Electronic cigarette has proven to be an excellent alternative to traditional cigarette.
Chinese pharmacist Hon Lik first commercially launched e-cigarette in 2003 with the brand name Ruyan. Since then the industry has only grown in leaps and bounds and is currently valued at more than $3.5 billion. The popularity of e-juices, hookahs and vaporizes has only further enabled the industry.
Millions have found a healthy alternative with E-cigarette and Vaping. With the explosive consumption of these alternatives, retail markets and online businesses have come up and become almost mainstream. With even big tobacco firms joining to make profit of off this blooming and dynamic industry.
As with every business, demand should be met with supply. And supply, not just in terms of products or services but also in terms of customer payment preferences.
The need for merchant services and online credit card processing will only grow exponentially with the growth in the industry.
Why is E-Cigarettes a risky business?
- Since it is a relatively new industry, debate on whether e-cig is safe for health since the research done regarding the same is limited.
- Changing policies- Legislators introducing new rules or changing existing policies that could affect selling as well as buying the products either way.
- The existing industry regulations are quite stringent wherein banks should strictly ensure that those are applied to e-cig businesses during the reviewing process. Which means extra procedure & precaution taken on behalf of the bank that banks do not want to offer.
- Undecided regulations on packaging and sale of e-fluids
- The industry also has a lot more political involvment making processors wary.
- Age Regulations- There are serious concerns over sale of e-cigs to minors.
- Just like every other high risk business, E-Cigarette industry is also prone to high chargebacks. Customer unsatisfaction, denying product order or delay in delivery are a few causes resulting in chargebacks.
Financial institutions see the uncertainty surrounding the industry & its pending regulatory status will result in potentially high chargeback rates, frauds and other risks.
Obtain High Risk Merchant Account Solutions for E-Cigarette Business
Offering merchant account services would be a policy violation for most banks and processers.
But with an expanding industry that is in its top form, there are certainly a lot more merchant account providers welcoming e-cig merchants with open arms since its inception.
Merchant Account Services are not just limited to e-commerce businesses but also retails stores selling E-Cigarettes and related products, with processors offering Point-of-Sale (POS) systems and Virtual Terminals.
Businesses also need to understand that some merchant account providers will impose certain limitations like a specific monthly volume processing cap or rolling reserves due its risky nature. They are the risk mitigation tools used by providers to manage potential credit risks.
But over time, with healthy & stable processing history, low chargebacks and positive relationship with the merchant account provider, a merchant can negotiate on those points.
Businesses that are offered High Risk Merchant Account Solutions:
- Online & brick-and-mortar electronic cigarettes business,
- Vape stores,
- Hookahs parlours,
- Cigars and other related accessories
Find a merchant match for your business and book a consultation soon!