Since their inception by some of America’s earliest merchants, the selling of pipe and leaf tobacco products has been part of the United States fabric, evolving from the traditional corner smoke shop complete with cigar store Indian to being sold through online stores to customers throughout the world, the demand for tobacco has remained constant while the marketplaces have evolved. What was once a rather straightforward industry for businesses to establish merchant services, the tobacco industry has been hit head-on by recent changes with legal and financial regulations, negatively affecting the entire industry and making the search for smoke shop credit card processing a difficult task.
Finding a smoke shop payment processor that can approve a business in a reasonable time while providing the necessary registration with the card association can save merchant’s significant time, money and headaches. For a smoke shop credit card processing account to be set up correctly, there are a few documents that the merchant services provider will require from the business and owner to show full compliance with the guidelines set forth by the card association (Mastercard) and that the merchant takes proper precautions to prevent any violations with the online sale of tobacco.
One of the most important documents that are necessary from a merchant is the legal letter of compliance, drafted by a lawyer stating that the merchant website, their practices and sales methods are in compliance with what is required by the card association. As with the requirements by the FDA for tobacco sales, smoke shops operating online need to comply with federal, local and card association guidelines to prevent any potential legal problems from unauthorized, fraudulent or otherwise illegal credit card transactions originating in their business.
Part of the compliance process requires merchants to have safeguards on their website to prevent the sale of tobacco products to minors, usually controlled by the use of age verification software or other services that require customers to verify that they are of legal age in their jurisdiction to purchase tobacco products. Once the underwriters of the merchant acquiring bank are able to confirm that the business is operating in a compliant manner and the merchant application is approved, the acquiring bank will charge the merchant the annual registration fee of $500 to ensure compliance is maintained and ensure against any potential tobacco liability.
While some smoke shops might have trouble finding online merchant services and be quick to jump on the first payment services provider that says they can accept tobacco, businesses need to ask the right questions while shopping the different merchant services providers. A tobacco payment processor will require that merchants provide a legal letter of compliance and go through the complete registration process with the card association, and though this does cost more and take more time, it does ensure that there are no future disruptions of services due to non-compliance or being a prohibited merchant.
At Tobacco Merchant Services, we ensure that all of our smoke shop merchants are in full compliance with the payment card associations upon approval and maintain their compliance yearly with our ongoing monitoring. Business with questions or looking for discount smoke shop credit card processing services can call and speak to one of our payment processing professionals as we would be more than happy to help.