Process Payments for Head Shops

Smoke shops have proved be a very popular business option over the years. However, as popular as it is, it is as difficult getting a merchant account for payment processing. The ever-increasing and changing government regulations surrounding the sale of tobacco-related products and accessories are to blame for it. Banks do not want to bear the loss of being associated with a high risk industry. They charge heavy and offer very little room for negotiation. The rules are more stringent for online tobacco merchants. Fortunately, there are third party merchant account providers who enable online payment while maintaining compliance with regulatory requirements. If you operate a smoke shop or a head shop and are looking for a merchant account, here’s what you need to read.

How Does a Merchant Account Work?

Consumers across the globe favour credit and debit card payments over cash transactions for the obvious reason of convenience. Payments are made using Visa, MasterCard, American Express and Discover cards. To be able to accept payments, the business will have to work with a payment processor and set up a merchant account. Payments are accepted via a virtual credit card terminal. An alternative is to integrate the payment gateway into the shopping cart on the merchant eCommerce website. The credit card processing company charges a fee for transactions completed using the merchant account.

Why is it hard to get approved or why denied?

A business is usually considered high risk if:
It has a high chargeback ratio
It registers a large number of fraudulent activities
It sells age-restricted items
It engages in questionable business practices
It is part of an industry controlled by strict rules and regulations

Smoke shops and head shops come under the scanner because of the products they sell. They suffer from a “reputational” risk. The greatest hazard is unethical procurement of products by minors. Such transactions are generally completed without parental consent, using a stolen credit or debit card. In online, card not present transactions, it is impossible for the merchant to validate the identity of the customer. This is also one of the major reasons for a high-chargeback ratio. Parents dispute such purchases.

Tobacco Products & Services Age Restricted

Modern day smoke shops are not restricted to the sale tobacco-goods. Their product line also carries hookahs, grinders rolling papers, glass pipes, e-nails, dab gear, bongs, rigs, bubblers and eCigarettes. A smoke shop merchant account is indispensable to both retail storefronts and online businesses. Also, if you are a retailer trying to move your smoke shop business online, you can benefit from the services of a merchant account provider.
1. Streamlines business processes – Setting up a merchant account for your smoke or head shop increases business efficiency. Business owners are better equipped to track sales, manage customers and keep records.

2. Easy and secure payments – A merchant account works directly with the acquiring bank. This means quicker transaction approvals. Payments are also settled faster.

3. Legal business practise – Payment processors providing merchant accounts to smoke and head shops are well-informed about the laws and regulations pertaining to the industry. Thus, you can rest assured that your business is being conducted in an ethical manner.

What You Should Evaluate

Here is a list of features to consider before you finalize your smoke shop merchant account.

1. It should offer a diverse payment platform that provides point of sale systems, physical terminals, mobile payments via Apple and Android apps and virtual terminals. Multiple payment options ensure that every client making a purchase has a hassle-free payment experience.

2. It should provide card not present processing (CNP) to enable payments where physical verification of card details is not possible

3. eCheck processing and ACH processing facility offered can be very beneficial. It allows customers to make payments using eChecks.

4. The merchant account should be PCI complaint and should offer API integration.

5. It should help monitor and prevent chargebacks and fraudulent transactions.

6. An account that approves higher volume units is essential if you plan to expand your business.

7. It should have a robust network of banking relationships to be able to provide multiple underwriting banks. It will put you at an advantage in case of changing bank policies.

8. It is preferable if the payment processor offers domestic and off shore accounts.

9. Round-the-clock technical support with a knowledgeable team will make a difference to your business.

10. It should be a reliable payment gateway ensuring your customer’s information remains secure every time you transact with them. An SSL encryption makes sure you have a secure payment gateway on your hands.

11. The cost is yet another aspect to factor in. It is going to be high given it is a high risk account and will vary based on credit history. Nevertheless, there should be no application fees. Most merchant account providers charge a per-transaction fee.

12. Above all, they should be willing to work with established and start up businesses alike. Many merchant accounts providers shy away from small businesses because they do not have a solid credit history or business track record. So, take some time weighing your options. Invest in a merchant account offering services tailored to the needs of your business.