Head shops, also known as smoke shops, are legal businesses that are quite popular among a diverse group of consumers throughout the country. If you are just launching one of these types of retail stores, you will need to obtain a merchant account designed specifically for high-risk retailers. 

Why is this the case, and how can you select a provider that will work with you to optimize your sales?

The “high-risk” categorization.

Like you, payment processing companies are in business to make a profit. To that end, they strive to partner with sellers who pose the lowest possible risk of default, chargebacks, or security breaches.

The nature of the industry in which you operate as a head shop makes conventional providers wary and results in the “high-risk” designation. For one thing, it is bound by age requirements dictating that no one can buy smoking-related products or paraphernalia unless they are at least 21 years old. 

Enforcing this rule involves extra diligence on your part and puts your business at higher risk of legal consequences if an under-age customer slips under your radar.

Furthermore, this sector experiences an above-normal amount of security problems, including fraud and data breach. As a result, payment processing for head shops necessitates even more vigilance and resources, which makes lenders nervous.

Like it or not, smoke shops are also held back by their reputation. Although the products you sell are totally above-board and you work hard to comply with all laws and regulations, the stain of shady dealings and the counterculture still remains. 

Consequently, conventional lenders prefer to steer clear, leaving you with no other option than to find a high-risk merchant account provider.

Finding a high-risk payment processing company.

Fortunately for you, there are many industries that get thrown into the “high-risk” designation for any number of reasons: the products they sell, their industry or reputation, added security risk, excessive regulations, and poor business owner credit, just to name a few. 

As a result of the sheer volume of companies that conventional account providers opt not to serve, a vibrant market of high-risk providers has erupted onto the scene. 

The key is to find the right one based on their qualities. Look for these things that separate mediocre processors from excellent ones, and your business will reap the rewards.

First and foremost, find a high-risk company with experience in the e-cigarette/vaping/smoke shop sector. Not every provider is created equal, and you need to partner with one that has an established reputation and specialized knowledge about the industry in which you operate. 

This is because they will already have forged relationships with head shop-friendly lenders and payment providers and will know how to help you navigate the industry’s security and regulatory landscape.

Next, select a company with transparent pricing. By their very nature, high-risk providers will charge elevated per-transaction and monthly fees. However, other costs vary wildly from one vendor to the next. 

You don’t need to break the bank just to find a good payment processor, and there should be no nasty surprises that you don’t learn about until after the ink has dried on your contract.

Additionally, you need a processing provider who can grow with your business and accommodate your customers’ different payment preferences. Besides credit and debit cards, they should have what it takes to allow you to accept bank transfers, ACH payments, digital wallet transactions, and even multiple currencies. 

Although you might not need to activate all of these options at first, you want to be able to furnish your customers with what they need as your head shop grows in scope and popularity.

Finally, partner only with a high-risk provider who can demonstrate that they are committed to excellent customer service. If technical difficulties, customer issues or security concerns arise, they should be willing and able to use their industry-specific expertise to address the situation promptly, thoroughly and proactively. 

Also, make sure that help is available via several channels, including phone, email, live chat, user forums, and knowledge base. When you are facing an urgent challenge, you need to be able to find assistance quickly so that there are minimal interruptions in the quality of the service you provide to your customers.

Finding top-tier payment processing for head shops is not as overwhelming as it may first appear to be. Just take time to review your options, carefully examining each and paying attention to online feedback from existing and past customers. 

Then speak directly with representatives from your top choices, being sure to ask any questions before agreeing to a partnership. 

Once you have found a payment processing partner that meets your needs and expectations at an affordable price, you can transform your “high-risk” categorization from a liability into an asset.