Vape Business Merchant Accounts

09 September 2024

Written by Libby James

Libby James is co-founder, director and an expert in all things merchant services. Libby is the go-to specialist for business with more complex requirements or businesses that are struggling to find a provider that will accept them. Libby is regularly cited in trade, national and international media.

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Everything you need to know

Vape (Electronic Cigarette) Merchant Accounts:

A User-Friendly Guide Introduction: Welcome to our business guide about electronic cigarette merchant accounts within the EU and UK. If you’re an e-cigarette business owner, you will find this article both friendly and educational, providing valuable insights into the nature of high-risk merchant accounts specifically tailored for your industry. Throughout this guide, we’ll explore what electronic cigarette merchant accounts are, why e-cigarette businesses are considered high-risk, the key benefits of those accounts, and address some commonly asked questions. you’ll be able to use the jump links below to navigate directly to the sections that interest you the most.

What Are Vape Merchant Accounts?

Electronic cigarette or vape merchant accounts are specialised payment processing solutions designed to satisfy the unique needs of e-cigarette businesses. Thanks to the nature of the industry, which is considered high-risk, obtaining a standard merchant account can be challenging. However, electronic cigarette merchant accounts provide a viable option, ensuring smooth and secure payment transactions for your online or brick-and-mortar e-cigarette business.

Why Are E-Cigarette Businesses Considered High-Risk?

E-cigarette businesses are often classified as high-risk because of various factors, including regulatory uncertainties, potential chargebacks, and also the age verification process related to the sale of nicotine products.

The perceived risk makes it difficult for these businesses to secure traditional merchant accounts from mainstream providers. However, with electronic cigarette merchant accounts, you’ll overcome these challenges and enjoy the advantages of seamless payment processing.

Terminated or Declined Vape Merchant Accounts and Gateways

Staying informed about the evolving regulatory landscape and ensuring compliance is crucial for your business’s long-term success.

Terminated/Declined Accounts: It’s important to understand that not all electronic cigarette merchant account applications are approved. In some cases, because of specific circumstances or non-compliance with the provider’s guidelines, your application may be declined or, in rare instances, an existing account could also be terminated. Several factors can contribute towards this, including inaccurate information, excessive chargebacks, or violating the terms of the merchant account agreement.

Key Benefits of Electronic Cigarette Merchant Accounts

Secure Payment Processing:

Electronic cigarette merchant accounts offer robust security measures to shield your business and customers’ sensitive information. With advanced fraud detection tools and secure payment gateways, you’ll have peace of mind knowing that transactions are handled safely and securely.

Higher Approval Rates

Unlike traditional merchant accounts, electronic cigarette merchant accounts are specifically designed to cater to high-risk industries. This means you’ve got a better chance of approval, allowing you to simply accept credit card payments and expand your customer base.

Chargeback Prevention

Chargebacks are often a significant concern for e-cigarette businesses, but electronic cigarette merchant accounts often provide chargeback prevention tools to help minimise their occurrence. These tools assist you to identify potential chargebacks and take necessary actions to resolve disputes before they escalate.

Industry Expertise and Support

Choosing a reputable electronic cigarette merchant account provider gives you access to industry expertise and specialised support. These providers understand the unique challenges faced by e-cigarette businesses and may offer tailored solutions to assist you to thrive.

Saving Card Processing Costs For Vape Companies

In addition to understanding the challenges related to electronic cigarette merchant accounts, it is also worth considering the advantages of periodically reassessing your payment processing solution and potentially switching accounts. By regularly reviewing your merchant account and exploring alternative options, you’ll unlock cost savings and improve functionality for your e-cigarette business.

One of the benefits of switching accounts is the opportunity to seek out better pricing and fee structures. As the payment processing industry evolves, new providers enter the market, offering competitive rates and reduced fees. By staying informed about the available options, you’ll identify cost-effective solutions that align together with your business’s financial goals. Lower transaction fees and decreased monthly account fees can translate into significant savings over time.

Moreover, switching merchant accounts allows you to explore enhanced functionality and features. As technology advances, new payment processing solutions emerge, offering improved security, seamless integrations with e-commerce platforms, and advanced reporting and analytics tools. By embracing these advancements, you’ll streamline your operations, enhance customer experiences, and gain valuable insights into your business’s performance.

When considering switching accounts, it’s crucial to assess the compatibility of the new provider’s offerings together with your specific requirements; look for flexibility in accepting various payment methods, including popular digital wallets, and make sure that the provider can support your business’s growth plans.

How to Get a Vape Merchant Account Approved: A Step-by-Step Guide

Applying for a vape merchant account can be challenging due to the high-risk nature of the industry. Here’s an informative guide to help you navigate the process and improve your chances of getting approved:

1. Understand the Approval Timeline

Since vape businesses are classified as high-risk, the approval process for a merchant account can take longer than usual— sometimes around 4 weeks. During this period, you may be asked to provide additional information and documentation, and there may be negotiations involved. Patience and preparation are essential.

2. Expect a Rolling Reserve Requirement

High-risk businesses, such as vape companies, are often subject to a rolling reserve. This means that the acquiring bank might hold back a portion of your funds—typically around 10%—for up to 180 days. This reserve helps protect the bank against potential chargebacks and refunds. After the first three months, you may be able to renegotiate these terms.

3. Be Aware of High-Risk Registration Fees

A registration fee may be applicable, often around $500, is required by Mastercard for vape merchant accounts. This fee is standard for high-risk businesses and is typically payable once the merchant account is live.

4. Set-Up Fees

Many merchant service providers charge a set-up fee once your application has been approved and an offer has been made. Be sure to confirm when these fees are due, as you should only be required to pay them after accepting the terms of the merchant account.

5. Choose the Right Payment Solutions

Decide whether you need chip-and-pin devices, eCommerce solutions, or both for your vape business. Ensure that your chosen provider offers flexible payment options that match your business model—whether in-store or online.

6. Prepare the Required Documentation

To expedite the process, have all necessary documents ready. While the exact requirements may vary by provider, you will typically need:

Invoices for Stock and Lab Reports
Proof of Identification (ID)
Proof of Bank Account
Acquiring Statements (if applicable)
Proof of Trading Address
Website Logins and Access Information

7. Additional Documents for Start-Up Businesses

If your vape business is a start-up, you may need to provide extra documentation such as:

Cash Flow Forecast
CV (Curriculum Vitae) of the Business Owner
Business Plan
Proof of Funds

Having these documents prepared can demonstrate your business’s stability and help strengthen your application.

8. Check Payment Gateway Compatibility

If your business operates online, ensure that the payment gateway you’re considering is compatible with your existing platform. This step will prevent integration issues and make the onboarding process smoother once your account is approved.

9. Review Settlement Periods

High-risk merchants, including vape businesses, often have weekly payment settlements initially. This is done to mitigate the acquirer’s risk. Over time, you may be able to negotiate more frequent settlement terms based on your business’s transaction history and relationship with the provider.

10. Understand the Pricing Model and Rates

Vape businesses are usually subject to the Interchange Plus Plus (IC++) pricing model, which adds the bank’s margin over interchange fees. The rates generally range from 1% to 4%, depending on your business’s risk level and processing history. Be sure to compare these rates among providers to find the most competitive option.

11. Consider Working with High-Risk Specialists

Since vape businesses fall under the high-risk category, consider working with a merchant service provider that specialises in high-risk industries. These providers are more likely to understand the unique challenges of your business and may offer better support and terms.

12. Check for Regional Requirements and Limitations

If you’re based in Europe or another specific region, ensure that your merchant account provider accepts applications from businesses within your area. Some providers may have restrictions on the countries they serve, and the director or business owner may need to reside within the EU or specified region for the application to be processed.

By following these steps and ensuring you have all the necessary information and documentation, you can make the application process smoother and increase your chances of getting your vape merchant account approved.

Wrapping it up

If you’re in the vaping industry, selling products like disposable vapes, starter kits, or vape liquids, understanding your options for a business bank account and merchant accounts is crucial.

Whether you run a vape store or focus on online vape marketing, opening a merchant account tailored for this type of business can help you accept credit and debit card payments effortlessly. From vape pens to vaping devices and starter kits, the right account ensures your customer’s bank transactions are smooth and secure.

Merchant Advice Service is your go-to guide for navigating the complexities of the vaping industry, helping you make informed decisions for your business’s financial future.

FAQs

How long does it take to get approved for an electronic cigarette merchant account?

The approval time for electronic cigarette merchant accounts varies depending on the provider. However, the process typically takes a number of days to a couple of weeks. It is vital to submit all the specified documentation accurately and promptly to expedite the approval process.

What are the standard fees related to electronic cigarette merchant accounts?

The fees associated with electronic cigarette merchant accounts can vary depending on the provider. Common fees include transaction fees, monthly account fees, chargeback fees, and potentially other additional fees. It’s crucial to review and compare the fee structures of various providers to decide on the one that most accurately fits your business requirements.

What should I consider when choosing an electronic cigarette merchant account provider?

When selecting an electronic cigarette merchant account provider, consider factors like their experience in working with high-risk industries, the safety measures they have in situ, their reputation and customer reviews, the range of payment options offered, and their customer support quality. Comparing multiple providers and their offerings can help you make an informed decision.

How can chargebacks impact my e-cigarette business, and how can they be managed?

Chargebacks can have significant consequences for your e-cigarette business, including financial losses and potential damage to your reputation. To manage chargebacks effectively, it’s essential to have clear refund and return policies, excellent customer service, and proactive dispute resolution procedures in place. Some electronic cigarette merchant account providers offer chargeback prevention tools and guidance to help you reduce chargeback instances.

Am I able to accept payments online and in-store with an electronic cigarette merchant account?

Yes, electronic cigarette merchant accounts allow you to accept payments both online and in-store. Whether you’ve got an e-commerce website or a physical store, these accounts provide versatile payment processing options to satisfy your business needs.

Are there any specific requirements for age verification with e-cigarette sales?

Yes, age verification is a crucial aspect of selling e-cigarettes. you must comply with the legal requirements for age verification to stop sales to minors. Some electronic cigarette merchant account providers offer age verification tools or integrate with third-party age verification services to assist you comply with these regulations.

Can I switch to a different merchant account provider if I’m not satisfied?

Yes, in most cases, you’ll switch to an alternative merchant account provider if you’re not satisfied with your current one. However, it is vital to review the terms and conditions of your existing agreement, including any termination fees or notice periods, before making the switch.

Are there any legal restrictions or regulations I need to remember as an e-cigarette merchant?

Yes, as an e-cigarette merchant, you must comply with various legal restrictions and regulations. These may include age verification requirements, product labelling rules, restrictions on advertising and marketing, and compliance with data protection laws.