How to Secure High-Risk Tobacco Merchant Services
For a long time, the tobacco merchant industry has remained one of the most lucrative and profitable industries in the world. Despite the politics surrounding the industry and prevailing concerns about health effects associated with long-term smoking, tobacco merchant services are still available to merchants seeking to capitalize on this multi-billion-dollar enterprise. SecureGlobalPay has payment solutions in place for high-risk merchant accounts for tobacco-related products and services or anyone who wants to become a high-risk tobacco merchant.
One unique challenge is finding a suitable merchant account provider and accepting credit card payments. While numerous financial institutions provide merchant services, industries such as tobacco may find it hard to access an online tobacco merchant account and payment services.
Before you engage in online tobacco sales, you have to make sure your customers have the option to pay on your website. Several tobacco products can be sold online, such as cigars, loose-leaf tobacco, pipes, and smokeless tobacco. However, accepting credit cards for payment might not be an option, and alternate payment solutions like a high-risk eCheck merchant account might be worth looking into.
Finding an affordable and reliable high-risk merchant account tobacco solution will help you profit from the tobacco industry. Nevertheless, accepting non-cash payments is not straightforward as the industry is heavily regulated and, hence, merchant account providers consider it a high risk.
The Tobacco Industry
Tobacco forms a complex industry that consists of global supply chains and production networks of a wide range of products. Close to 20% of the worldwide population actively uses tobacco products. The global tobacco industry has an annual net worth of $750 billion. The industry remains very profitable for tobacco merchants.
The U.S. forms a key market for tobacco products, where some 40 million Americans actively use tobacco products. The percentage of users has declined from 40% in the 60s to 15%. That may seem like a small figure, but it accounts for billions of tobacco products sold in the US each year. In 2017, tobacco merchants sold about 250 billion cigarettes across the country.
The tobacco industry is vast and ranges from growth to the distribution of tobacco products.
Why Tobacco Merchant Services are Considered High-Risk
Tobacco businesses have been around for hundreds of years and continue to be highly profitable. However, the industry is considered high-risk by many merchant service providers. The following are the two key reasons why a tobacco merchant will have trouble getting credit card processing services:
- Federal government regulations, including age restrictions on the sale and use of tobacco products.
- Political concerns have led many financial institutions and payment processors to opt out, due to reputational costs to their businesses.
- Ongoing campaigns regarding health impacts may also discourage financial providers.
Other reasons include complications that may come with online sales of tobacco products, occasioning high rates of chargebacks. The ever-changing rules, regulations, and possible future sanctions on tobacco products may also worry providers.
Tobacco merchants have also previously been accused of tax avoidance, which has created major problems. Other concerns include sales of marijuana products or failure to adhere to rules when promoting and advertising their products.
Regulations may also differ depending on specific tobacco products, such as the following:
- Cigarettes: The “Prevent All Cigarette Trafficking Act” (PACT) puts additional rules on the sale of cigarettes online
- Smokeless: PACT regulations heavily restrict smokeless tobacco products. Federal laws also make it harder to accept smokeless products’ card-not-present (CNP) payments.
- Cigars: Cigars are less restricted compared to other products.
- E Juices: Also known as e-cigarettes, continue to face increased FDA regulation
- Shisha (Hookah): The use of Shisha is growing in the US, but no punitive regulations exist at the moment.
You should not allow the challenge of accepting payments to discourage you. SecureGlobalPay specializes in high-risk merchant accounts and has a solution for you.
You may also find other online tobacco merchant service providers willing to set up a sales processing solution for you. Most of these providers will have several requirements and demands to safeguard themselves from possible financial loss when approving merchant accounts for tobacco.
They will demand full compliance with regulations, a secure website, and access to payment history. Most providers that allow high-risk merchant accounts will also charge higher fees to facilitate both retail and virtual terminal payment processing.
SecureGlobalPay Tobacco Merchant Solution
SecureGlobalPay has handled online payments for over 25 years. We have developed a high-risk tobacco merchant account service tailored explicitly for your tobacco business. The application process is straightforward and will take a few minutes of your time.
Some of the core features and benefits you will likely get:
- Help in complying with ever-changing rules and regulations
- Free application process
- Competitive rates
- Chargeback management and resolution
- Secure payment gateways to safeguard your data
- Unlimited transactions
- Fast approval times
- Mobile payment processing
- Multicurrency processing
Click here to access your tobacco merchant account in a few steps. The application will take a few minutes of your time.
