Everyone knows that the tobacco business is not approved by the government, the Ministry of Health, and public organizations for selling deadly products. Despite the many efforts made by the state to reduce the use and sale of tobacco products, in recent years this industry has been developing rapidly. Thanks to its highly diversified product portfolio, the tobacco industry is considered one of the most profitable industries in the world.
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According to statistics, the global revenue of the tobacco industry in 2018 amounted to 12.1 billion US dollars, and by 2021 it is expected to increase to 13.6 billion US dollars. Every year the demand for tobacco products is growing, new products are being developed, large tobacco companies are increasing, shareholdings all contribute to a further increase in profits in the tobacco business.
Despite the fact that this specific industry is constantly limited by strict laws, the sale of tobacco and related products is not prohibited by the state and remains a completely legal business area.
What is a Tobacco Merchant Account?
A merchant account allows companies to accept payments from debit and credit cards, Visa, MasterCard and other payment systems. Tobacco company transactions are carried out under a special MCC code 5993, it is used to service all retail outlets that earn on the sale of tobacco products and smoking accessories ( Cigar Stores and Stands).
Why do I need a merchant account for tobacco companies?
The rapid development of the business leads to high competition, in order for your company to remain in demand in the long term, you need to constantly improve. One way to stand out from the competition is to match consumer trends. Including the provision of various methods of payment for products and goods online.
Regardless of the type of tobacco business you manage, whether it’s a retail store, a kiosk or an online store, you need a merchant account in the tobacco industry so that you can process credit cards and other online transactions. Thanks to the Tobacco Merchant Account, you will expand your payment options for consumers and attract new customers.
Since the tobacco industry is a High Risk business, finding a reliable provider to connect your merchant account is not easy. If you contact a bank or other traditional financial institution to open an account for the tobacco business, you will most likely be denied.
Why can banks refuse to connect a merchant account?
- High chargebacks are widespread in the tobacco industry. Online stores selling tobacco products are particularly prone to chargebacks due to transactions that are carried out without the presence of a card (Card not present transaction), delivery delays, and fraudulent activities. In addition, due to age restrictions on tobacco sales, many young buyers are finding ways to provide fake credit card information, which leads to even more chargebacks.
- Obvious ethical and medical problems associated with the tobacco industry require strict laws and other regulations governing the tobacco industry. In addition, states are systematically attempting to suppress the tobacco industry, leading to a sudden change in laws and the introduction of new restrictions and rules.
- Serious health risks associated with products sold and increased control by the state apparatus. The consumption of cigarettes, cigarettes, cigars, smoking mixtures and other tobacco products carries a mortal health risk. Pulmonary diseases, heart complications, cancer and other dangerous diseases caused by smoking are the cause of close attention of regulatory organizations, which also causes unwillingness of banks to cooperate with tobacco companies.
Why choose Wellcoinpay to open a merchant account for a tobacco company?
We offer individual and affordable technological solutions when opening merchant accounts for all types and sizes of business. Thanks to our individual conditions, you will receive additional advantages over competitors, be able to reduce transaction fees and attract new customers. Apply to open Tobacco Merchant Account today and enjoy the benefits of credit card processing tomorrow!