The Changing Tobacco Industry | Online Tobacco Merchant Account

Aug 12, 2014

From ‘Call for Phillip Morris’ to ‘Winston tastes good like a Cigarette should’ – we really have ‘Come a long way Baby.’ In the 1950s tobacco farming was the cash crop for the deep South. With changes in laws plus the huge increase in federal and state taxes on a pack of cigarettes, the economy of the tobacco states and the industry has changed. There are now online tobacco merchant accounts that lawmakers feel may be abusing the tax laws so the credit card associations have labeled them high risk.

However, the tobacco companies are not dead. They are like chameleons. They have been smart enough to keep up with the changing mores, diversify and thrive. According to the CDC, in 2011, the tobacco industry spent $8.4 billion on cigarette advertising and promotional expenses in the United States alone, and 83.6% ($7.0 billion) of this expenditure was spent on price discounts.   Smokeless tobacco advertising and promotion rose to $451.7 million in 2011–up from $444.2 million in 2010. Approximately 124.6 million pounds of smokeless tobacco were purchased in the United States in 2011 (up from 122.6 million pounds in 2010), with three companies selling nearly 90% of this form of tobacco. Online tobacco merchant accounts sell an abundance of e-cigarettes.

Not only are the major players diversifying into smokeless e-cigarettes, but they are also buying companies that sell smoking cessation products. It almost seems like a dichotomy. But remember, the tobacco industry is not all about cigarettes – there are cigars, pipe tobacco, humidors, and other accessories.

IBISWorld says that ‘the industry is heading into a growth phase, with exports on the rise. Higher cigarette consumption rates and fewer tobacco product regulations in major export markets such as China will drive demand. Furthermore, US prices of tobacco leaf will remain competitive, supporting growth in the industry.’

Fox News reported that yearly sales of pipe tobacco rose more than eight-fold from fiscal 2008 to 2013, while sales of roll-your-own tobacco declined almost six-fold. Over the same period, large cigar sales doubled, while small cigar sales dropped to just 700 million from 5.7 billion.

In an article on the American Lung Association website, they say that as cigarette sales in the United States decline, the three largest tobacco companies  – Altria (Philip Morris), R.J. Reynolds, and Lorillard are expanding beyond cigarettes. All three Big Tobacco companies are selling e-cigarette products and Altria is selling smokeless tobacco and cigars, while R.J. Reynolds is selling smokeless tobacco, including new dissolvable products.

The latest ASH report has a quote from Warren Buffet: “I’ll tell you why I like the cigarette business. It cost a penny to make. Sell it for a dollar. It’s addictive.  And there is fantastic brand loyalty.  According to the recently release Tobacco Atlas, tobacco industry profits are greater than ever and estimates of revenues from the global tobacco industry are likely to approach half-trillion U.S. dollars annually.

For the online tobacco seller, this means that there are bright years ahead. Do not let conservative credit card processors block you from an affordable online tobacco merchant account. If you have less than 3% chargebacks and have not broken any laws, eMerchantBroker can have you on your way to accepting credit cards and checks with a new online tobacco merchant account.

Get approved for an online tobacco merchant account in 48 hours, contact us today at 818-621-4893.

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

Get Started

Award winning.

  • 2012
  • 2013
  • 2014
  • 2015
  • 2016

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.

Live Chat