Head Shops have carved out a niche of customers interested in buying smoking accessories.
The popularity of marijuana coincided with the popularity of pipes and heads used as a preferred method of smoking; steadily blossoming into an industry of its own in the late 70s.
Make no mistake; these outlets sell tobacco paraphernalia used for consumption of tobacco and legal cannabis only and not the drug itself.
If you are a merchant operating in this industry, you must know the difficult legal loops you need to jump through to get approved for licensing. For some owners the trouble does not end there, their next worry being able to find a suitable bank or merchant account provider.
This is the type of business which everyone knows exists but does not talk about. It is heavily scrutinized by the government, financial institutions as well as the public.
While it is comparatively easy for retail outlets to find willing processors, it is an uphill task for card not present merchants operating online business to set up a merchant account.
The lack of banks and payment processors unwilling to accept these businesses prevents retail shops from expanding their business into the online market. It also discourages new entrepreneurs to explore the industry and open up their shops leaving space for limited growth only.
Why are head shop merchant accounts considered high risk?
- The nature and type of business itself makes it a risky industry. Its association with the drug paraphernalia industry does not bode well with regulators.
- Head shops primarily sell items closely related to the cannabis and smoking industry like hookahs, glass pipes, bongs as well as clothing and music vinyls. While the products are not prohibited but there are increasing regulations being places on how the items are sold and marketed.
- The industry falls in a grey area. These products are not illegal but the substances used or associated with the products are sometimes, putting the industry in a tight spot.
- There is a high probability the accessories being sold are used to smoke illegal substances, creating challenges for businesses looking for merchant services.
- The increasing regulations and tight restrictions imposed by lawmakers put an uncertainty over the industry.
- Banks and processors fear that businesses might sell illegal drug products and result in significant fines for both
- For processors, the risk outweighs any benefits that are the business brings to the table.
Is it possible to get head shop merchant account solutions?
Absolutely! There are merchant account providers that specialize in this industry and have positioned themselves strongly to provide seamless services to these businesses.
Whether you operate an e-commerce shop or run a storefront business, merchant account and online credit card processing solutions customized to meet the requirements of the tobacco paraphernalia industry.
But obviously, if you happen to approach a regular bank chances are they will shoo you away at first glance or demand heavy account set-up and transaction fees. Many established merchants have trouble with their existing merchant account provider when they look to expand into the online head shop industry.
Therefore, a customized head shop merchant account solution offered by experienced merchant account providers is the right choice for your business. As these processors regularly work and have long-term relationship with high-risk acquiring banks, they assist merchants to ensure smooth and uninterrupted credit card processing transactions.
