About Electronic Cigarette High-Risk Merchant Accounts
The e-cigarette business is more than $3.5 billion industry and with the increased popularity of e-juices, hookahs, and vaping, this industry will grow furthermore in years to come. Ex-smokers have discovered e-cigarettes to be a better alternative to conventional tobacco-containing cigarettes. Vaping also is attractive to those who have never smoked a traditional cigarette. According to the National Center for Health Statistics published in October 2015, 3.2% who have never burned cigarettes have tried an electronic cigarette.
There is no doubt that this industry is icing on the cake, and entrepreneurs are taking advantage of it. However, acquiring a credit card processing solution for small to medium-sized business in this industry isn’t easy. Most financial institutions consider electronic cigarette and related businesses high risk, making it very difficult for them to get fair, cost-effective payment solutions. This is when iPaytotal comes in with a solution as a responsible high-risk e-cig merchant account provider that serves businesses worldwide.
Concentrating on high-risk merchant accounts for businesses, such as online and bricks-and-mortar e-cigarette, vaping, and smoking accessory shops, iPayTotal customizes payment processing solutions for all types and sizes of companies.
Why a business needs an e-cig merchant account
E-commerce businesses that sell electronic cigarettes, vaporizers, hookahs, and other related accessories need e-cig merchant accounts because conventional banks will not accept them. Due to rules and regulations and the high chargebacks associated with this industry, banks won’t approve credit card processing solutions for these high-risk merchants.
E-cig merchants looking for a credit card processing solution need to apply to a high-risk credit card processor, such as iPayTotal Ltd. As a high-risk merchant account provider, we specialize in e-cig high-risk merchant accounts. We have a dedicated team for customer support and our payment processing solution is tailored as per merchant’s processing needs.
What to anticipate during an e-cig merchant account application review
E-cig businesses need to explain to a credit card processor’s underwriter that they are operating a responsible, legal business. It is the underwriter’s job to evaluate any potential risk. Eventually, the underwriter accepts or rejects an application based on the risk evaluation. Merchants can confirm they are operating legally by furnishing underwriters valid disclosures and restrictions that help support the businesses’ claims.
When underwriters evaluate an application of a vaping, electronic cigarette, or smoking accessory business, they will ensure that merchants are following all relevant laws. For example, they will look at a site to ensure that none of the products are being directly marketed for marijuana or other illegal materials.
Throughout the review, underwriters will look at a merchant’s credit scores, credit card processing history, bank statements, and its website. Underwriters want a clear picture of the merchant. A negative bank account balance, unpaid bills, and late payments, and a history of high chargeback rates will be viewed as blows against a merchant. Underwriters also will check the business’ website to make sure that is has trusted privacy and refund policies, as well as a secure (SSL).
The straightforward route to approval starts with preparation. Before an application goes to an underwriter, a merchant should have no outstanding debts, a good amount of money in the bank and the person applying for the account should have an excellent credit history. Merchants should want underwriters to conclude they are running trusted, legitimate businesses when they view their e-commerce sites. Exercising these steps make a merchant likely to get approved for an account without any monthly volume caps on higher processing volume or a lowering rolling reserve.
Requirements for an E-cig Merchant Account Application
E-commerce industries who want to apply for an e-cig merchant account can begin today. To get started, simply fill out iPayTotal’s online application. For a smooth transition flow, a business must have the below items ready to hand over to processors and underwriters:
Also, an E-commerce business must have secure, fully-operational websites.
Ipaytotal ensures maximum approval and within 48-72hrs, the merchants will have an update from our underwriting team.
Why are chargeback ratios so high in this industry?
Industries, like e-cig, vaping, and smoking accessory, are exposed to a high volume of chargebacks for several reasons. When a customer contradicts a debit or credit card transaction, it results in a chargeback. When a High-Risk merchant is not communicated by the bank or the processing company about a customer query/complain on time, that too triggers a chargeback.
Since e-cigarette businesses are almost new, many are small businesses with even smaller reliability. Due to the nature of the business and the lack of name recognition, there is an excessive number of customers who report that they didn’t recognize an e-cig business purchase when they checked their monthly credit card statements. This happens when the descriptor is not something related to the business or the customer is not informed of the descriptor.
Delays in delivery can also lead to high chargebacks. Online e-cigarette merchants in most cases rely on third-party fulfillment centers and shippers to get orders to customers. Backorders and delivery problems can lead to unhappy customers who opt to contradict a transaction.
Such businesses being relatively new, are also targets for fraud because many merchants don’t know the precautions they need to take to protect against scams. Unlike more established businesses, e-cig merchants are unaware of the steps to be taken to protect them against online credit/debit card frauds.
Why are Vape Merchant Accounts considered High Risk?
Traditional banks and payment processors consider Vape Industry to be High Risk because of the chargebacks involved with this industry and the reputational risks associated with it. Here are the two important factors why Vape or E-cig Merchants are considered High-Risk.
Prior to 2016, national regulations on e-cigarette and vape usage varied from state to state in the US. There were no uniform regulations regarding the use of Vape or E-cig in a public space and laws restricting minors.
The Food and Drug administration considered e-cigarettes and vape as prohibitory items. Regulations on vape products are unpredictable and the FDA takes action on online and brick and mortar retailers that violate age and product restrictions. Acquiring banks and credit card payment processors due to these regulations considers Vape and E-cig businesses as High-Risk.
Although vape has been advertised as a “safer” option to cigarettes, the technology is too new for scientists to study the long-term effects(if any) of vaping on human health. On top of that, e-juices come in a variety of fruity and candy flavors which appeals to teens and children. These unknown and the dangerous fame tobacco products have acquired over the years don’t look good to acquiring banks setting up your vape merchant account.
We at iPayTotal are highly skilled when it comes to queries related to opening a vape merchant account. We have years of experience in helping merchants to acquire a high-risk merchant account for their E-cig/Vape industry. So If you are looking for a vape/E-cig merchant account, you are in the right place, as iPayTotal provides the best solutions for High-Risk businesses. We guaranty quick real-time credit card processing solution, top-notch services, reasonable rates, and merchant friendly terms. Give us a call at +44 800 776 5988 or get in touch with us through our website. You can also email us at [email protected]