Few industries are never out of trend and market. Cigars have a long and interesting history. They have been around for well over a thousand years, although not in their present form. After the introduction of e-cigarette and vape tradition of the cigar has taken a new face. Let’s take a deep look to this industry and know how to get e-cigarette and vape merchant account.
WHAT ARE E-CIGARETTE AND VAPE?
An electronic cigarette is a battery-operated device that emits doses of vaporized nicotine or non-nicotine solutions, for the user to inhale. Using e-cigarette is commonly referred to as vaping. Vaping was invented for one reason, to give cigarette smokers a healthier alternative to the tar and carcinogen laden habit of smoking cigarettes. The risks of inhaling vaporized syrup after impregnating with nicotine are as much as 97% less dangerous to the person using it. Whereas people who inhale second-hand smoke, the effects are entirely indistinguishable from those of everyday air pollution.
Nevertheless, there is an emotional connection between cigarettes and vaping in the minds of those who have rightly learned to fear cigarette smoke.
E-CIGRATTE AND VAPE INDUSTRY
The vaping industry is growing like weeds. The number of vapers has been increasing rapidly from about seven million in 2011 to thirty-five million in 2016. Market research of group Euromonitor estimates that the number of adults who vape will reach almost 55 million by 2021!! The e-cigarettes market is expanding, as the number of vapers rises. E-cig market share is fragmented; with industry leader enjoy controlling 32% of the market. That means, 41% of sales are going to companies that make up about 1% of the total market as a whole The United States, Japan, UK are the biggest markets. Vapers in the three countries spent a combined $16.3 billion on smokeless tobacco and vaping products. The e-cigarettes and the vaping market have grown dramatically in recent years, especially among younger female consumers.
In the United States, there are over 45,000,000 smokers, but just 2,750,000 vape smokers. Just 7% of adults have tried using a vaping device. Today over 3,500 retail vaping shops exist in the United States.
Vape industry is expected to grow by 25% through 2018, while tobacco sales have shrunk by 30% over the last decade and a half. E-cig sales are expected to exceed tobacco sales by 2026.
In spite of the massive success of the vaping industry, still, financial institutions fail to recognize the immense opportunity they could take advantage of by providing e-cigarette merchant accounts.
E-CIGARETTE MERCHANT ACCOUNT & VAPE MERCHANT ACCOUNT.
The merchant account is a type of online bank account that allows your business to accept payments by debit or credit cards. Retailer, a merchant and payment processor make settlement of credit card/debit card transactions through an agreement finalized by them for a merchant account.
Running and operating a business takes a lot of toll on the owner in the form of focus, planning in order to become successful which is most relevant in the case of the e-cigarette and vape industry. This is due to keeping a balance between customer satisfaction and complying with strict laws made by the government. If you are establishing your business and want to accept credit card payments online, you will need a secure payment gateway for your website. The credit card is the most common mode of payment in this industry. Vape merchants need a partner for online credit card processing on their websites in order to ensure timely payments and that customers get the products they need without delay.
In spite of the fact that electric cigarette industry is growing on a notable speed but the truth can’t be ignored that this industry is prone to high risk.
WHY E-CIGARETTE & VAPE INDUSTRY IS CONSIDERED HIGH-RISK
- The banks that credit card processors and merchant services providers process through are exceedingly sensitive to anything that might affect their public image. For this reason, any industry that is considered “high risk” by the merchant services provision community, becomes truly high risk.
- When credit firms like visa and American express believe that working with certain types of retailers harms their public image, they often withdraw support. It’s a common occurrence that affects tobacco merchants, firearms dealers, alcohol distributors, and of course, retailers who sell and distribute vaping supplies and equipment.
- The uncertainty of this industry because it is still a new concept for market and government has still not cleared the laws to govern how electronic cigarettes and vapes can be sold and consumed which scares many banks and processor.
The nature of this industry is very risky and which is why it makes running this business challenging for their owners. Besides this FDA (Food and Drug Administration) regulation makes it hard too. It is hard to predict the future of vape industry which may lead to high chargebacks and fraudulent transaction in future.
If you are selling both vaping supplies and CBD products, then it will become harder for you to get a merchant account because any business which is part of an industry impacted by regulations that are rapidly evolving is considered high-risk by banks and merchant account providers. Some financial service companies prefer not to work with e-commerce vendors who are selling both vape and CBD in one store and that’s why complication is doubled. Many merchants are now separating these two into two online stores. But if you don’t feel like to divide your business then, iPayTotal is the only merchant account provider which can help you to suggest best for your business and flourish your business without any complications in the single merchant account.
GETTING APPROVAL IN A HIGH-RISK INDUSTRY
Vape and e-liquid companies are considered as high risk for a variety of reasons. Several financial institutions don’t even understand this industry well and so forth put that on denial to give access to payments platform to customers.
Several high risk vape merchants provide services to cater to the needs of their customer in various ways as follows:
- E-cigarette credit card processing
- Immediate, same day or next day funding
- Retail and online vape payment processing
- Gateway and terminal integration
- E-cig & vape merchant accounts
- 24/7 based customer support
FACTORS AFFECTING ONLINE VAPE SALES
Since this business has been categorized as high risk, one will not approve a merchant account easily. Although, high risk doesn’t mean to lose all hopes.
Besides this, new rules enacted in 2016 by the FDA have made a direct impact on payment processing for vape products and the types of products you can offer as a merchant. It restricts the manufacturers and companies that change size of the bottle and taste from selling new vape products without registering their product for FDA approval even if you want to make a mixture of your own as each new mix is considered a new product will be subjected to FDA approval, a process that can cost up to $1 million and take years.
Another rule which has put up a serious dent in vape sales is registration with mastercard and visa. Earlier, online businesses that used to sell e-cigarette-related articles but did not actually sell tobacco were not required to register with visa and mastercard or pay the high $1,000 annual fee to accept credit cards. But now, one has to pay a fee of $1,000 every year (which goes to mastercard and visa) and register their website to sell vape. Some other compliance has also stepped in to get a letter from a lawyer stating that your business complies with applicable laws like age verification as well.
HOW TO GET A HIGH RISK E-CIGRATTE AND VAPE MERCHANT ACCOUNT?
In order to find the best e-cigarettes merchant account, one should keep a few points in mind in order to evaluate them to match their needs:
- High-risk specialization – a reputed and experienced merchant accounts specialist will have a sales staff (preferably in-house) that’s trained and experienced in dealing with high-risk merchant accounts.
- E-commerce support – with an online presence, one requires a payment gateway to process their sales transactions. There is wide use of the virtual terminal to go with it, as this will allow you to input card-not-present transactions from any internet-connected device with a web browser. Card readers that connect to your computer via with the use of USB or bluetooth, a connecting card with them through computer enhance the utility of a virtual terminal by allowing you to process card-present transactions as well.
- Sales and advertising – foul sales promises and unreliable sales representatives is not an uncommon issue in the payments industry. Basic terms of any contract fulfill full disclosure of terms of contract, processing and account fees by a sales representative; however, they always come to fall short of their promises on this front. It’s also not completely their fault because these agents work with so many processors to accommodate your needs. As every processor sets its own rates and terms, it’s practically impossible to spell out all the details on a website. One should closely work with their agents to come out with the most promising terms.
- Pricing – there are two types of costs associated with this merchant account i.e., processing fee and account fees. Processing fees are measured on a per-transaction basis, while account fees are billed monthly or annually basis. However it is recommended to go for interchange-plus pricing plan ordinarily, we recommend an for processing rates over a usually more expensive tiered pricing plan and keep in mind as a high risk category one will find difficult to get approved for interchange-plus pricing.
- Contracts – many terms of contracts for merchants have been modified in recent years for the benefit of payments industry such as automated renewal of contract from a standard 3-year agreement, early termination fees have also been eventually decreased. However, it is still a no-go zone for high risk merchants. They are asked to sign up for long-term contracts.
- Customer support – one of the most important criteria is to have suitable and east customer support 24/. This is certainly a very challenging task for any merchant account provider. However many providers have taken various steps to address this issues such as self-help resources which act as a medium between provider and customer. It is easily available on the website in the form of tutorials and articles. This allows the account provider to solve simpler problems of customer and work upon more complex issues.