As you are aware, retailers face challenges in this industry to get a merchant account; however, you will be surprised to know that wholesalers and smoke and vape distributors face even bigger challenges. And the reality is that most never see the challenge coming until a low-risk payment processor shuts down the account when the shipment is in transit. Such situations can be extremely challenging for wholesalers.
Wholesale smoke, vape, and tobacco distributors are all classified as high-risk merchants, and this is simply because they combine large transaction volumes, bulk order values, and product categories that most acquiring banks immediately restrict. Finding the right credit card processing solution for such a business model requires working with acquiring partners who specifically underwrite this merchant category and have massive experience in it.
| Factor | Retail Head Shop | Wholesale Distributor |
|---|---|---|
| Average ticket size | $20 – $150 | $500 – $50,000+ |
| Transaction volume | High frequency, low value | Lower frequency, high value |
| Customer base | General public (B2C) | Retailers and resellers (B2B) |
| Chargeback profile | Consumer disputes | Business disputes and delivery issues |
| Compliance requirements | PACT Act compliance and age verification | Business licensing and reseller verification |
| Processing risk level | High | Very High |