Tobacco merchants processing transactions online for tobacco and cigarettes will find it very difficult to find and keep a high risk merchant account for their business. Face to face tobacco and cigarette merchants do not have an issue with obtaining a merchant account however online merchants do. The chargebacks for online tobacco merchants is much higher than average accounts. There is an ongoing problem with fake cigarettes and tobacco products which puts the banks and processors at risk for being sued and other legal action. Age verification is another issue with online tobacco sales. It is difficult to correctly ID a customer to make sure they are of the legal age. Tobacco retailers have a large worldwide market to sell to with a sizeable mark up however if they are unable to process their customer’s orders they are not going to stay in business.
Tobacco merchants are required to pay higher than normal rates compared with their retail face to face counterparts. The rates and fees for an online tobacco merchant can differ depending mainly on their; processing history, chargebacks, monthly volume and where they are located. Merchants in certain countries are not liable to follow the laws and regulations of other districts where they might have customers however they are not located. Start up tobacco merchants will find it hardest out of all to be setup for a high risk merchant account. This is mainly because these merchants do not have a proven track record and appear to be more risky compared to their proven competitors that have a track record of sales to show the bank when applying for an account. Most merchant account providers, banks and processors do not want to work with startup merchants which will create a headache for these merchants. Startup merchants should try and setup their business with echeck processing or ach processing in order to build up their processing history before applying for a card processing account. They will have a better chance of being approved.
Tobacco merchants have a number of different payment processing options for their online store when they partner with Offshore Merchants. Offshore Merchants provides; echeck processing, ACH processing and credit/debit card processing solutions. Tobacco merchants that process with Offshore Merchants are allowed to process payments in multiple currencies. Card processing is of course the most valuable however it is important that online tobacco retailers offer other forms of payment options as well. There are two main reasons for this. First of all, it gives flexibility to the customers in order to complete the order with their preferred method of payment. Second, if one of the merchant’s payment processing solutions goes down temporarily or for good, it does not put the merchant out of business and allows them to stay in business while they setup additional solutions.
Offshore Merchants has been providing high risk merchant accounts since 2007 and is a leader in the high risk industry. These types of companies require secure processing solutions which is obtained from Offshore Merchants.
Contact one of our helpful account representatives to assist you in the setup of a high risk merchant account or offshore merchant account for a tobacco high risk merchant account.