Tobacco businesses, such as online retailers selling tobacco and related products, help to provide the supply to meet those high levels of demand. And there is a lot of money to be made in the world of tobacco; customers are often willing to pay high prices for the best products and services, and they’re also quite likely to become loyal to their favorite stores and shop with the same businesses over and over.
In order to run a successful tobacco business with loyal customers and impressive profits, you need to be willing to put in a lot of effort and hard work. There are many rules and regulations controlling the tobacco industry, and the situation is always subject to change, so you have to keep your finger on the pulse of the latest industry-related news and developments.
Not only that, but you also need to make sure you have a tobacco merchant account in order to be able to carry out your business online and receive payments with ease. Shark Processing can help with all your tobacco merchant account needs, and this guide will include a tobacco merchant account definition, as well as explaining why these accounts can be difficult to obtain.
The High Risk Tobacco IndustryThe tobacco industry has seen all sorts of changes over the years. In the early days, before research revealed the negative health effects associated with tobacco, tobacco-based businesses could operate relatively freely and enjoyed a lot of success. However, as the years went by, new challenges gradually emerged for those in the tobacco trade.
Studies and research into the effects of tobacco consumption revealed some of the health problems that can be linked with tobacco usage. This led to new rules and controls being put into place, with tobacco businesses having to adapt. Then, in more recent years, the rise of e-cigarettes and vape devices changed the game again, giving tobacco companies real competition for the first time.
However, in spite of all the challenges and changes, and even taking into account the development of e-cigarettes and vape pens, the tobacco industry has stayed strong through it all and continues to have a high valuation, with no major declines in the number of smokers or the level of demand for tobacco products. This means that entrepreneurs can set up new tobacco businesses and still have good chances of lucrative success, but you have to have a tobacco merchant account first.
So what do we mean when we talk about tobacco merchant accounts and why are they such an important part of the modern-day tobacco industry? Why is it so important for tobacco businesses to have merchant accounts in the first place? Well, a merchant account is what makes it possible for you to receive online electronic payments from your customers.
The process works as follows: a customer places an order with you via your online tobacco store. From there, the money they send via their credit or debit card goes from their account into the merchant account for processing. After that, it continues its journey to its final destination: your main business account, where you can use it for paying salaries, buying inventory, etc.
You have to have a merchant account to be able to receive these kinds of payments, and in today’s world, more and more payments are being made this way, due to the fact that so many people are shopping remotely online for goods and services they need. This is true in the tobacco industry too, with many people buying tobacco, cigars, and related products on the internet.
In today’s world, it’s clear to see that tobacco merchant accounts are immensely important. You can’t hope to truly conduct any kind of online business or make many sales without them, and all of the best tobacco-based merchants have their own merchant accounts. But getting such an account can be a challenge.
In fact, if you apply for a tobacco merchant account with your usual bank or local financial institution, you may find that they immediately reject your application and refuse to work with you. Why is this? Well, it’s all because of the fact that the tobacco industry is classified as one of the most “high risk industries” out there.
Online tobacco businesses are regarded as high risk for several reasons. Firstly, there’s the fact that nicotine and tobacco products are strictly controlled, with regularly changing rules and regulations. All of those laws and rules cause complications, such as a minor trying to use a parent’s credit card to buy cigarettes online.
This can cause a lot of headache for banks and payment processors, and it raises the risks of issues like fraud and chargebacks. Indeed, online tobacco companies generally have higher-than-average rates of chargebacks, due to various reasons, and this is something that banks really don’t want to deal with, so they prefer not to work with tobacco businesses at all.
Since it’s so difficult to get involved in the online tobacco industry and set up a tobacco merchant account, you may be wondering what options you actually have in terms of getting one of these accounts and getting your business off the ground. Well, that’s where Shark Processing comes into play.
At Shark Processing, we exclusively work with high risk businesses, like those in the online tobacco sales industry. We aim to help these kinds of businesses get the financial services they require to operate effectively, such as tobacco merchant accounts, and we work with trusted banks and payment partners to make that happen.
We have an expert team with years of experience, and we’re ready to help you find the right merchant account for your cigarette business, with only the best rates and fairest fees. Get in touch with the team to find out more about our tobacco merchant accounts and what we can do for you.
