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Posted: by Bronte

Reduce Risk Factors in Your Vape and eCig Merchant Account

Even though the industry as a whole is thriving, vape and e-cigarette merchant accounts of this type are hard to get. This points to the fact that reducing the risk in the industry is hard to do and therefore not many businesses do it. To begin understanding how to reduce risk in your vape and e-cig business, you must first understand what makes you risky in the first place.

Step 1: Know Your Risks

There are more than just a handful of risk factors that are measured, but in the vape industry, these are the mosts common. Vape and e cigarette merchants have to deal with industry-specific risks as well as the holdbacks of any online business. Consider the 4 R’s as you are beginning your journey running a company in this industry.

  • Rules

Regulations in the vape industry are constantly changing. Everyday new rules are added, changed, and removed. This makes upkeep difficult and nobody likes this vulnerability. Merchants find it harder to keep track of compliance issues and banks dislike having to update their service terms for that industry type. It takes time and money to stay on top of, which is something that many other business types don’t require. This increases your risk because of the constantly changing e-cigarette regulations that make it hard to comply with banks and merchant accounts.

  • Reputation

vape liquid dropperThe vape and e cig industry has its inherent drawbacks. People have mixed feelings about the use of the product itself. Health effects and strong opinions mar the industry. Banks don’t always want to take a chance on businesses with a holdback such as this. They think it would add a sour note to their otherwise traditional industry types. This increases your risk because the number of banks willing to accept a stigmatized industry decreases extensively.

  • Refunds

Unsatisfied customers is one thing that the vape industry finds itself dealing with a lot. Then with subpar customer service, this oftentimes pushes customers into enacting a chargeback in order to get their money back. Banks and payment processors track the amount of chargebacks that are requested each month. With this information they produce a percentage ratio. If this percentage goes over the industry standard of 3%, your business is in serious jeopardy of being shutdown. This increases your risk because of the propensity to accrue chargebacks on your account when compared to other industries.

  • Rip-Offs

Fraud is prevalent in any business, but online companies see this issue more often. The impersonal aspect of the transaction allows scammers to more easily hide. Even worse is that there is not a solution for ending all types of fraud. Some things you will catch and others you won’t. This increases your risk because of the extra steps that online vape businesses need to take in order to reduce fraud.

Step 2: Reduce These Risks

Understanding and combating risk factors takes a lot of work and a little bit of luck. Utilizing the mitigation procedures available to you will be a huge help as you scale your business.

  • Rules

Working with the ever-changing vape industry is really the only way to reduce this risk factor. Until the industry becomes more settled and accepted, this will be an issue. Stay on top of the changes and adjust as you see fit for your needs. Banks will be slow to change, but eventually this won’t be the biggest issue that they see.

  • Reputation

More research and long-term studies need to be conducted before people’s ideas will be swayed. There are a lot of unsubstantiated claims from both sides of the coin that makes it hard to know the truth. Along with the regulations portion of this risk factor, it will not be helped overnight. This is a constantly developing aspect of the industry. Do your best to keep unverified claims to a minimum.

  • Refunds

As with any business, dealing with unhappy customers and refunds is going to be a part of the job. But how you deal with it reflects on your future success. Customer retention issues are mostly caused by mishandling of refunds. A good rule of thumb is if a customer is requesting a refund, give it to them. Don’t give them just half, don’t haggle them about why, and definitely don’t just ignore them. If any of those things happen, your customer will reach out to their bank and get their money back anyway. But if they go this route, you will be penalized more than just giving back their money. The bank will get the money from your account, they’ll count against your chargeback ratio, and you have surely lost a customer. If you get the opportunity to right a wrong, don’t pass it up.

  • Rip-Offs

woman vapingMany payment processors have plug-ins and monitoring tools to detect and stop possible fraudulent transactions. This often means to implement an extra layer that card payments get put through to verify the card number, name, address, etc. It is surprising how many of the possible fraud transactions are detected and prevented with these methods. Don’t take any chances with closure and reach out to your vape and e-cig payment processor for ways to reduce online credit card fraud risks.

Step 3: Turn to a High-Risk Provider

After going over the top few possible risk factors for this industry type, it is easy to see that these types of businesses are high risk. Entities such as banks and merchant service providers look at the factors and make snap judgements. Many times this judgement is not in the business owner’s favor.

Tier 1, traditional, low-risk acquiring banks do not have the capability to support high risk accounts. Merchants therefore have to find a different way to get payment processing accounts for vape and e-cigarettes. High risk payment processors are the only option for industries deemed too risky. With a hard to place merchant account in place, businesses get the support and risk mitigation procedures to keep them compliant and accepting credit cards.

And at the end of the day, in order to continue supporting your vape and ecig merchant account, get partnered with a high risk provider. You can get back to running your business quicker with a safe and secure credit card processing solution.