The tobacco industry is unique in that many of its owners and operators are aficionados. They indulge in the products they sell and are able to provide expert-level advise and recommendations to consumers looking to enjoy their goods. The tobacco business is an ultra-competitive marketplace. Tobacco merchants have little wiggle room before they price themselves out of the market. Some tobacco merchants have moved into making the purchase of their tobacco goods more of an experience by opening a cigar bar whereby consumers can relax, watch sporting events, listen to music, and pair their favorite tobacco product with an adult beverage of choice. Regardless of the type of business, tobacco merchants need payment processing services that are cost effective and help them run efficiently. It’s not always that simple though. Tobacco merchants are considered high risk merchants by the merchant services industry. So how can tobacco merchants get the most out of their merchant account? Let’s discuss it.

Tobacco Merchant Accounts for Stores, Bars, and Kiosks

Retailers of tobacco products usually need to have high inventory turnover per square foot. Overhead is high, rent is expensive, and inventory takes up space. One of the best ways to manage inventory is through a Point of Sale system (POS). You can manage inventory, employees, sales, and many other important aspects through this system. However, these systems are expensive and can put a strain on cashflows. If you need a system like this, you should try to negotiate with the merchant service provider you are working with. Many times they will provide free or reduced cost equipment for merchants that qualify. Tobacco merchants that don’t need this equipment can still try to leverage a free terminal. If you already have payment processing history, you may be able to leverage your monthly volume to get you the hardware and the best rate.


Cigars, Tobacco, and E-commerce Tobacco Merchant Accounts

Tobacco merchants have a unique set of challenges when selling through the internet. There are strict regulations that accompany the nature of the product. These regulations cause merchant service providers to place tobacco businesses in the high risk merchant category. The risk is high enough that many high many risk merchant service providers won’t accept e-commerce tobacco merchants. It’s important to work with a payment processor that has experience working with tobacco merchants. You don’t want to be suddenly and unexpectedly shut down because your payment processor didn’t take the appropriate precautions to assure your website is compliant. Furthermore, tobacco merchants don’t want to be smoked out by outrageous rates and fees. Although, they should be aware there are additional registration costs associated with this type of account. This registration is required by Visa and MasterCard so don’t be surprised by it.


Payments for the Wholesale Side of Cigars and Tobacco Products

The majority of sales for cigar and tobacco product manufacturing or distribution businesses happens over the phone. Many of these businesses run into trouble when they try to take card payments and manually key them into their swipe terminal. These terminals are designed to primarily handle retail card-present transactions, and on a rare occasion a manual entry. The retail tobacco merchant account is set up with thresholds that only allow for so many manual entries against swiped transactions. Once those thresholds are crossed it puts the account in jeopardy. Tobacco merchants need to be set up with a MOTO merchant account and process their transactions through a virtual terminal in order for tobacco companies that take payment over the phone to process payments seamlessly.

Smoking the Tobacco Merchant Account Competition

The tobacco industry is unique and cut throat. It’s a competitive marketplace that requires a delicate balance of cost, product offering, and an experience. I’ve watched a countless number of consumers purchase cigars and other tobacco products. Some of them are true aficionados that engage in thoughtful conversations over the taste and aroma of their favorite tobacco brands. Others look for that special product for a special occasion. In either case, these people always take three things into account: cost, service, and quality of product. It’s no different with merchant services. While tobacco merchants are considered high risk; they still need a high level of service that delivers a quality product at a cost that does not turn them away. Even if they don’t have many payment processing options. That’s what we do at Painless Processing. We make payment processing for tobacco merchants so easy… it’s Painless.


High Risk Merchant Account Solutions