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The word on the street is that Vaporizer Merchant Accounts are not considered high risk any longer. This is far from the truth. How can the sales of an unregulated product be anything but high risk? Yes, we do know one true fact, the sales of ejuice and ecigs, and vaporizers aren’t illegal. But to say that they aren’t high risk products is false.
What makes Vaporizer and Ecig online retailers higher risk?
First, e-juice also known as eliquid contains nicotine. As we all know, nicotine is illegal to sell to minors. For this reason, tobacco products cannot be sold online, so why would ejuice and eliquid be any different? This fact alone opens the Ecig industry to scrutiny. Big tobacco is getting hurt by the online sales of ejuice, ecigs, and vaporizers and they’re making noise about it.
Secondly, the online sales of any type of product cause the business to be at higher risk. The risk for fraud increase dramatically whenever a credit card is not present during a transaction, many online businesses are targeted including ecig companies.
Thirdly, because of the newness of the vaporizers, ejuice, and ecigs, causes the industry to be higher risk. It’s something new and unfamiliar and as a result banks and other financial institutions scrutinize it more. Yes, credit card rates have come down dramatically compared to just a year ago. However to say selling ecigs is just the same as selling anything else online would be a lie.
Lastly, the industry remains at high risk, as long as the FDA is still contemplating the legality and rules of engagement for the sales of ecigs. It’s that simple!
Now for the good news! The online sales of Ecigs and vaporizer accessories are legal. So, go get it while the gettin is good. The industry is exploding exponentially and ecig shops are popping up all over the place. Not to mention all the online vapor shops as well. Money is being made by young entrepreneurs with vision. For every 1 making it there might be 3 that fail. The one's making it are doing things right and so should you. Their are some basics you should know in opening a vape shop or ecig online retailer.
In starting an online vapor, ejuice, or ecig company, you should some simple things. First of all, I highly recommend you create an LLC or Inc to protect your personal assets. This is business 101 and really applies to all people entering into business. Especially if the product being sold is scrutinized by the government. In the USA, anyone can get sued at anytime for any reason. So why not protect yourself in case you do get sued. You’ll need to protect your home, car, retirement, personal bank accounts. Anything considered to be your’ personal assets.
Furthermore, you should get the proper sales permits and business licenses in your state. Check your states Secretary of State website. This will be a good starting point. Also, check with the tax board of equalization in your county to see if anything is needed to sell. Some counties and states will require a sales permit. In California a sales permit is warranted for the sale of just about anything. So, do your due diligence and see what is needed in your state.
Lastly, get situated with a bank account that isn’t tied to your personal bank account. This will help you to track expenses for your business. Also, in the event you create an LLC or Inc you won’t want to co-mingle funds.
Have questions and need some additional assistance. Feel free to contact us. Fill out the form to the left and one of our specialists will contact you.
As you know, being able to accept credit cards is an integral part of your business. The line of business you are entering will dictate what service you'll be able to use for your credit card processing. For sakes of this conversation, we are writing to online retailers that are considered High Risk by Pay Pal, Square, and Stripe. Presently High Risk businesses include the online sales of items such as adult novelty, obscene material, pornographic material, drug paraphenalia such as bongs, hookahs, electronic cigarettes, vaporizers, ejuice ( e-liquid ) , Tabacco related products, and other items. ( to see more go to:Paypal acceptable products, Square prohibited products, Stripe prohibited businesses .)
First, lets discuss the con's of PayPal from the standpoint of the business owner accepting credit cards.. Most people are familiar with Pay Pal from using Ebay auctions. Paypal is an Ebay company and this synergy makes logical sense. However Paypal can also be added to most websites. So long as you're not selling questionable products, or High Risk items.
PayPal Con#1 - Unclear on Acceptable Products.
PayPal is not very clear about these acceptable products. Nowhere on the Paypal acceptable products list do they state in a clear manner that they do not accept payments for electronic cigarettes, vaporizers, and ejuice ( e-liquid ). We have encountered many disgruntled Pay Pal customers that were shut down by PayPal for the sales of these items. However, we are also aware of many other customers using Paypal to sell these goods. To add fuel to the fire we called Paypal several times to find out these products are banned. I asked the representative, if this is the case, how come these actual products are not listed. The representative had no reason. Don't take my word for it, call yourself. We find Paypal is constantly keeping you guessing! I personally believe they do this for a reason. Partly because they are making a boat load of money off these products and two, they don't want competitors to know exactly what they are doing.
PayPal Con#2 - Deposits
IF you are one of the ones Paypal hasn't shut down, you'll experience a lag time in getting your deposits. Once you sell an item, your funds are deposited into your Paypal account and not your bank account. You'll need to initiate a transfer to your bank account which takes 3 - 5 business days. This can create cash flow issues. I don't know this for fact but I believe Paypal is making money off the interest of your money while held in Paypal account. Just my opinion. Could also be because Paypal is the holding company and ACH transfers typically take 3 - 5 business days. Nonetheless, your funds are not directly deposited into your bank.
PayPal Con #3 - Website Integration
If you are able to use paypal on your website, PayPal doesn't integrate with websites. Yes you can add a PayPal check out button. But this is not true integration. Meaning, when your customer checks out, they leave your website to go to Paypal to pay. This adds to abandoned carts and lost sales.
Merchant Discount Rate is viable solution for high risk online retailers. MDR is very clear in the products that are accepted. You'll find that our credit card processing solution is a viable and scalable solution for Adult Novelty online retailers, Ecig online retailers, vaporizer merchants. To add, MDR deposits funds directly into your bank account in 24 - 48 hours. Once the sale is transacted and captured by you , the transfer happens automatically. Lastly, MDR integrates seemingly with 400 websites.
Square is another popular method of payment for many retail businesses. However, they do not allow for the online sales of adult specialty products, drug paraphanalia ( water bongs, hookahs, etc.) electronic cigarettes, vaporizers, or e-liquid. Because of this mere fact, Square doesn't represent a viable option. However the reason we are discussing it, is because Square does allow for the sales of electronic cigarettes and vaporizers in retail stores. So if you choose to use Square in your retail vape shop, you'll have to find another solution for your online shopping cart.
On the other hand, Merchant Discount Rate offers you both retail and online solutions under one roof. In comparison to Square, MDR offers a better pricing plan. We can offer you Flat Rate pricing similar to Square or we can offer you a tiered pricing structure that can save you additional savings. We can perform a cost analysis to get you the best savings.
Stripe is another payments solution that doesn't support adult toys, adult specialty stores, ecig online retailers, vape shops, or e-juice online retailers. We have gotten calls from merchants that started processing without knowing the products they were selling were banned. After several weeks up to several months, these merchants were terminated.
Unlike Stripe, Merchant Discount Rate will inform you up front whether the product your selling will be supported or not. MDR specializes in credit card processing for ecig online retailers, vape shops and vaporizer merchants, as well as e-juice companies.
In closing Paypal, Square, and Stripe are not viable solutions for the online sales of adult specialty products, ecig , vaporizer, or e-juice, water bongs, hookahs. Merchant Discount Rate offers the high risk market a long term credit card processing solution. Merchant Discount Rate also offers various pricing models, and website integration. Some of the other competitive advantageous include:
Please contact MDR at 1-805-906-0150 to discuss in detail or simply fill out the form below.