The Essential Guide to Vape Shop Credit Card Processing

  • By Danielle Dixon
  • Jun 20, 2024
  • Retail Tools

A vape shop can be exciting to start, but managing the financial end of it, especially credit card processing, can be tricky.

Did you know that credit card processing fees can eat up anywhere from 1.5% to 3.5% of a business’s revenue? For vape shop owners, this percentage can be even higher due to the high-risk nature of the industry.

But don’t worry — not all payment processors charge exorbitant fees for high-risk merchants. This guide will explore everything you need to know about high-risk vape shop credit card processing and offer tips and strategies to negotiate better rates. Read until the end for valuable insights!

High-Risk Vape Shop Payment Processing: What’s the Deal?

High-risk payment processing involves credit card services for businesses with a higher risk of chargebacks or fraud. This includes industries like adult entertainment, travel services, and vape shops. Vape shops are considered high-risk due to their products and the regulatory environment.

  • Higher Chargeback Rates: Vape products often experience higher chargeback rates because of age restrictions, potential misuse, and compliance requirements. Customers might dispute charges if they believe the product was misrepresented or didn’t meet their expectations, increasing liability for payment processors.
  • Stricter Underwriting: High-risk accounts undergo more rigorous checks to ensure they meet legal and regulatory standards. This includes examining the business’s financial stability, operations, and adherence to laws on vape products.
  • Higher Fees: Due to the increased risk of chargebacks and fraud, high-risk merchants face higher transaction fees than low-risk businesses. These fees cover the added risk payment processors take on and can significantly impact business profit margins.

What’s the Difference Between a Vape Shop Payment Gateway and Payment Processor?

Understanding the difference between a payment gateway and a payment processor is crucial for any business owner, especially one in the vape industry. Many vape shops face challenges securing traditional payment processing due to their classification as high-risk.

A payment gateway is a service that authorizes credit card payments for online and brick-and-mortar stores. On the other hand, a payment processor handles the transactions between the merchant and the customer’s bank.

Why It Matters for Vape Shops

Many vape shops operate both online and in-store, requiring them to use both payment gateways and processors.

The best POS systems for vape shops provide integrated payments or third-party processing support. For instance, FTx POS offers integrated payment processing and supports third-party processing, giving you flexibility in managing transactions. However, some systems, like Lightspeed POS, do not support third-party processors, limiting your options for finding processors that specialize in high-risk industries like vape.

Why Is a Vape Shop Payment Processor Necessary?

Here are a few reasons why a vape payment processor is essential:

1. Manage your business’s risk: As a vape shop owner, it’s crucial to work with a payment processor that understands the challenges and needs of high-risk businesses. This ensures secure transactions and protects your operations from fraud and chargebacks.

2. Avoid penalties and fines: A reputable high-risk payment processor not only handles your payments but also keeps you updated on the latest regulations and compliance standards. Staying compliant helps you avoid costly penalties and fines that could harm your business’s finances.

3. Get better rates: High-risk payment processors often offer more competitive rates than traditional ones. By negotiating better terms, you can save on transaction fees over time, allowing you to reinvest in your business for growth.

4. Ensure smooth operations: High-risk payment processors usually have strict underwriting processes and strong chargeback protection measures. These features help keep your business running smoothly, ensuring efficient transactions and a stable revenue stream – essential for success in a high-risk industry.

Is a Merchant Account Required?

A merchant account is a type of bank account that allows businesses to accept credit card payments. While some processors bundle this service, others may not require it. Understanding your options can save you time and money.

  • Integrated Solutions: Some payment processors offer all-in-one packages that include the merchant account. These solutions make setup easier and provide a seamless experience, letting you manage transactions and your account in one place.
  • Third-Party Options: You can also choose a third-party processor, which might offer better rates or extra services. These processors may have specialized features like advanced fraud detection or detailed analytics, which can be helpful based on your business model and transaction volume.
  • No Merchant Account Needed: Some modern payment processors don’t require a separate merchant account. They use aggregated merchant accounts, where multiple businesses share a single account. This can be a cost-effective and simpler option for smaller businesses or startups.

Why Traditional Processors Don’t Measure Up

Traditional payment processors often fail to understand the unique needs of high-risk retailers like vape shops.

Here are some issues you might face:

  • Sudden Account Termination: Traditional payment processors can abruptly close your account without warning, forcing you to quickly find alternatives and putting your business in a tough spot. This unexpected disruption can seriously affect your operations and customer trust.
  • Tied-Up Funds: These processors might hold your money for unclear compliance reasons, causing major cash flow issues. Such holds can strain your finances, making it hard to handle daily expenses and long-term investments.
  • Lack of Support: Traditional payment processors often don’t offer the specialized support needed for high-risk industries. This lack of tailored customer service means businesses in these sectors may struggle to get timely and effective help, complicating their financial management and growth.

What About Third-Party Processing?

Third-party processors handle transactions on behalf of the merchant but do not require a separate merchant account. While convenient, they come with their own set of challenges, such as higher fees and limited control over transactions.

Many major POS systems like Lightspeed, Clover, and Square do not allow third-party processors or charge expensive fees for using them. With FTx POS, you can keep your third-party processor, use our integrated service, or rely on us solely for payment processing. We provide the flexibility you need to succeed in the high-risk world of vape shop retail.

Benefits of third-party processing include:

  • Ease of Use: Simplified setup and management.
  • Lower Initial Costs: No need for a separate merchant account.
  • Flexibility: Can switch processors without changing your POS system.

What to Expect with High-Risk Vape Shop Payment Processing

High-risk vape shop credit card processing differs from traditional processing in several ways:

  • Higher Transaction Fees: Expect to pay higher fees due to the increased risk.
  • Reserve Accounts: Some processors require reserve accounts to cover potential chargebacks.
  • Payout Cycles: Payout cycles may be longer to mitigate risk.
  • Strict Underwriting: More rigorous checks before approval.
  • Higher Chargeback Rates: Increased likelihood of chargebacks due to the nature of the products.

How to Get Lower Vape Shop Credit Card Processing Rates

Negotiating lower vape shop card processing rates is possible, even for high-risk businesses. Here are some tips:

  • Negotiate: Always negotiate rates with your processor. They often have some flexibility.
  • Shop Around: Compare different processors to find the best rates and terms.
  • Track Record of Success: Maintain low chargeback rates and strong financials to qualify for better rates.
  • Improve Compliance: Adhere to all regulatory requirements to minimize risks.
  • Strong Financials: Demonstrate financial stability to negotiate better terms.

Traditional retail processing rates usually range from 1.5% to 3.5% per transaction. High-risk processing rates are generally higher, between 3.49% and 3.95% per transaction, due to the increased risk of fraud and chargebacks. These high-risk rates can be 0.5% to 1% more expensive than traditional ones. However, with the right strategies, you can bring them down.

Want a better rate? Schedule a call now for a free card processing quote. We specialize in high-risk retail. Let us help you keep more of your profits.

Streamline Your Vape Shop with FTx POS: High-Risk Processing Made Easy

Don’t let vape credit card processing slow you down. FTx POS offers specialized solutions to help you navigate the complexities of high-risk merchant accounts. We provide POS integrated card processing or can act as a third-party processor.

Here’s how we can empower your business:

  • Competitive Rates, Guaranteed: We understand the vape industry, and we offer competitive rates tailored to high-risk merchants. Plus, we guarantee to match or beat any competitor’s rate.
  • Fast Access to Funds: Get your hard-earned money quickly with FTx POS’s fast payout cycles. No more waiting weeks to see your revenue.
  • Minimize Chargebacks: Our strong chargeback protection measures help maintain your profits. We work to prevent fraudulent transactions and equip you with tools to manage disputes effectively.
  • Seamless Ecommerce Integration: Offer your customers the convenience of online ordering with in-store pickup or delivery. FTx POS integrates smoothly with your existing systems for a hassle-free experience.

Ready to learn about how we can help you with vape shop credit card processing? Be sure to get in touch today to set up a consultation and check out a demo!


Yes, there are specific regulations and restrictions for selling vaping products and accessories. These rules can include age limits, packaging requirements, and advertising restrictions. They can also vary widely by state and country, so it's important to know your local laws.

When setting up credit card processing for a vape shop, make sure to follow all relevant laws and guidelines to operate smoothly and legally. Ignoring these rules can lead to fines or other legal actions, so it's important to do your research and comply.

Many credit card processors integrate with popular point-of-sale systems, making it easier for vape shops to accept credit card payments alongside cash and other methods. This integration ensures smooth transactions, reduces errors, and improves customer satisfaction.

Before choosing a processor, confirm it’s compatible with your point-of-sale system and check for additional features like fraud protection and detailed reporting tools. Choosing the right processor will streamline operations and enhance the experience for both customers and staff.

Credit card processors have strict rules to ensure all transactions follow state and federal laws on vaping products. They verify age restrictions, track purchases to prevent illegal sales, and stay updated with changing regulations. Not complying can lead to fines or the termination of a merchant account.

It varies by business and processor, but generally, it takes a few days to a few weeks to set everything up. This timeframe depends on the application process, necessary documentation, and technical setup.

When planning to accept credit card payments at a vape shop, factor in this time for testing and troubleshooting to ensure smooth payment processing once the system is live.

Vape shop owners should invest in secure payment systems and regularly update their software to prevent data breaches.

It is also important to train employees in how to handle credit card information properly and securely. Additionally, using encryption technology can add an extra layer of security for credit card transactions.

Overall, it is crucial for vape shops to prioritize the security of their customers' sensitive financial information. So, taking all necessary precautions to protect customer data is essential to maintain trust and loyalty

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Business Experts & Contributors

A New Solution Coming To FasTrax

Danielle is a content writer at FTx POS. She specializes in writing about all-in-one, cutting-edge POS and business solutions that can help companies stand out. In addition to her passions for reading and writing, she also enjoys crafts and watching documentaries.

Danielle Dixon

Content Writer
A New Solution Coming To FasTrax

Matthew Davis is a content marketing specialist for FTx POS. With experience in marketing, brick-and-mortar retail, and ecommerce, Matthew enjoys writing about strategies and technology retailers can use to grow. Previously, he managed retail operations for a sports/entertainment facility and worked in marketing consulting.

Matthew Davis

SEO Specialist/Content Writer

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