Credit Card Processing

Credit Card Processing for Vape and Tobacco Shops

by Ben Dwyer

Vape shops and traditional tobacco smoke shops often run into challenges when applying for merchant accounts.

If you’re looking for credit card processing for an e-cigarette business or tobacco shop, it’s important to know your options. In this article, we’ll go over the difference between high risk and low risk smoke shops and how to find a processor no matter what kind of business you run.

Vape Shops / E-cigarettes

While vaping is legal in the United States, some e-cigarette and vape juice businesses have a hard time finding the right merchant account. Vape shops are considered “high risk” regardless of whether you accept cards in person or online. Several factors, such as age restrictions and FDA regulations, mean that traditional processors often stay away from processing for e-cigarette businesses. Additionally, since some vape shops sell items that could be used for marijuana, even if they aren’t intended for that, low-risk processors are hesitant to offer merchant accounts.

Vape juice and pens aren’t the only products that fall under the high risk category for vaping. Accessories and related products – including atomizers and batteries – also fall under high-risk vaping, even if you don’t sell the liquid.

However, that doesn’t mean you can’t accept credit cards. Rather, you’ll need to do so through a designated “high risk” credit card processor.


Interestingly, tobacco shops may or may not be classified as a high-risk business. The main factor is how you’re accepting cards. Processors consider tobacco shops to be high risk if they accept cards online as opposed to in person.

Brick and mortar smoke shops can usually work with a traditional credit card processor. If you’re swiping all of your cards and don’t accept internet sales, you don’t need to seek out a high risk processor. However, if you’re selling tobacco products online, you will need a tobacco high risk merchant account.

Taking cards in person for tobacco sales? Get instant quotes for a tobacco merchant account now!

Why are online tobacco sales high risk?

One of the main reasons is because every state has different laws regarding tobacco sales, including how old customers must be to purchase it. When selling online, it’s more difficult to verify a customer is legally allowed to purchase the item.

Ecommerce sales are always considered riskier than in-person sales, so with the added legalities and age restrictions for tobacco purchases, it gets pushed into the “high risk” category. Your processor can advise you on any requirements for online tobacco and vape sales. For example, as part of Mastercard’s online tobacco requirements, you’ll need to obtain an adult signature at the time of delivery.

FDA Regulations

E-cigarettes, like traditional cigarettes and cigars, fall under FDA regulation. The FDA considers any type of device that uses vape liquids to be a delivery system. The full term is “electronic nicotine delivery system,” or ENDS. The FDA’s regulations cover ENDS as well as liquids and accessories.

We’ll go over regulations from the FDA’s website, but remember this is not a conclusive list of all regulations that may apply.

FDA Rules for Tobacco and E-Cigarette Sales

The FDA publishes a list of rules for vape and tobacco sales. (Keep in mind that your city or state may have more restrictive rules or additional rules that you’ll need to follow.) The agency also offers flyers stating the rules that you can order via its website.

FDA vape regulations

As you can see from the flyer, the FDA states you’ll need to check I.D. of anyone appearing to be under the age of 27, only selling to customers over 18, not giving out free samples, and not selling via vending machine.

While the flyer pictured above is tailored to e-cigarettes, these general rules apply to all in-person tobacco sales, with additional regulations for different types of products. Additional rules apply for cigarettes, cigars, e-cigarettes, and more.

E-Cigarettes / Vapes

In addition to the rules noted above, effective August 10, 2018, vaping businesses must not:

  • Sell ENDS without a health warning statement on ENDS packages
  • Advertise ENDS without a health warning statement.

Cigarettes / Cigars

Cigarettes and cigars have some overlap in rules, though cigars have fewer restrictions on quantity.

In addition to the rules noted above, traditional cigarette businesses cannot:

  • Sell cigarettes that contain a characterizing flavor other than menthol.
  • Sell packages containing fewer than 20 cigarettes.
  • Break apart packages to sell in smaller amounts.

Two additional rules are effective as of August 10, 2018. These apply to both cigars and cigarettes and state that businesses cannot:

  • Sell or distribute tobacco products without a warning on the package.
  • Display ads for tobacco products without a warning statement.

If you sell individual cigars that aren’t in a package, you’ll be required to post a sign with required warning statements. The sign must be posted within 3 inches of every cash register at your store.

High Risk Credit Card Processing for Smoke Shops

Getting an e-cigarette merchant account or tobacco merchant account means finding a company that can explicitly support your business. Unless you’re an in-person tobacco seller, you’ll save yourself time by limiting your search to high risk processors. Some business owners take a chance on signing up for merchant accounts that aren’t designated for high-risk processing. However, this is a risky option, as the processor may initially approve you, only to shut down your account later – often without warning. You’ll save yourself time and headaches by looking for a processor that knows and supports your business.

Fortunately, we’ve made that easier than ever by offering a comparison shopping marketplace specifically geared to “high risk” businesses. It’s free to use, no obligation, and lets you see actual pricing from companies that support high risk industries. Try it now!

Understanding Credit Card Processing Fees

Credit card processing fees function the same whether you’re high risk or not. Every time you accept a card, you’ll pay credit card processing fees. The fees sometimes look complicated, as there are multiple parts. However, once you have the basic terms down, it’s a lot easier to understand what you’re looking at.

Processing fees have three components: interchange, assessments, and markup. Interchange fees are non-negotiable and paid to the banks that issue cards to your customers. Assessments are also non-negotiable, and paid to the card brands (like Visa and Mastercard.) Markup is negotiable. This is the amount the processor charges for handling your account.

If you’re new to credit card processing, be sure to check out our credit card processing guide for a full explanation of how fees work.

High Risk Processing Fees

Interchange and assessments don’t change much (or sometimes at all) for high-risk businesses, but the processor’s markup is often higher. The reason is simple: the account is, well, higher risk. A processor needs to balance that higher risk with the amount of profit it receives. On lower risk “safe” transactions, a processor can accept less profit. When there’s a higher risk of problems, it must receive more money for the trouble.

One fee that is different for high and low risk is the card brand registration. Some businesses, including smoke shops, will need to register with Visa and Mastercard. This happens through your processor.

Registration with Visa and Mastercard

Visa and Mastercard require some high risk businesses to be registered with them before accepting cards. Tobacco businesses and vape shops fall into this category. Your processor will need to register you with the card brands in order for you to accept cards.

High risk registration for Visa and Mastercard comes with a $500 annual fee to each card brand. Your processor will charge you that fee when setting up your account and once a year thereafter as long as you’re processing.

You may also be subject to additional requirements for ecommerce tobacco and vape sales, including requiring an adult signature upon delivery.

Don’t Fudge the Details

It may be tempting to fudge information about your business in order to secure better pricing or more favorable terms. A business owner may think, “What’s the harm? E-cigarettes are similar to traditional cigarettes.” The fact remains that they are different products and that misrepresenting your business to a processor amounts to fraud.

If you sell tobacco and related items, disclose that. If you sell vape pens and juice, don’t try to claim you sell tobacco items. This also applies to marijuana sales. In states where marijuana is legal, businesses may try to secure a merchant account by claiming to be a tobacco seller. Don’t risk it. Eventually your processor will catch on and will freeze or close your account to investigate further. You may end up with fines and inclusion on the Terminated Merchant File, making it difficult to secure a merchant account in the future.

Bottom line: Don’t misrepresent your business. It’s safer to be honest about what you sell and find a processor willing to serve you. If you sell a legal service or item, there are processors that will work with you.

Find a Processor

Ready to start looking at specific companies? Try CardFellow’s free, no-obligation high risk credit card processing quote marketplace.

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