High risk merchant account providers are well familiar that providing solutions for tobacco products and e-cigarettes can be challenging to say the least. In Massachusetts, the home state of several Instabill staffers, the purchase and consumption age of tobacco products, including e-cigarettes, was just raised to 21 as of Jan. 1, 2019. Massachusetts is the sixth state to lift its tobacco sale/use age to 21, joining Maine, New Jersey, California, Oregon and Hawaii.
It’s no secret there is a war on tobacco, particularly e-cigarettes, and it is centered around use by minors. Massachusetts’s new tobacco law is consistent with the trend which we’ve watched and reported. In November, we blogged about the FDA seeking to ban the sale of e-cigarette flavors from convenience stores and fueling stations nationwide for the appeal to minors. In mid-September, the FDA tasked four major e-cigarette manufacturers to request action plans on how they were going to halt the sale of their products to minors.
Our gut feeling is that more states will follow the aforementioned six by tightening restrictions and raising the legal age to purchase and consume tobacco and e-cigarette products.
The toll of resistance and perception
Does public perception plays a role in determining the risk level of certain industries?
It absolutely does. Acquiring banks are concerned with their reputations as merchant account providers for high risk industries. Many acquirers shun business types such as gambling, adult and collections, but will process payments for nutraceuticals, travel and CBD. While the anti-tobacco and vaping movement marches on, one has to wonder about the toll it will take on acquiring banks.
Every so often, out of the blue, we’ll receive a deluge of inquiries about merchant services for particular industries within a 24-72-hour period. Seasoned merchant account providers know that when a barrage of sudden inquiries occur, somewhere an acquiring bank has discontinued providing merchant accounts for that industry.
We’ve seen it with online pharmacies in Canada as well as tech support and collections here in the U.S. We hope the e-cigarette industry can adjust to continued restrictions.
Merchant accounts for tobacco, e-cigarette products: The difference
Merchant account providers will agree that tobacco and e-cigarettes are two separate entities, each with unique challenges.
Though it is legal to purchase tobacco online, we only know of very few acquirers willing to provide merchant services for such. Similar to the transporting of alcohol, each state has regulations for transporting tobacco. As a result, rogue ‘merchants’ have created a black market for such (more on that momentarily).
E-cigarette merchant accounts are easier to obtain than traditional tobacco perhaps due to the massive popularity of vaping. Though we believe challenges for e-cigarette payment processing will continue for the foreseeable future – there seem to be news items on safety and health concerns each week – there will always be solutions, for the following reasons:
- Tobacco products giant Altria purchased a 35 percent stake in Juul, the widely popular e-cigarette manufacturer.
- Phillip Morris International has also entered the e-cigarette market, and recently unveiled a new, apparently safer device that heats real tobacco, rather than an e-liquid. It is drawing interest from investors.
- A recent study by the Competitive Enterprise Institute found that traditional smoking among teens has decreased more than 50 percent (from 15.8 percent of teens to 7.6 percent). Though the study didn’t mention the means or impetus for quitting, it’s likely safe to say the majority turned to vaping.
One byproduct of state tobacco product restrictions
While the intentions of our state and federal officials are (usually) for the good, there is always an unpleasant byproduct whenever bans or restrictions are placed upon certain products: it creates a black market. More and more restrictions on e-cigarettes and tobacco, we feel, will result in black market sales to varying degrees.
Instabill named among the best e-cigarette merchant account providers
In January of 2018, Instabill was named among the Best E-Cigarette Merchant Account Providers by CardPaymentOptions.com, a credit card processing and merchant services reviews website. Instabill was recognized for its debit and credit card processing alternatives, the numerous currencies in which it is able to process, as well as its personal, one-on-one customer support.
Our merchant services managers are always up for a conversation at 1-800-530-2444, Monday through Friday, from 8 a.m. until 6 p.m.
