Online smoke shops often sell other products than tobacco such as marijuana-related paraphernalia, music, clothing and accessories.
However, traditional banks often concentrate on the marijuana-related products even though they’re perfectly legal in many states.
That results in the business being classified for credit card processing as a head shop.
If your business has been denied credit card processing by the bank because it’s considered a head shop, your business could be in trouble.
Although these items are considered mainstream items throughout the country, tradition dictates that they be viewed as “high-risk” products for the businesses that sell them.
Even if most of your income comes from tobacco, there are risks in these products as well such as selling to minors or contributing to health problems.
It’s impossible to predict when attorneys general might decide to sue tobacco sellers to defray healthcare costs.
These businesses attract great scrutiny from neighborhood activists and law enforcement, but the real problem is that customers often have second thoughts and ask for refunds.
Sometimes, parents demand refunds when their children use their credit cards without authorization.
Faulty or cheap products also generate returns and chargebacks.
High Chargeback Rates Result in Merchant Account Applications Being Denied
Your application’s approval is influenced by several factors that make a smoke shop a greater risk than everyday businesses such as a clothing store.
Chargebacks are higher–often because kids use their parents’ credit cards to buy products over the internet.
Some smoke shops target underage kids specifically, and others try to defraud customers by selling drug-related substances and paraphernalia that don’t do what the sellers claims.
Although medical marijuana has resulted in booming business pipes, rolling papers, rolling machines and other paraphernalia, marijuana remains illegal under federal law.
Credit card processors could share in legal liability. They are definitely liable for chargebacks.
However, you can qualify for a credit card processing account when you choose the right processor.
Blue Wave Merchant Solutions has extensive experience in processing credit and debit cards for high-risk companies.
Blue Wave Merchant Solutions
If you’ve been denied credit card processing services, your best option is to find a more liberal payment processor that looks beyond traditional risk profiles and supports legitimate businesses that sell popular products to fulfill consumer demands.
Supply-and-demand is the cornerstone of the free enterprise system.
Blue Wave can help you build your business with all the necessary processing capabilities.
Your application can be approved within a day or two, and you’ll be ready to start taking internet orders.
Blue Wave also offers advice and answers to your questions. We can help you establish better customer service and verifications of customer ages to reduce chargebacks and increase customer satisfaction and loyalty.
Our program includes special steps you can take to keep your chargeback rate below 2 percent, which is the cutoff rate of many processors.
A collaborative processor like Blue Wave Merchant Solutions has a thorough understanding of the trends and opportunities in the smoke shop industry.
The company won’t deny your application just because conservative banks and their insurance underwriters deny your applications even though you’ve done everything properly to get your legitimate business online.
Blue Wave has developed processing solutions to simplify accepting credit cards while increasing profits for your enterprise.
The company handles everything needed to accept credit cards, but it takes its job of mentoring new clients just as seriously so that these merchants can maintain better customer service, which results in lower chargeback rates.
Inevitable Expansion of Smoke Shop Products and Accessories
Smoke shops have added head shop items as a necessity because of the falling rates of tobacco use. Adding e-cigarettes, pipes and paraphernalia are natural enhancements to your inventory.
Blue Wave understands the necessity of expanding goods in a declining market. Adding these increasingly popular items protects your investment.
We understand these influences on your business decisions, and if you follow our advice, you should have no problem running your smoke shop profitably.
The e-cigarette and pipe industries are expanding to handle the needs of the fast-growing medical marijuana industry.
Some brick-and-mortar stores are nervous about selling head shop products because there is still quite a lot of controversy over medical marijuana.
Brick-and-mortar stores could be targets of protests, so selling products online becomes increasingly attractive for aspiring entrepreneurs.
What You Need to Do to Get a Merchant Account
You can market your products worldwide with a merchant account, website and popular products.
Your credit card processing system is the backbone of your operation.
You will need to provide supporting documentation, but that won’t take long if your business is in order.
The things needed to establish a merchant credit card processing account include:
- Proof of ownership
- Bank account information
- Business license
- Proof of financial responsibility
- Description of the business and its products
- Details of any other merchant accounts you’ve had
- A copy of your business plan if available
A thoughtful and well-researched business plan can work in your favor no matter where you apply for a merchant account.
Proof of financial stability will help you get a better processing rate.
The fees for startup companies are usually higher unless you can prove that you’ve operated a previous online business accepting credit cards successfully.
A bad credit rating might not disqualify you, but your processing fees might be higher.
Evolving Rules and Regulations
In high-risk industries, there are always new regulations and rules to follow, so you should keep up-to-date on your legal requirements, government reports, tax payments and other pertinent issues.
The best practice is to hire a business attorney to guide you through the legal process and protect your rights.
The technical side of business includes securing credit card processing privileges, a secure payment gateway and a strategy for delivering great customer service to keep your chargeback rate low.
Blue Wave can support you in all these issues and get your account approved within 48 hours in most cases.
The company’s experience clearly demonstrates that educating its clients is the best way to build a long-lasting partnership that benefits both processor and merchant.
If you’re ready to own a responsible business with full payment processing privileges, contact Blue Wave Merchant Solutions today for further information or to submit an application for high-risk credit card processing services.