Do You Need a Paraphernalia Merchant Account?

Accounts Wizard
November 23, 2021

Do You Need a Paraphernalia Merchant Account?

Cannabis and many other recreational drugs have been in use for decades, but recently the production and demand for such products have skyrocketed. Many countries have even legalized the use of recreational Cannabis and hemp. The rise in use of cannabis-related products has also led to an increase in smoke shops and merchants selling drug paraphernalia.

Setting up a legal store selling cannabis products is really difficult. Still, even if you don’t sell tobacco or THC products, it is a hard task opening a drug paraphernalia store and getting a merchant account for transactions.

Smoke shops selling tobacco accessories, vapes, bongs, hookahs, rolling paper, roach clips, grinders, etc., are targeted by multiple laws and regulations by the Government. Most payment processors have high requirements to open a paraphernalia merchant account or have stopped working with the industry because of high risks and legal troubles.

For drug paraphernalia merchants and other high-risk industries, it is important to partner with a reliable high-risk merchant account provider like Wizopay and do business safely. We will take an in-depth look at everything related to paraphernalia merchant accounts and how to open one with a trustworthy payment processor.

What is a Paraphernalia Merchant Account?

Land-based smoke shops and drug paraphernalia retail stores are viewed negatively by the public but are still in operation. However, in recent years, customers have shifted to online shopping, and this has led to paraphernalia merchants going online too. These merchants face many issues for payment processing and card-not-present transactions because banks and top credit card providers deem their business high-risk and don’t work with them.

Online paraphernalia store owners have to find a payment provider who offers merchant account services specially designed for online paraphernalia, smoke, and head shops. Such paraphernalia merchant account providers follow all Government guidelines and laws but charge more than traditional providers because of the high-risk involved. They offer high security at affordable fees and reduce the risk of fraud and chargebacks.

When a store owner opens a paraphernalia merchant account, he can accept payments from top credit cards like Visa, Mastercard, etc. The payment provider handles this account and even provides a report of all transactions and data. Both card-not-present and point-of-sale payments can be accepted through this account. All software and hardware needed for payment processing are given, and a secure link is set up between the online store and the provider for transactions.

Businesses that Require a Paraphernalia Merchant Account

Even if smoke shop merchants do not sell banned drugs, Cannabis, or tobacco products, most other accessories and related products are considered high risk by payment services and banks. Shops selling rolling paper, incense, cigar cutters, detox, roach clips, grinders, rolling machines, and other accessories used to smoke marijuana fall under this category.

Stores that sell smoking devices like hookahs, hydroponic flasks, water bubblers, etc., need a merchant account too. Water pipes and bongs are used a lot because of their durability and ability to withstand constant heat. Made of plastic or glass, water filters the smoke of heavy particles, and the experience of smoking is made better.

Tobacco and cannabis users also buy glass pipes and bowls for smoking. Drug paraphernalia stores have a variety of glass devices in various shapes and sizes. All smoke shops that sell any of the above products and accessories face payment issues and should open a high-risk merchant account.

Some payment processors like Stripe or PayPal open paraphernalia merchant accounts, but there are a lot of risks and issues involved. They may terminate your account and deny services anytime. Smoke shops can apply for a merchant account in the following situations also:

  • Account Flagging: Stores selling bongs, glassware, and similar accessories come under scrutiny because of Government laws and negative perception in some states. Payment providers can flag the accounts of paraphernalia merchants anytime.
  • Account Termination: Many payment providers can terminate your merchant account anytime, even if they accepted it in the first place. They may view your inventory and products and denote them as risky. You will lose the power to accept payments and process your store’s sales.
  • Frozen Account: Once your account is flagged, it can be frozen anytime until your payment provider manually reviews it. You will be unable to receive any payments until your account is unfrozen. In some cases, the provider may even hold your funds until the investigation is completed.

Issues Faced by Smoke Shops and Paraphernalia Merchants in Payment Processing

The Government has never been kind to any merchant dealing drugs or related products. The same goes for paraphernalia stores that face a hard time finding a good payment processor. Here are some of these issues:

  • Some providers offer services to land-based smoke stores but consider online stores to be at a higher risk. At online stores, fraud is more common than in retail stores. Due to the high fines and risks involved, payment processors mostly avoid online paraphernalia merchants.
  • The sale of drug accessories and smoke devices to underage kids has risen in the past few years. Payment processors hesitate to partner with smoke store owners because of this issue. Online stores should have an age-verification method on their website. This is done using a popup or software that needs the customer to upload his ID for verification purposes.
  • Different states have different laws for banned substances, and as these drugs are associated with paraphernalia stores, payment processors avoid the industry. These laws are confusing and keep on changing from time to time. Complying with all rules and regulations is hectic, and payment providers also have to follow certain regulations. All this hassle involved makes it difficult for paraphernalia merchants to get a merchant account service.
  • The general public has a really negative perception of smoke shops and the products sold there. Most people associate drugs and banned substances with these stores and have negative thoughts about them. Traditional payment services worry about their reputation in the industry and do not open paraphernalia merchant accounts.
  • There is a high risk involved in selling drug accessories online, and if merchants break any rules, it can lead to a high fine for the payment provider. Increasing underage sales and the risk of chargebacks make payment providers deny services to smoke store owners.

An experienced payment processor will help merchants follow all rules and regulations. Merchants can avoid high compliance fines and overcome the above issues through a high-risk merchant account.

Documents and Requirements for a Paraphernalia Merchant Account

Paraphernalia merchants need to have the required documents for verification when they apply for a merchant account. Underwriting is really important for this industry, and the merchant needs to provide them with the right supporting documentation.

  • A Completely filled Application
  • Voided Bank Cheque
  • Any Previous Merchant Account Statement
  • Bank Statements or Financial History
  • Copy of any Government-approved ID

When a merchant offers a fully complete application, it will increase the speed with which underwriters review it. In some situations, an underwriter may reject an incomplete application as he may think some documents are being held back on purpose.

A color ID is a must, along with a Government ID copy, because underwriters need a photo ID while completing their KYC process.

The voided cheque makes sure that the account is set up properly, and any transactions and payouts will be not be delayed. Also, banking details should be filled in correctly.

Previous account statements help the payment provider understand the business, sales volume and know about previous chargebacks. This is important so that there are no surprises after the paraphernalia merchant account is open.

After the submission of these documents, an underwriter may grant conditional approval to an account. Some additional requirements are as follows:

  • Pictures of the Inventory and Products
  • Website Compliance
  • Order Verification 

There are strict guidelines for smoke shop owners, and payment providers need to ensure that the online stores are fully compliant. This may require making changes to the business.

Pictures of the inventory make sure that no illegal or banned product is being sold at the store.

Order verification makes sure that a customer placed an order and received it. This helps reduce fraud.

The verification process is done to ensure smooth transactions and improve the longevity of a paraphernalia merchant account.

Paraphernalia Merchant Account Services

Both land-based smoke stores, online merchants, and shopping carts can avail merchant account services from a recognized provider.

  • Retail and POS systems: Those paraphernalia business owners that have a retail store can get traditional and wireless terminals for credit card processing. Merchants can even integrate their previous payment systems with their merchant account. These POS retail terminals work efficiently with a high-speed internet connection.
  • Virtual Payments: Opening a paraphernalia merchant account will let merchants receive payments virtually through mail, telephone order, or a computer application. No terminal is needed, and the payment provider will handle the transaction through the owner’s merchant account.
  • E-Commerce Payment Processing: Any online smoke shop and paraphernalia store can get payment processing for their dropshipping, billing, or direct-to-consumer sales. It is easy to integrate the payment service into your website. Also, most payment providers provide easy integrations with shopping carts like Shopify, WooCommerce, Magento, Weebly, Drupal, etc. Card-not-present transactions are safer, and the risk of chargeback is reduced.

Benefits of a Paraphernalia Merchant Account

These are the benefits of a high-risk merchant account:

  • Some payment services have an easy application, and smoke shop owners open an account with them. However, they are not safe for the long-term and can terminate the account anytime. High-risk payment providers allow integration with acquiring banks and offer safer payment transactions. This means faster settlements and low risks.
  • Merchant accounts are fully compliant with Government rules and regulations, and any rule changes are quickly checked. They offer transaction management and integrate with all popular online E-Commerce platforms and shopping carts.
  • Offering easy payment options to your customers will increase sales and help build a better relationship with your customers. Also, as the risk of fraud is reduced, your account will not be at risk of getting frozen or terminated.
  • Paraphernalia merchant account providers offer elite chargeback management and help you settle disputes. Reducing chargebacks save a lot of money and prevent your business from going into loss.
  • You can receive payments safely from international customers too. Top payment providers accept all major international credit cards and let you accept payments from many countries.

How to open a Paraphernalia Merchant Account?

Once you have the necessary documents needed for applying for a paraphernalia merchant account, you can proceed with the following steps:

  • Choose a reliable payment provider and visit their website.
  • Go through the terms and conditions thoroughly before filling in the application form.
  • Fill in legitimate details and go through the filled application for errors.
  • Scan and upload all necessary documentation and licenses
  • Wait for the payment provider’s underwriters to review your application and give approval.

Once your merchant account is approved, you can start accepting payments.

Open Your Paraphernalia Merchant Account with Wizopay Now

Do you run a drug paraphernalia business and cannot find a good payment provider for your online store? Wizopay is one of the most trusted names when it comes to providing payment solutions to the smoke accessories and drug paraphernalia industry. You will get the best services at affordable prices at Wizopay.

  • Easy approval for your paraphernalia merchant account
  • Fraud prevention and chargeback management
  • No limit on transactions and ability to scale in case of increased sales volume
  • Transparent, fair, and affordable prices
  • Free equipment and easy integration with online shopping carts
  • Round-the-clock customer service and technical support

Once you open a merchant account at Wizopay, you will have access to the Secure Merchant Portal. Access your account anytime through this portal.

  • Track your transactions and sales history through the portal.
  • You can receive payment anytime, anywhere.
  • Check reports for sales volume, transactions, chargebacks, etc.

Wizopay understands the risks associated with the paraphernalia industry, and the services are tailormade to suit their needs.

Summing Up

The public has always had a negative perception of drugs and illegal substances. This has led to a lot of problems for online paraphernalia merchants for payment processing. Most payment providers reject smoke shop merchants, and the demand for special payment providers for the industry is high.

We discussed everything related to a paraphernalia merchant account above and the issues faced by the industry. Before opening an account, you must have the necessary documents. Once your account is approved, you can receive transactions safely.

Reliable providers like Wizopay offer round-the-clock support and reduce the risk of fraud. Get in touch with an expert soon and open a merchant account for improved sales and comfortable credit card payment processing.


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