Process Vaping Sales Online with an E-Cigarette Merchant Account

Mar 01, 2018

Ever-changing regulations, litigation, and questions over enforcement have made it very difficult to obtain an e-cigarette merchant account, which are necessary if you want to accept and process credit card payments. Banks have classified them as “high-risk” because of these issues.

Though all of these factors make it difficult, you can still obtain a e-cigarette merchant account if you keep track of what’s happening in the industry and take steps to minimize your risk.

Get to Know the Laws and Possible Outcomes

In late-January 2018, Vape shops in five U.S. states, filed federal lawsuits, challenging a Food and Drug Administration rule that allows the agency to regulate e-cigarettes the same way they do cigarettes.

The shops located in Texas, Minnesota, Michigan, California, and North Dakota argued the 2016 FDA regulation, often called the “Deeming Rule” because it deems e-cigarettes to be tobacco products, is unconstitutional. In the suit, the shops claim the rule violates the U.S. Constitution’s free speech protections by requiring vape retailers to get the FDA’s approval before marketing information about their products health effects.

Vape retailers have opposed federal regulations, citing they will destroy small businesses.

In 2009, Congress signed the Family Smoking Prevention and Tobacco Control Act of 2009 into law, giving the FDA the power to regulate the tobacco industry. The 2016 rule extended its reach to include e-cigarettes, cigars, pipe tobacco, and hookahs, as well as cigarettes and smokeless tobacco. Originally, beginning in August, 2018, retailers would have been prevented them from selling or distributing Electronic Nicotine Device Systems (ENDS), such as e-cigarettes, vape pens, e-hookahs, e-cigars, personal vaporizers, and electronic pipes unless they received government approval, listed their ingredients, and placed health warnings on packages and in advertisements. In July 2017, the Trump administration successfully delayed the enforcement of the FDA’s rule. Any deadlines were postponed as part of a broad plan to reduce tobacco deaths in the United States.  When the FDA commissioner announced the delay, it also encouraged e-cigarette businesses to talk to the agency about gaining approval for their products as smoking cessation aids, if that is what they are intended to do.

What’s Next

With all of the uncertainty surrounding regulations, it is still possible to obtain an e-cigarette merchant account. Merchants services providers have many strategies they can use to minimize the risk associated with e-cigarette businesses. In addition to charging higher fees for each transaction, merchants can begin saving money. Many merchant account providers will offer merchant accounts to businesses that will create and maintain either a rolling or capped reserve. The reserve covers any potential defaults on the merchant’s part.

With a rolling reserve, a fixed percentage of successful transactions are held in an account to pay for fraud or chargebacks. A capped reserve takes a percentage of successful transaction until a specified, agreed upon amount is reached. Once the amount is reached, the merchant no longer has to put money in the reserve. Reserves work best in situations where merchants are making more than $10,000 in profits per month.

Find a High-Risk Merchant Account Specialist

When you are a high-risk merchant, you want to go with an account provider that has the expertise and skills to handle the challenges that these businesses face.

Since they are familiar with the obstacles that come with e-cigarette businesses, they are more likely to help you get approved. There are plenty of high-risk providers and processors out there, and with most of them accept to pay higher fees and limitations, such as monthly processing volume caps, just make sure you do your research and check out customer complaints before you move forward and sign a contract.

The Last Word

As the litigation and law changes continue, the e-cigarette industry will remain a high-risk in the eyes of traditional lenders. However, there are many merchant services providers out there that also know there is a market for these products and that helping you sell them is good for them, too. Just don’t settle for something that is less than right for your business. Look around and weigh your options.

Despite the challenges and likely higher rates, obtaining an e-cigarette merchant is worth it to have the ability to accept and process credit card transactions. It will have a positive impact on your business and profit margins. (EMB) is a high-risk merchant account provider that has helped many businesses find e-cigarette merchant accounts with reasonable terms that allow them to grow and expand in the future.

Let us help you get a high risk merchant account today!

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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 on 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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