Tobacco and e-Cig Merchant Accounts for Businesses in Canada, India, US and the UK
E-cigarette (e-cig) and vaporizer (vape) sales are booming, growing from $8 billion in 2015 to a projected $50 billion or more by 2025. That’s a 525% increase in just ten years. The US and UK comprise the lion’s share of e-cig sales at 43% and 13% respectively.
Even with the popularity of electronic cigarettes, the tobacco business is as strong as ever. Discount cigarettes, luxury cigars, custom blended pipe tobacco, and other tobacco-related products and accessories still remain highly sought after.
Why are Tobacco and e-Cig Businesses Considered High Risk?
Despite the high volume of sales realized by online tobacco and e-cig merchants, these types of businesses are still deemed “high risk” by banks and other merchant service providers. Why are they classified as high risk? There are several reasons:
Strict Government Laws
Especially in the US, tobacco and nicotine are considered “controlled substances” and as a result are subject to all manner of laws with regard to licensing guidelines, shipping restrictions, tax obligations, and more. Many merchants who start out selling tobacco and e-cigs online find it difficult to stay in compliance with these requirements so they end up going out of business. This higher than average turnover rate makes banks wary of taking on financial liability.
Higher Risk of Chargebacks
Most online tobacco and e-cig purchases are Card Not Present (CNP) transactions, meaning that neither the credit card nor the cardholder is present at the point of sale. Verifying the cardholder’s identity is more difficult with CNP transactions which increases the potential for fraudulent chargebacks.
Need a Tobacco or e-Cig Merchant Account? High Risk Pay Solution Can Help
Our merchant services specialists have helped high risk tobacco and e-cig retailers throughout Canada, India, US, and the UK increase sales and customer loyalty by enabling them to accept credit card, debit card, and eCheck / ACH payments online, by phone, and in person. To learn more about our tobacco and e-cig merchant accounts service options, give us a call us at 855-736-6460 or click here to request information online. Or, if you’re ready to get started, you can apply online for free.