Electronic Cigarette Merchant Accounts

Accepting card payments in vape and e-cigarette shops

Smoking indoors was banned in 2007 and, as a result, there was a surge in demand for electronic cigarettes (or e-cigs) that smokers have continued to use as an alternative. E-cigarettes and vapourizers have become increasingly common but there is a lack of clarity in the classification of e-cigarettes, which scares banks from opening merchant accounts for businesses selling these products. Banks perceive retailers as high risk for a number of reasons:

  • It is believed that the regulation around e-cigarettes is set to change and as a result this has caused uncertainty with merchants who are unsure of its long-term future and therefore want to steer clear.
  • Some banks perceive businesses like vape store retailers as cash cows. They are popular for a short period, and make big profits, but after the initial hype and popularity they think a lot of these vape stores may go under. So far, this is proving not to be the case, but it will take time for minds to be changed.
  • The long-term health implications of e-cigarettes are considered unclear given they are a new technology.
  • The industry has a high volume of chargebacks which can have a negative effect on securing a merchant provider

If you are looking to get a merchant account in place as an e-cigarette retailer, you’ll may to find a high-risk specialist broker. At Merchant Advice Service our team works here is some of they key information you need to know:

Vape Store Payment Gateways

Under normal circumstances in a brick and mortar shop, organising the account should be relatively straightforward. However, this doesn’t apply to higher-risk accounts and the process can be difficult. We work with specialist merchant account suppliers who look at both account set up and specialise in finding a favourable high-risk payment gateway to allow you to take online payments.

 

E-commerce merchants will find it a little more difficult to secure payment processing, however as the popularity of vaping products seems to be withstanding the test of time more banks are considering applications from vape and e-cig businesses.

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Online Transactions for E-Cigarette Suppliers

Online transactions have always been regarded as higher risk than face-to-face transactions. Couple this with retailing in a high-risk industry renowned for chargebacks and it starts to look impossible. Payment gateways or acquirers will determine risk based on their past experience with a merchant sector as well as that particular merchant’s financial stability.

Historically, acquirers have been caught in fraudulent activity whereby merchants take online orders and declare themselves bankrupt after the order is placed but before the goods are sent. In situations like this the acquirer is legally obligated to refund the value of the transactions and this is a large part of the reason they are reluctant to agree account set ups from the e-cigarette industry.

Face-to-face transactions for Vape Stores

Face to face e-cigarette purchases carry less risk to an acquirer than online transactions as goods are paid for an taken away at the point of sale – as the customer is present there is no risk of chargebacks, making this simpler, but still not without challenges. It entirely depends on a variety of factors, including length of time trading and proven track record.

If you would like to know more about setting up a merchant account or payment gateway for an e-cigarette business you have come to the right place.

Get in touch today by filling in our enquiry form or calling 0800 304 7875 and we’ll be happy to discuss your options further.

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Chip and Pin machine for Vape Shop

Vape and e-cig merchants often choose their chip and pin machines based on initial cost. However there is a lot more to consider than just the headline merchant account fees. 

For example some providers offer free card machines and charge a lot more per transaction, these are often high-street suppliers such as PayPal or Stripe. Card machines are ordinarily rented on a monthly basis, so when reviewing it’s essential to account for ALL processing costs. It’s important to review processing costs on a pound for pound basis allowing for a fair comparison.

When it comes to ensuring you have the best merchant account costs for the duration of your vape business, we suggest shopping around regularly. Switching providers becomes easier if you have solid processing history.

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Terminated Vape merchant account and payment gateways

Due to the high-risk nature of vape stores, sometimes merchants may receive notice from their existing provider such as PayPal, or have been declined when applying for a new account.

 

When looking for an alternative payment processor,  we suggest using  a non-biased broker who will be up to date with a range of banks criteria. This means the likelihood of being accepted first time around by the new bank is increased because they know where to place the business and how to package your application correctly.

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