Most businesses have a pretty easy time setting up their merchant accounts for processing credit and debit cards. And since three in 10 Americans say they don’t make a cash purchase at any point during a given week, having good card processing is imperative for doing business.
Unfortunately, things are a little different for vape shops. These businesses are considered high-risk, just like CBD retailers, meaning that banks and traditional financial institutions are typically unwilling to provide them with merchant accounts.
So, what’s a vape shop owner to do? Accepting only cash is not an option anymore, as increasingly contactless and convenience-oriented customers will quickly find an alternative. You need to find a vape merchant account and credit card processing provider that is able to work with high-risk businesses. With an experienced and supportive payment solutions partner, you’ll be able to take your business to the next level.
Vape shops are growing
It shouldn’t come as a total surprise that the vaping and e-cigarette industry continues to grow. In 2020, the market was valued at around $15 billion. By 2027, experts estimate that will expand to more than $67 billion. The reason for this growth, especially among the younger generation, is because many people believe that vaping is safer than cigarettes.
Vape aerosol has far fewer contaminants than regular cigarettes, which can contain more than 7,000 chemicals. It should be noted vaping also has been linked to other lung problem, but that hasn’t slowed down users. According to the U.S. surgeon general, e-cig use among high school students was up 900% in 2015, suggesting that vaping will continue to be a strong business segment for years to come.
Why vape shops are high-risk
Despite huge growth in the market, there are a number of reasons traditional financial institutions are reluctant to partner with vape shops.
First, age restrictions and FDA regulations put major limitations on these types of businesses, and since these rules can vary by state, many payment processors don’t want to be involved. If a shop didn’t follow the correct guidelines and sold to an underage customer, for example, the payment processor would be in the middle of an illegal transaction.
Second, there is the connotation that vaping is linked to illegal products, such as marijuana or other drugs. While this is not necessarily the case, standard card processing companies might misunderstand the space or not want to put their reputation in jeopardy. In addition, some financial institutions are wary of new businesses in fledgling industries, like CBD and vaping, or they simply avoid those that are associated with possible health issues.
Payment solutions for a modern business
If you run a high-risk business like a vape shop, there are a few important things you’ll need in terms of merchant services.
- Merchant account
A merchant account is where all the money you make on sales goes. It’s not the same as a business bank account because you don’t have control over it. It just acts as the holding place for your funds until they settle. If you have any chargebacks or returns, the funds will come from this account. Merchant accounts are vital for accepting electronic payments; without one, you won’t be able to take credit or debit cards.
- Card processing
Card processing is the term for handling purchases made with credit or debit cards. Your card processor acts as the middleman between the cardholder’s bank and your terminal. It also manages interactions with the card associations involved, such as Visa and Mastercard. This is the company that actually moves money from the customer’s bank into your merchant account.
- Payment gateway
The payment gateway is similar to the payment processor but more specifically refers to the technology that’s involved. A payment gateway is what connects a merchant with the payment processor and banks, enabling you to accept debit or credit card purchases from customers. It usually includes a terminal, tablet, app or other method that allows you to capture credit card information and transmit the details to the appropriate parties.
Services and equipment your vape shop needs
Like any business, vape shops have a number of payment processing needs that may require additional hardware, software or advanced solutions. These include customer-friendly features, such as contactless and smartphone payments, which can easily be accommodated with virtual terminals and mobile card readers and are more critical than ever in the wake of the coronavirus pandemic. These make it convenient to accept payments quickly and easily, which is good for the customer and for you.
Your point of sale system is very important. You’ll want a platform that allows you to track inventory, run reports, process sales, manage your employees’ schedules and even create a loyalty program for frequent shoppers. The advantages of a mobile (mPOS) system are that it’s simple, can be used anywhere and is free of traditional merchant terminals and expensive equipment.
Of course, you also need to have e-commerce functionality, so having integrated e-commerce payments is essential. That way, you’ll be able to keep track of both in-store and online purchases without making separate calculations and keep up with customers who are shopping online in record numbers.
Why the popular payment processors won’t work for you
There are a few big players in the field of payment processing services. Two of the most popular are Square and Clover, which allow businesses to accept online, in-store and mobile payments and come with a suite of invoicing and payment management technology.
While these providers may make sense for many small retailers, they aren’t the best choice for everyone, because they have been known to suddenly freeze merchant accounts or drop clients if a business processes above a certain transaction volume or is considered high-risk.
A payment solutions partner for vape shops
If you’re a vape shop, FLEX Payment Solutions wants to be your processing partner. We understand the legal and regulatory issues around the vaping industry, and we have extensive experience with high-risk businesses, including CBD stores, Native American companies, firearms dealers, pawn shops, collection agencies and general merchants.
We underwrite carefully, work hard for our high-risk clients and provide them the tools needed to grow their business. You’ll never have to worry that your transactions might be flagged or your account shut down just because you’re successful.
FLEX offers a unique compliance background and outstanding customer service, so we’ll be here to help you every step of the way. Our goal is to offer you flexible payment options and custom processing solutions so you can take your business to the next level.