without saying that operating in cash-only is simply not an option. Likewise, without adequate working capital, businesses cannot pay for day-to-day expenses, cover payroll or purchase necessary supplies/equipment.

Of the many reasons why banks are generally hesitant to process payments for online tobacco stores, the following are the most common:

  • Inconsistent, ever-changing state and federal regulations and rules
  • Online transactions (higher risk than in-person transactions)
  • Vulnerable to excessive chargebacks
  • Part of an industry considered high-risk

Chargebacks and Processing Volumes

Essentially, a chargeback is a form of customer protection provided by the issuing bank. It gives the cardholder the ability to file a complaint regarding a fraudulent transaction on their statement. A chargeback occurs when a credit-card provider demands a retailer to make good the loss on a fraudulent or disputed transaction. Tobacco merchants are more vulnerable to excessive chargebacks than other business types, thus making them more high-risk.

Because of this high-risk categorization, online tobacco merchants are often approved for merchant accounts that have monthly caps on credit card processing volumes. Once the business has reached the processing ceiling, they must wait to accept sales until they reach the next month. Fortunately, these caps can be raised over time; new processing volume caps can be requested in just a few months.

High Risk Merchant Account Tobacco

As a high-risk specialist and provider of industry leading merchant services, emerchantbroker.com understands the many challenges tobacco businesses face. An online tobacco merchant account provides customized payment processing solutions, along with chargeback management tools and multiple payment gateways. Fraud filters for online payments can also be setup. The application itself takes just minutes to complete, and approval is received in as little as 24 to 48 hours.

Application Requirements – What to Expect

To be approved for a tobacco merchant account, businesses must be able to show underwriters they are complying with all rules and regulations. Underwriters will also check the site to make sure all privacy and refund policies are clearly displayed, and all products being sold on the site are legal. Credit scores, credit card processing history and bank statements will be examined. Compared to applying with a traditional provider, these documentation requirements are minimal. With EMB, even merchants with less than stellar credit, limited time in business and those with high chargeback rates are approved.

Your business will hear back and have an account set up as soon as 72 hours. There are no application fees. Merchants not only receive access to chargeback protection and prevention programs, but also multiple secure payment gateway options and competitive rates.

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Having a merchant account allows an account holder to take advantage of merchant cash advances. When a merchant is approved for an advance, the business agrees to receive a lump sum of cash in exchange for an agreed-upon percentage of future credit card sales.

Pricing varies depending the merchant’s industry, past credit card processing history, the type of business seeking the account, average ticket sales, and average transaction volumes.

Yes, EMB works with merchants who are building their credit, as well as those who have poor credit. EMB also approves merchants that have no credit card processing history and businesses that have lost their merchant accounts due to high chargebacks.

Several factors influence a merchant’s risk level. Though only one factor likely will not get a merchant classified as high risk, a combination of these may: business size, location, and industry, credit score, credit card processing history, a industry’s reputation for excessive chargebacks, a prior history of high chargeback ratios, and whether a merchant exclusively sells online.

Virtual terminals are stationed on a merchant’s website, making it easy for customers to make a payment or purchase online. Merchants or a payment processor can easily set up virtual terminals, so online businesses can accept credit and debit card and e-check transactions.

A merchant account is a business account with an acquiring bank. Without this business account, which actually works more like a line of credit, a merchant cannot accept and process credit and debit card transactions. Businesses need a merchant account to accept major credit cards via a static point-of-sale terminal, mobile card reader, or through a virtual payment gateway.

After filling out EMB’s simple online application and submitting any necessary, requested documents, many merchants get approved within 24 and 48 hours.

EMB specializes in working with high-risk merchants. EMB works with many merchants, including but not limited to businesses in these industries: gambling and gaming, adult entertainment, nutraceuticals, vaping and e-cigarettes, electronics, tech support, travel, high-end furniture, weight loss programs, calling cards, e-books and software, and telecommunications.

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