These days, vaping is big business. As traditional cigarettes continue to fall in popularity, vaping use continues to rise. Current estimates hold that there are at least 80 million vapers, resulting in an industry that is now worth billions of dollars—and, the increasing number of individuals who vape has created increased opportunities for new businesses. As a result, the vaping industry has exploded, with more and more companies attempting to provide vaping services to consumers.

The vaping industry also faces no shortage of problems. Regulatory challenges and a less-than-stellar reputation among medical professionals and government officials have created many issues for vaping-related vendors. These issues often make it difficult for people in the vaping industry to access essential financial services, including the ability to process credit cards or make sales over the internet.

Starting a vape merchant account is not easy and often expensive. These difficulties are a direct result of vape merchant accounts being classified as high-risk by payment processors and credit card processing companies. A high-risk classification is not fatal to a vaping merchant. It can add significant challenges and force vendors to seek out other credit card processors who can suit their business needs. There are merchant account vendors who can handle the creation of a vape merchant account. Zenti is one such vendor. With years of experience in the high-risk merchant account services business, Zenti is more than capable of handling all of your high-risk processing needs.

Why Are Vape Merchant Accounts High-Risk?

There are real challenges that come with a vape account. You may have a harder time accepting payments with a Visa, Mastercard, American Express, or any related debit card. You may not be able to adequately engage in eCommerce, and you may struggle with being able to access a variety of other basic business and financial services. Zenti can help you find the payment gateways that you need. It has years of experience in the vaping industry, and with other high-risk businesses.

One of the real challenges with the area of selling vaping products is the possibility of completely losing your credit card processing. These days, no business can operate without having access to merchant account solutions. Most processors will not allow for a vape merchant account to operate as a low-risk business. You should be able to continue to operate, but it will have to be as a high-risk account.

A high-risk account is a classification that merchant account vendors will give to certain types of businesses. This is not a classification that is exclusive to vaping businesses. Many other businesses have this classification. These tend to be businesses that are subjected to high amounts of chargebacks, like subscription-based businesses or other businesses with lower customer satisfaction and more customer confusion.

Reputational issues are also common roadblocks for high-risk businesses. This is the case for vaping businesses, which often struggle with perceived health risks and regulatory challenges. Furthermore, vendors tend to be more worried that a high-risk account will have issues that result in governmental regulators or law enforcement making more inquiries about services. Again, this is a concern that applies to vaping businesses.

High-risk classifications come from numerous factors, and no individual factor will be singularly responsible for a high-risk classification. Vaping merchants tend to have numerous factors that make them more likely than not to be classified as high-risk. These include:

• Chargebacks: A chargeback is one of the most important factors that can lead to a high-risk classification. Chargebacks occur when a good is returned. This means that the customer must have their money refunded. A refund obviously means that a vendor loses their money. It also means that a processor must expend time and money refunding the consumer, and this costs them money. A chargeback will thus negatively impact numerous parties.
• Fraud: The vaping industry is still a relatively new one. It’s also rife with issues related to fraud, including the sale of counterfeit goods. Many credit card processors are thus less likely to want to do business with the vaping industry. They may this make a high-risk classification.
• Reputational issues: The vaping industry currently struggles with many reputational challenges that are directly related to counterfeit goods and the potential negative health impacts of their products. These issues make it more challenging for credit card processors to want to do business with vaping merchants. This often results in high-risk classification.

High-risk accounts are more problematic for credit card and online processors. In order to offset the added expenses that come with managing high-risk accounts, credit card processors will typically increase fees and other requirements for their high-risk customers. This results in more expenses for your vaping. In a thin profit margin business—like vaping—this can be the difference between business success and failure.

What does this mean for a vaping business? You will have to spend extra time finding merchant services that can suit your needs and give you access to the high-quality services that you deserve. You will have to make sure that they provide you with all of the services that your business needs, including a payment gateway, eCommerce solutions, and more.

What Businesses May Have Trouble With Vape Merchant Accounts?

There are many businesses that may be impacted by this high-risk classification. This obviously includes any vendor that sells vaping products. This is not the only vendor that may earn a high-risk classification. As a result of the way these high-risk classifications are made, other vendors may find themselves impacted by such a classification. These include:

• Convenience or grocery stores that sell high levels of vaping products
• CBD stores that sell vaping products
• Tobacco or cigar stores that sell vaping merchandise

The risk of this occurring is even higher if a vendor already has other aspects that might make it more likely to be classified as high-risk. For example, CBD vendors are already likely to face a high-risk classification. This likelihood increases if sales data shows that a store sells a relatively high level of vaping products. Keep in mind that selling any vaping or related products can earn you this classification.

How Can a High-Risk Classification Damage Your Vape Business?

A high-risk classification can be a serious burden to your business. These classifications are commonplace in the vaping and cigarette industry, and if you open a vaping business, you can likely expect to be classified as high risk. Such a classification can have a variety of negative impacts on your business. This includes:

• Higher payment processing fees: Every business pays a portion of a charge to their merchant account vendor. If you are a high-risk business, you are likely to owe a higher percentage of fees to your vendor. You may also find that you have a higher flat fee per charge and a higher fee for chargebacks.
• Longer application process: Applying for payment processing solutions means filling out a lot of paperwork. If you are high-risk, you'll have to provide even more records, including additional insight into your past financial history, credit history, and bank accounts. In some cases, you may not even have the option of filling out an online application, and you may have to provide a slew of paperwork for your merchant account application.
• Higher levels of cash reserves: All payment and credit card processors keep a certain amount of money as a cash reserve. Your money will eventually be deposited in the appropriate financial institution, but you will find that a portion of the money you are owed is kept for chargebacks or other refunds. If you have a high-risk business, you find yourself needing a higher level of cash reserves.

What Services Does My Vape Merchant Account Need?

A vape merchant account will need to provide you with an array of financial services. The basics—including processing credit or debit cards—simply aren't enough anymore.

Many vaping companies now have an internet component. If this is the case for your operation, your business will need to have some sort of eCommerce component. This means that you will need to take credit cards securely, over your website. You may also need to take other forms of online-exclusive payments, such as a Paypal account, Venmo, or more. The array of payment options has become massive at this point, and it seems as if a new and popular method of payment comes out every month. As such, you will need a merchant account provider who can not only handle processing credit card payments but has constantly been updating and upgrading the number of payments that they process.

If you have a retail business, you will need a vendor who can provide you with POS services. This means giving you the necessary equipment that you need in order to take payments in person. You'll have to get clarification about how the point of sale devices will be serviced. What happens if one breaks? Do you have to pay for maintenance? How quickly can you get customer service on this device?

Furthermore, depending on your type of business, you may want to explore other payment options. For example, could your business benefit from zero-cost processing? This is a processing method in which the cost of your high-risk credit card processing is passed along to consumers. Zero cost processing can save you money, but it obviously comes with trade-offs, as it will increase the price that your customers pay, potentially leaving you in a less competitive business position. You will have to speak with an expert in the field of credit card processing and make sure that such a move would be the best for your business.

Your business will also need access to world-class, knowledgeable customer service. Individuals who help your business must be available to quickly answer any questions whenever your business is open. If there are technical issues, these must be resolved in the speediest manner possible.

How Do These Services Integrate With Accounting and Marketing?

If you are creating a vape merchant account, your account must integrate well with already existing services. This means that they must smoothly operate with the financial payment models that you have already set up in your business. The accounting programming must easily integrate with your website, providing shopping cart support and easily exporting any information. This will help ensure you have the most accurate accounting of your finances. It can also make sure that your taxes are paid on time and accurately.

You should also make sure that merchant account services can provide you with marketing assistance. Think about all of the contact information that travels through your accounting software: Names, addresses, phone numbers, Emails, and more. If you can gain access to this information, you can do more than just automatically Email someone a receipt. You can also ensure that you are giving them appropriate, targeted, and relevant marketing info.

Some businesses may also need custom computer software to ensure that their accounting syncs with their website. This means that a merchant account provider must have technical and programming efforts on staff. These individuals should be able to get your website up and running, thus making sure that your shopping card will easily integrate with any new software.

As you are probably well aware, these services can be difficult to find. Vaping business owners need to find a merchant account provider that is comfortable with their industry and who can provide all of these services at competitive rates. This is where Zenti can help. We can provide all of these services and more, ensuring that you can stay competitive in business at affordable prices. If you want more information on how Zenti can provide you with the bank services you need, please contact us today.