Selling Vaping Supplies and CBD Products Online


September 27, 2018

Offering vaping devices, liquids and other supplies along with CBD products in an online store seems to be a natural fit. Unfortunately, it may be hard to find payment processing service providers who agree with that assessment.

Some financial service companies – and shopping cart platforms – prefer not to work with ecommerce vendors who are selling vape supplies or CBD products. Combine both vaping and CBD in one store, and the complications are doubled.

To bypass this and other issues, some vendors have chosen to separate their CBD store from their vaping supplies store. This does allow for rapid response to a regulatory changes or terms of service that apply to only one category of products, but can make doing business far more difficult.

This article discusses the complications that ecommerce merchants must consider when selling both vaping supplies and CBD products, along with processes and solutions that address these issues.

Merchant accounts for CBD and vaping supplies

Why is it so hard to get a merchant account for an online store that sells both CBD and vaping products? Because any business that is part of an industry impacted by regulations that are rapidly evolving is considered high-risk by financial services firms. Vaping supplies are a perfect example of an industry that may be heavily impacted by regulatory demands in the near future. Financial firms are leery about getting involved with merchants whose business model may have to change rapidly.

Merchants that are considering separating their CBD business from their vaping business, using two separate online stores, must make that business decision based on what makes sense within their region (states regulate these products differently) and their level of concern with regulations that might impact their business going forward. That said, creating two separate websites solely to meet a payment processor’s demands is unnecessary. As an example, T1 Payments enables merchants to process both CBD and vape supply transactions via one website.

Merchant account terminations and other problems

In general, merchants involved in an industry that is considered high-risk should work with payment processors who specialize in high-risk payment processing. Unfortunately, as many merchants have learned, it’s all too common to be approved for a merchant account only to discover that the account has been terminated within a month or two. The reason? The service provider failed to properly underwrite the merchant to determine what products they offer, and the new account has been terminated for violating their terms of service.

When an account has been terminated, it is extremely unlikely to be reinstated. That leaves the business owner with no way to process card payments, which is death to an online business. The merchant will need to find another payment processor very quickly.

Sometimes accounts will be placed on “Hold” or are “Frozen” instead of being terminated. Holds tend to be enforced when the payment processor feels that the ecommerce business is unstable – chargebacks are rising, or large transactions  are being posted.  A hold may be temporary or ongoing. During the hold, some of the payouts the merchant is due from the processor will be held in a separate account, pending investigation. Accounts on hold may still be able to accept transactions, although some types of transactions may be refused.

A freeze is a temporary halt on processing payment cards. This typically happens when a processor wants to do a full analysis of a business’ transactions. The processor may believe that the terms of a payment processing agreement have been violated or that the business may have been affected by regulatory changes. Merchants may be able to prove that the freeze should be lifted.

Reasons for sudden terminations, holds and freezes include regulatory changes, shifts in the types of businesses accepted by ecommerce platforms, and excessive chargebacks, fraud or suspicious activity associated with the merchant’s business. Suspicious activity can include anything that violates the terms of the agreement with the payment processor.

Choosing a payment processor

When choosing a payment processor for a CBD and vaping ecommerce business, merchants must check to see if the payments processor has experience in working with companies in both of these industries. It’s best if the payment processor is enthusiastic about working with high-risk online businesses, providing the expertise needed to deal effectively with ecommerce platforms, payment gateways, evolving challenges, regulatory demands, chargeback risk mitigation and data security issues.

T1 Payments successfully processes millions of transactions for CBD and vape supply merchants. To find out more about our customizable global payment solutions for high-risk merchants – including fast and flexible onboarding, active account monitoring for fraud, chargeback management and real-time reporting – please visit t1payments.com or call 866-518-2216.