Cigar Merchant Account: The Industry Guide.
A cigar merchant account is a specialized high-risk merchant account that allows businesses to legally accept credit card payments for cigar sales. Such accounts are suitable for cigar websites and retail stores. Due to strict regulations and age verification requirements, only specialized high-risk PSPs provide cigar credit card processing accounts. Such providers comply with mandatory compliance and underwriting requirements.
- Market Size: $54.79 billion (Cigar & Cigarillos Market) (2024)
- Projected Market Size: $56.70 billion (Global Cigar Market) (2025)
- CAGR: $73.75 billion to $97.48 billion (varies by source) (2030)
- Top Growing Region: North America, Asia-Pacific, Europe
- Online Transaction Growth YoY: 44–47% growth in online cigar sales globally
- Average Transaction Value: Data not available
- Key Growth Drivers: Premiumization, changing lifestyles, tourism, subscription boxes, digital engagement
- Leading Customer Segment: Affluent consumers, Millennials (25–40)
- Tentative Global Online Business: 13% of online cigar sales are from digital-only boutique brands; exact count data not available
- Digital Payments Adoption Percentage: Data not available
- Top Market Opportunities: Subscription boxes, premium/luxury cigars, online sales growth
- Data Source: Grand View Research, 2024 Mordor Intelligence, 2025 Fact.MR, 2024 Statista, 2025 CigarsUSA, 2025 MarketGrowthReports, 2024 LinkedIn Market Report, 2025 Research and Markets, 2025 Swiss Cuban Cigars Blog, 2025 Maximize Market Research, 2024
Finding a suitable high risk credit card processing company is not easy because there are very few high-risk processors that work with industries like cigars, tobacco, CBD, and vapes. Merchants may take months to find these providers directly.
The cigar merchant services team at QuadraPay has created this guide. The objective of this guide is to make the search easy for you. In this guide we have discussed why cigar merchant accounts are considered high risk, associated fees, the timeline for approval, and the application process. We are sure that after reading this guide, you will have answers to all possible questions that you may have regarding cigar website merchant accounts. Let’s begin.
Cigar Shop Payment Processing Options (In-Store vs Online)
When it comes to cigar shop payment processing, merchants generally choose either one of the two primary payment solutions; these include in-store point-of-sale systems or online payment gateways. Each of these solutions has its own benefits, and the right solution depends on the exact business model of the merchant. Whether you are operating a physical cigar lounge or you have an e-commerce cigar website, this will decide which is the best option for you.
In-store cigar merchant processing generally involves a physical credit card terminal that supports chip cards, magstripe swipes, and NFC payments like Apple Pay. These terminals are perfect for cigar lounges or shops with foot traffic. On the other hand, online payment gateways allow cigar merchants to accept payments directly on the website using a secure hosted checkout page or API.
We offer hybrid solutions that include virtual terminals for phone orders, countertop point-of-sale systems for walking customers, and online payment gateways for sales on web all of this is offered under one merchant account contract.
| Feature | In-Store Cigar POS Terminal | Online Cigar Payment Gateway |
|---|---|---|
| Ideal For | Brick-and-mortar cigar shops | Cigar websites and online stores |
| Age Verification | Manual ID checks at checkout | Integrated DOB field & IP filter |
| Hardware Required | Yes (terminal device) | No (browser-based system) |
| Mobile Compatibility | Via portable terminals | Mobile-optimized checkout |
| Integration Time | 5–10 business days | 2–4 business days |
| Refund/Chargeback Handling | Via POS dashboard | Through gateway control panel |
Cigar POS Systems and Terminals: What Works Best?
In the world of retail cigar sales, smooth transactions and elegant ambiance are just as important as the quality of the leaf. Whether you operate a walk-in humidor, a cigar lounge, or both, for you, selecting the right cigar shop point-of-sale system is a vital step. This will help ensure compliance, better customer satisfaction, and excellent inventory control.
Modern cigar lounge POS systems must do more than just accept card transactions. The terminals must allow you to manage SKUs, support age verification, track loyalty, and enable tipping or split payments in real time.
That is where QuadraPay steps in. We offer end-to-end solutions integrated with powerful point-of-sale devices. At this time our retail point-of-sale terminals for cigar shops are available in the United States, the United Kingdom, Malta, Australia, and New Zealand.
We partner with top-rated payment processors that provide highly efficient terminals from Valor, Dejavoo, Clover, Pax, Ingenico, and Castles. Whether you are going for a fixed countertop terminal or you need a mobile point of sale device for your lounge seating or cigar events, we have got them all for you.
A well-designed cigar shop POS system should include:
- Barcode scanner compatibility (for both boxes and single cigars)
- SKU-based inventory management
- Integrated age verification at checkout
- Loyalty and rewards program modules
- EMV and NFC payment support
- Tip adjustments and split-bill functionality
- Cloud reporting and remote access dashboard
If you run a hybrid cigar business that means you sell both in-store and online, then you should go for the omnichannel payment solution. It will allow you to automate reporting and avoid overselling, which is especially important when you are dealing with limited-edition cigar boxes.
“The right POS system doesn’t just sell cigars; it enhances the in-store experience.”
POS Terminals We Recommend (Sorted by Date, Newest First)
We believe that cigar shop retail credit card processing should be simple, and that is why we offer terminals that are easy to use and can fit the requirements of different types of cigar retail outlets. You can find these terminals at cigar lounges, mobile events, boutique retailers, and also at your nationwide chains.
Our current Inventory of point-of-sale terminals is listed below. Please note that the Dejavoo, Valor, and Clover terminals are available in the US. Castle and Ingenico terminals are available in the UK and Malta. And we also offer some terminals in Australia and New Zealand.
Whether you are looking forward to setting up a sleek cigar lounge with a mobile POS device or you want to launch your own online subscription service for cigar boxes, QuadraPay can offer excellent solutions to you.
| Terminal Name | Brand | Type | Key Features |
|---|---|---|---|
| Dejavoo P5 Android mPOS Terminal | Dejavoo | Mobile | Android OS, portable, EMV, touchscreen |
| Dejavoo P3 Android POS Terminal | Dejavoo | Desktop | Android, larger screen, tip function |
| Castles Saturn 1000 | Castles | Mobile | Contactless, EMV, compact build |
| Castle Vega 3000C | Castles | Desktop | PCI-certified, high-speed processor |
| Ingenico Move/5000 | Ingenico | Mobile | 4G, Wi-Fi, NFC, long battery life |
| Clover Flex 2 | Clover | Hybrid | Full-scale POS, tip adjustment, portable |
| Valor VL550 | Valor | Desktop | Smart tipping, receipt printing |
| Valor VP550E | Valor | Mobile | Compact, Wi-Fi capable, e-receipts |
| Valor RCKT | Valor | Mobile | Android-based, digital signature |
| Dejavoo QD5, QD4, QD2 | Dejavoo | Desktop | Compact, customizable, EMV-ready |
| Dejavoo Z Series (Z3, Z6, Z8, Z9, Z11) | Dejavoo | Range | Varying form factors, Wi-Fi, NFC |
Do you want to impress lounge patrons with super sleek mobile terminals, or do you want to manage complex SKUs across different franchises? QuadraPay can recommend you options for every setup, most of the time pre-configured and plug-and-play ready.
Why Are Cigar Merchant Accounts High Risk?
Cigar credit card processing is considered high risk by acquiring banks because of several reasons. It will not be wrong to say that at this point in time, onboarding cigar merchants can be one of the most complex assignments for credit card processors. Let’s explore the key reasons.
Regulatory Challenges
Selling cigars, tobacco, and related products (paraphernalia) is a highly regulated activity. Merchants must adhere to various health and age-related guidelines. Cigar shops and websites must display disclaimers and checks to ensure that the product is not available to the underage population.
Another mandatory requirement is ensuring health-related compliance. Such as putting warning notices regarding the ill effects of nicotine on health. Not adhering to these regulatory guidelines and compliance can result in permanent closure of the merchant accounts and may also impact the payment processor.
Fraud & Reputation Risks
A cigar is a premium product and can be easily sold at secondhand markets. This is why many fraudsters may try to place orders online using stolen credit cards. A high fraud ratio can attract huge credit risk for processors. Some banks prefer to stay away from the cigar business because of the social stigma and reputational risk.
High Chargebacks
The cigar industry experiences slightly higher chargebacks than other industries. This can be because the quality of cigars does not meet customer expectations. It may also be because of delays in delivery. Merchant service providers avoid working in industries that can attract high chargebacks.
Complex Compliance
The cigar industry is highly compliance-oriented. Low-risk merchant account providers often avoid the cigar industry. All these factors contribute to the classification of cigar credit card processing as high risk.
Apply for a high-risk merchant account accepted worldwide.
Did You Know?
Over 30% of cigar businesses face payment processing challenges, leading to lost sales and operational delays.
Top Challenges in Cigar Website Merchant Account Approval
Launching a Cigar website is a bold move, but getting approved for a cigar website merchant account is not always the easiest thing you can imagine. This is because cigars are regulated and age-restricted products most payment processes examine your website with great scrutiny, and some may outright decline the application.
The biggest challenge is compliance readiness. Your cigar website must have an age verification system, such as a tool that verifies the date of birth of the individual when they access the website or a system to upload the photo ID at the time of entry on site. The checkout process on your website must be secure with SSL encryption. Remember, if your site lacks legal disclaimers, a return policy, a shipping policy, and a privacy policy, then the underwriters will definitely flag your application.
Another challenge with cigar websites is the wrong marketing approach. You should stay away from any suggestive language that increases reputational or legal risk for the acquiring banks. Make sure that on your website you mention clear delivery timelines, shipping restrictions, and return terms for tobacco products.
Common Roadblocks in Cigar Website Merchant Approval
| Issue Detected by Underwriters | Impact on Application | Recommended Fix |
|---|---|---|
| No Age Gate on Homepage | Declined due to compliance risk | Add DOB gate or ID verification |
| Missing Terms or Policies | Low trust score from processor | Add refund, privacy, and T&C pages |
| No SSL Certificate (HTTPS) | Application auto-rejected | Install HTTPS immediately |
| Health Claims in Product Listings | Risk of legal violations | Remove or reword any health claims |
| No Product Disclaimers | Higher chargeback risk | Add warnings per local regulations |
| Missing Tobacconist License | Rejected for non-compliance with local laws | Obtain and upload a valid tobacconist license |
| Missing Public Health Licence | Fails regional compliance checks | Acquire and display a valid public health license |
We offer a chargeback alert system that will notify you in near-real time about disputes so that you can issue refunds before the dispute becomes irreversible.
“A strong chargeback strategy today protects your business tomorrow.”
KYC Documents for Cigar Credit Card Processing
Let’s take a look at some of the most important KYC documents that you will need to provide at the time of application.
The merchant account application form collects basic details of your cigar business. On this form, you will share details about the structure of your company, ownership, sales traffic, expected volume, desired payment instruments, and previous processing experience.
Along with the application, you will also have to share personal and business documents for verification.
For the business registration proof, you can submit the incorporation certificate or any other similar document.
For the photo ID, you can submit the passport or driver’s license of directors.
Additional documents that may be requested include a tobacconist license/registration with the local Public Health Organization or any other documents that may be mandatory for operations at the time of application.
Tobacco CNP Addendum: In addition to the merchant account application, cigar businesses are sometimes asked to fill in a tobacco CNP addendum. It is an additional part of the agreement. It outlines special terms and conditions that educate the merchant about risk factors, as well as dos and don’ts that the merchant must be aware of.
All merchants that sell cigars must undergo high-risk registration. This means the merchant will have to commit to paying a fixed fee per year for each card brand they wish to process.
Apart from the above-mentioned documents, the payment processing company may ask for more documents as required to complete the underwriting review.
Best Practices for Reducing Chargebacks in the Cigar Industry
Chargebacks are the biggest threats to any cigar merchant account, no matter which payment processor you get it from. Since cigars are considered high-value, age-restricted products, issues such as delivery delays, misunderstood product quality, or underage misuse can result in disputes and chargebacks. Remember, if your overall chargeback ratio reaches close to 1%, then it may lead to higher processing fees, account hold, or even termination.
To keep your cigar credit card processing account in good standing, you need to have a proactive chargeback management strategy in place. You can start by offering accurate product descriptions, uploading real photos of cigars, and including tasting notes, ring gauge, and strength level.
Also, ensure that you are transparent with the refund and return policy; this will help your customers to set the right expectation.
Another good strategy is to offer signature-required shipping. The approach ensures that the proof of delivery is collected at the time of item delivery. This proof of delivery will deter unauthorized claims. To stay safe, you should also use age verification at checkout and display mandatory disclaimers prominently.
Proven Chargeback Reduction Strategies for Cigar Sellers
| Risk Trigger | Preventive Strategy |
|---|---|
| Product Not as Described | Use detailed images, flavor profiles, and specs |
| Item Not Received | Provide real-time shipping & require signatures |
| Fraudulent Use by Minors | Add DOB input + third-party ID verification |
| Long Shipping Times | Display estimated delivery & carrier info |
| Refund Misunderstanding | Clear refund/cancellation policy on checkout page |
Cigar Credit Card Processing Rates & Fees
There are very few credit card processing companies that onboard cigar merchants. Since the demand for such providers is higher, the pricing is slightly elevated in comparison to regular low-risk accounts.
The actual rate can only be provided after a full evaluation of the merchant’s risk profile. However, it will be great if you know about some mandatory fees that you will have to pay for using a cigar website merchant account.
Transaction fee. On every transaction, the merchant pays a fixed percentage. This is also called MDR or sometimes TDR. The processor may charge you a fixed fee or an interchange plus fee. In a fixed fee model, you pay a fixed percentage irrespective of card type. However, in the interchange model, you pay different fees as per card type. Large cigar merchants prefer the interchange model. At the same time, startups and low-volume merchants prefer fixed rates.
Monthly Fee. The processor will charge a monthly fixed fee. Consider this a monthly maintenance or usage fee for the payment gateway. Usually, this is under $50.
Chargeback Fee/Refund Fees. For refunds and chargebacks, you pay a fee. This ranges from $10 to $50.
Cigar Merchant Services: What’s Included in a Full-Service Account?
A full-service cigar merchant account that you get from QuadraPay partners will give your business far more than just the ability to accept credit and debit card payments. It will allow you access to a complete suite of high-risk merchant services that are designed for cigar retailers and websites.
Cigar merchant services generally include a virtual terminal for phone orders and an online payment gateway, as well as support for mobile credit card readers or countertop point-of-sale devices. You will also get a chargeback protection mechanism that will help you keep your chargeback ratio under control.
Whether you operate a Cigar lounge, kiosk, or an online shop, these tools will help you optimize your business operation, improve customer satisfaction, and reduce the risk exposure to your payment solution.
Features Included in Full-Service Cigar Merchant Services
| Component | Description |
|---|---|
| Online Payment Gateway | Secure checkout, fraud filters, AVS, 3D Secure enabled |
| Virtual Terminal | Browser-based tool to accept MOTO/phone orders |
| POS System Integration | Compatible with top brands like Clover and Dejavoo |
| PCI Compliance Support | Assistance with meeting security certification standards |
| Recurring Billing Tools | Ideal for cigar clubs & subscription models |
| Multi-Currency Support | Accept USD, EUR, GBP and more |
We understand that every merchant has unique needs. That is why we help match your cigar business with a high-risk processor that supports your vertical, your country, and your monthly volume.
Cigar Merchant Account Application Process
The application process for a cigar credit card processing account is fairly simple if you get hold of the right processor. It starts with a pre-application, where you submit basic details like your name, email, and website. These details are reviewed by the merchant service providers, and they contact you for additional details.
Next, you send a merchant account application with copies of the KYC documents. The underwriters review the KYC documents. They can either approve or decline your application. Whatever the case may be, you will be notified. Once approved, the team will share login information and an integration guide.
If you apply for a retail cigar shop payment terminal, then the device will be shipped to your business address. If you apply for an online credit card processing account, then you will get API information and a ready-to-use plugin.
Throughout the process, the technical team of the processing company will be in touch with you and will assist. After integration, you will make some test transactions using test card details. After successful test transactions, the merchant processor will switch your account to live mode.
Comparison: Cigar Merchant Account vs. General Tobacco Merchant Account
Cigars are often placed in a broader category with tobacco, but processors differentiate cigar merchant accounts from general tobacco merchant accounts. This distinction matters when it comes to risk, underwriting, compliance, and pricing.
Cigar merchants typically involve high ticket value and slow usage, and they target a more niche customer base. In contrast, general tobacco merchant accounts may include products like vapes, nicotine pouches, cigarettes, and accessories, which are governed by different health and advertising rules.
Cigar transactions typically involve higher ticket values, slower usage rates, and a more niche customer base. In contrast, general tobacco accounts may include products like cigarettes, e-liquids, chewing tobacco, nicotine gum, tobaccoless pouches, and vapes, which are governed by different health and advertising rules.
Understand the differences, and you can ensure that your processor is experienced, especially with cigars and not just with generic tobacco.
Cigar vs Tobacco Merchant Accounts
| Factor | Cigar Merchant Account | General Tobacco Account |
|---|---|---|
| Product Type | Hand-rolled cigars, humidors | Cigarettes, vapes, chew, rolling papers |
| Ticket Size | Medium to high ($15–$100+) | Low to medium ($5–$25) |
| Chargeback Rate | Moderate | High (especially with vapes) |
| Ad & Labeling Compliance | Strict but lifestyle-oriented | Stricter, especially for flavored items |
| Ideal Setup | Online stores, cigar lounges | Kiosks, smoke shops, vape retailers |
If your catalog includes both cigars and tobacco products, then we can help you structure your application in a way that reflects the true risk profile of your business. This way, your merchant account will get the most appropriate merchant classification code (MCC).
Supported Countries for Cigar Payment Processing
Cigar sellers often wonder whether they can get approved for a payment processing account in a specific country or not. At QuadraPay, we support cigar merchants in over 20 countries. We do it in association with strong acquiring partners in North America, Europe, and Oceania.
The key to success basically lies in ensuring that your business meets local tobacco compliance laws and age verification requirements. For example, merchants in the USA must hold valid tobacco licenses and are often required to comply with FDA mandates. In the European Union, sellers must follow the Tobacco Products Directive (TPD). While in the UK, strict labeling and promotional limitations requirements must be met. The regulations vary based on jurisdiction and the type of product being sold.
Cigar Shop Merchant Services FAQ
What Is the MCC for Cigar Businesses?
The MCC 5993 is for cigar stores and stands. Merchants classified with this MCC sell various tobacco-related products, including vapes, cigars, and pipes.
What Are Good POS Systems for Cigar Lounges?
There are many, but you can explore Toast, Clover, and SkyTab.
Why do most US-based payment processors need an SSN for cigar and tobacco businesses?
Cigars and related businesses are considered high-risk everywhere, and US acquiring banks and PSPs must follow strict KYC/AML rules. This includes collecting SSNs from domestic owners.
Can someone who doesn’t live in the US get approved without an SSN for a U.S.-based cigar merchant account?
They may not get approved by US acquirers. However, they may get approval from offshore or EU processors. Offshore processors will also need the KYC from the region where the PSP is licensed to operate. For example, an EU processor will need an EU company, an EU bank account, an EU office, and EU directors.
Are there other options if I have an EIN but no SSN to get a cigar merchant account in the US?
Having a US signer or partner with an SSN can potentially help open up US acquiring options, but it may also have legal and trust issues. The US partner should be an active partner, likely with a larger share percentage, and actively involved in the business.
What should I expect in terms of price and terms?
For cigar merchant accounts, expect Higher fees, possible reserves, and stricter monitoring.
How to Integrate Cigar Payment Gateways on Popular Platforms
Integrating the cigar merchant account on your e-commerce platform is the final and most crucial step. Whether you are using Shopify, WooCommerce, Magento, or OpenCart, or you have a custom site built on PHP or ASP, QuadraPay partners can offer easy integration.
- API integration for custom platforms
- Hosted payment pages (HPP) that require no development
- Plug-and-play gateway modules for major platforms
For Shopify, if we don’t have direct integration in your geo, we can recommend external software like Checkout Champ/Konnective that can help with smooth integration.
Our team will provide you with full integration assistance, including test mode walkthrough, sandboxing, and live activation guidance.
Can You Use Automated Cigar Subscription Billing for Monthly Cigar Clubs?
Yes, many premium cigar brands and cigar of the month clubs use automated cigar subscription billing, and they do this to create recurring monthly revenue. A recurring billing setup allows customers to subscribe once, and they receive curated cigar boxes every month without manually re-entering the credit card information on the merchant’s website.
For any cigar business, automated billing is especially important because it helps in improving the overall customer retention and can also be significantly beneficial in terms of increasing the lifetime value associated with each customer.
Subscription models work extremely well for premium cigar samplers, limited edition releases, and VIP cigar lounge memberships. A good cigar merchant account must support recurring billing tools, tokenized card storage, automated invoicing, retry logics for failed payments, a subscription management dashboard, and mandatory age verification workflows. Cigar businesses should also ensure that their payment processor supports tobacco-related recurring billing as well, since not all payment providers allow subscription billing for cigars/tobacco due to regulatory concerns.
